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Personal Finance Courses: Taxes

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1.

Which of the following is true regarding tax credits?

Choose wisely. There is only one correct answer.

A tax credit reduces your taxable income as reported on Form 1040.

A tax credit reduces the actual tax you owe.

For most taxpayers, the standard tax credit will be larger and more valuable than itemizing your credits.

A tax credit reduces the actual tax you owe. Within limits, a dollar of credit reduces your tax by a dollar.

2.

There is one federal income tax rate that all taxpayers pay.

Choose wisely. There is only one correct answer.

True

False

False. As you earn more money, your rate increases.

3.

What kind of retirement planning contributions can help you save money on filing your taxes currently?

Choose wisely. There is only one correct answer.

A health savings account

A traditional IRA

A Roth 401(k)

A traditional IRA. Contributions to a traditional IRA can help you save money on filing your taxes currently. Roth 401(k)s cannot, and health savings accounts are not retirement plans.

4.

Retired workers receive more in benefits from Social Security than they contributed to it during their working years.

Choose wisely. There is only one correct answer.

True

False

True. They receive more; this is a big advantage during one's retirement years.

5.

Personal information you will need to prepare your tax return includes _______.

Choose wisely. There is only one correct answer.

Your former address

Your Social Security number

Your parents' names

Your Social Security number. Personal information you will need to prepare your tax return includes your Social Security number.

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