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Your Money: Tax Quiz

This is for those of you who cannot resist taking those quizzes in magazines.  Since taxes are a major annual expense for most people, take this simple quiz to see how much you know about taxes and the options you have for cutting them.

1. Everyone must file an income tax return.
True? or False?

2. What’s the top income tax rate?  A) 31%  B) 39.6% C) 50%

3. Which is more valuable?
A) a $100 tax deduction B) a $100 tax credit C) they’re equal in value.

4. When are estimated tax payments required? A) when you’re over 65 and no longer working, B) when you inherit money C) when     your withholding won’t cover the amount of tax you’re required to prepay.

5. On which kind of income could you pay the highest tax? A) sale of stock you’ve owned for two years B) interest on a bank CD.

6. If you pay $100 for an item at a charity auction, you can deduct: A) $100 B) the actual value of the item C) the amount by which $100 exceeds the actual value of the item and which you intend to be a contribution to the charity.

7. Tax records should be kept for: A) three years B) seven years C) permanently

8. Alimony is tax-deductible; child support payments are not.
True? or False?

9. Keeping record of home purchase costs and improvements is no longer necessary.
True? or False?

10. Amounts withdrawn from a Roth IRA after age 59 ½ are always tax-free.
True? or False?

11. If you’re covered by a retirement plan at work, you cannot make a deductible contribution to an IRA. True? or False?

12. You need a canceled check to substantiate a deduction for any charitable contribution.
True? or False?

13. A pay raise can actually cost you money if it pushes you into a higher tax bracket.  True? or False?

14. Taxpayers who work can take a $500 tax credit for each child under age 17?
True? or False?.

15. If your father gives you $9,000 worth of stock, what do you report on your tax return? A) the difference between the $9,000 and what your father originally paid for the stock B) $9,000 of capital gains C) nothing.

16. After a divorce, the parent who has custody of the children is entitled to the dependency exemption for them.
True? or False

Answers:
1.FALSE 2.B 3.B 4.C 5.B 6.C 7.B 8.TRUE 9.FALSE 10.FALSE 11.FALSE 12.FALSE 13.FALSE 14.  FALSE 15.C 16.TRUE

If you would like to get the explanations for the above questions, please call
Julie M. Sturgeon, CPA
at 251-6031 or email, juliecpascv@netscape.net.

Read more of Julie Sturgeon’s articles by clicking here.

Your Money: Tax Quiz

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