Tax Terminology Quiz

What is an Exemption in tax terms?

• A penalty for late tax filing

• A specific amount of money that can be subtracted from gross income

• A fee for tax preparation services

• A bonus for early tax filing

What are Deductions in the context of taxes?

• Additional income added to taxable income

• Expenses that can be subtracted from adjusted gross income

• Fees paid to tax preparers

• Penalties for incorrect tax filing

Who is considered a Client in tax preparation?

• The IRS agent reviewing tax returns

• The individual or entity seeking tax services

• The software used for filing taxes

• The bank processing tax refunds

What is a Paid Preparer required to include on tax returns they prepare?

• Their social security number

• Their Preparer Tax Identification Number (PTIN)

• Their business address

• Their personal phone number

What does EIC stand for in tax terminology?

• Earned Income Credit

• Employee Income Contribution

• Employer Insurance Coverage

• Economic Investment Credit

What determines a taxpayer's Filing Status?

• Their age and occupation

• Their marital status and family situation

• Their income level and education

• Their place of residence and citizenship

What is a W-2 form used for?

• To apply for a tax refund

• To report employee earnings and taxes withheld

• To claim tax deductions

• To file for an extension on tax returns

What is Gross Income?

• The total income a person receives in a year before taxes and deductions

• The income after taxes and deductions

• The income from investments only

• The income after all expenses are paid

What is a Non-Refundable Credit?

• A credit that can result in a refund if it exceeds the tax owed

• A credit that reduces tax owed but cannot result in a refund

• A credit that is always refunded regardless of tax owed

• A credit that applies only to state taxes

What is a Refundable Credit?

• A credit that can only reduce the tax owed to zero

• A credit that can reduce tax owed and result in a refund if it exceeds the tax owed

• A credit that applies only to federal taxes

• A credit that is non-refundable