Personal Finance Chapter 14 Review

Most people pay federal income tax by ______.

• earning tax credits for various deductions

• having amounts withheld from their paycheck

• cashing in their savings

• filing quarterly tax returns

• paying the total amount owed by April 15

Real-estate property taxes are significant but not a major source of revenue for local governments.

• True

• False

Tax assistance from an attorney is less common than using a tax service.

• True

• False

Most taxpayers have to file quarterly payments of estimated amounts owed for taxes.

• True

• False

A tax ______ is an amount subtracted directly from the amount of taxes owed.

• exclusion

• deduction

• shelter

• exemption

• credit

Philip Marnier had earnings from his salary of $40,000, interest on savings of $700, and a contribution to a registered retirement savings plan of $1,500. Philip's net income would be _______.

• $38, 500

• $39, 300

• $41,500

• $40,000

• 39,200

Capital gains refer to ________

• earning from investments such as dividends or interest

• gains from the sale of capital assets

• tax-deferred investments

• profits from the sale of an investment asset

• tax-exempt investments

Making use of legitimate methods to reduce one's taxes is called tax _____.

• deferred techniques

• exemptions

• reductions

• planning

• evasion

The ______ property tax is based on the value of land and buildings

• proportional

• direct

• regressive

• real estate

• personal

There is no significant difference between a federal tax credit and a federal tax deduction.

• True

• False