WorksheetsChapter 3: Income Taxes - Chapter Exam Review
Total questions: 25
Worksheet time: 38mins
Use the formula to solve the following:
Formula:
self-employment tax = tax rate × contract earnings
Problem:
Selena works as a freelance web developer. This month, she earned $2,200 from a business website, $950 from a personal blog, and $1,050 from a nonprofit site. If her self-employment tax rate is 12.5%, how much does she owe in self-employment taxes?
$500.00
$540.00
$515.50
$525.00
Use the formula to solve the following:
Formula:
inheritance tax = tax rate × value of inheritance
Problem:
Jamie lives in a state with an inheritance tax of 6% for lineal descendants (children or grandchildren) and 10% for all other beneficiaries. Jamie inherited a property worth $120,000 from a family friend. What is Jamie's inheritance tax?
$10,800
$6,000
$7,200
$12,000
Use the formula to solve the following:
Formula:
taxable income = adjusted gross income - deductions - tax credits
Problem:
Liam has an adjusted gross income (AGI) of $90,000. He is single. Should he claim the standard deduction of $14,600 or his itemized deductions totaling $16,200? What is his taxable income?
$75,400
$74,800
$76,200
$73,800
Which of the following best describes the standard deduction?
A tax credit given only to people who own a home.
A bonus refund for taxpayers who make charitable donations.
A penalty applied when you forget to file your taxes.
A fixed amount that reduces your taxable income and can be claimed without listing individual deductions.
How are short-term capital gains taxed?
They are not taxed
At the same rate as long-term capital gains
At the same rate as ordinary income
At a lower rate than ordinary income
What is an investment?
A tax paid on earned income
Money spent on everyday expenses like food and rent
A purchase made in hopes of making money
A loan you take out from a bank
Use the formula to solve the following:
Formula:
taxable income = adjusted gross income – deductions – tax credits
Use the following standard deductions:
Single: $15,000 | Married (filing jointly): $30,000 | Married (filing separately) $15,000 | Head of Household: $22,500
Problem:
Jason and Maria are married filing jointly. Their combined adjusted gross income is $88,340.25. They will claim the standard deduction and have no tax credits. What is their taxable income?
$70,340.25
$60,340.25
$65,840.25
$58,340.25
Who is legally responsible for the information reported on a tax return?
The employer providing the W-2 form
The tax preparer
The taxpayer
The CPA who reviewed the form
How is adjusted gross income (AGI) calculated?
Gross income minus the standard deduction
Gross income plus tax credits
Gross income minus adjustments to gross income
Taxable income minus tax credits
What is the purpose of a will?
To create a legal contract for the deceased's funeral arrangements
To outline the wishes of the deceased, including who should receive their estate
To determine who will manage the deceased's finances during their lifetime
To specify how the deceased's estate should be taxed
Use the formula to solve the following:
Formula:
capital gain/loss = sales price - purchase price
Problem:
Emma bought shares in a technology company for $5,200 and shares in an airline for $3,900. Later, she sold the technology shares for $4,800 and the airline shares for $4,500. What is Emma’s net capital gain or loss?
$600 gain
$400 gain
$200 gain
$100 gain
By what date is the federal income tax return usually due each year?
January 15
December 31
April 15, unless it falls on a weekend or holiday, in which case it’s due the next business day
May 1, unless extended by the IRS
Use the formula to solve the following:
Formula:
taxable income = adjusted gross income - deductions - tax credits
Problem:
Sara and Jake are married filing jointly. Their AGI is $120,000. Their itemized deductions are $27,000, and the standard deduction is $29,200. What is their taxable income?
$90,800
$93,000
$92,000
$91,800
Use the formula to solve the following:
Formula:
capital gain/loss = sales price - purchase price
Problem:
Barret purchased shares of stock in an airline for a total of $7,812.71. Two years later, he sold the shares of stock for a total of $5,990.83. What is Barret’s capital loss on this investment?
-$1,864.88
-$1,841.88
-$1,900.50
-$1,821.88
Use the formula to solve the following:
Formula:
inheritance tax = tax rate × value of inheritance
Problem:
Olivia lives in a state with an inheritance tax of 5% for lineal descendants and 8% for all others. Olivia inherited a bank account worth $30,000 from her aunt. What is the amount of inheritance tax Olivia must pay?
$1,200
$1,500
$3,000
$2,400
Use the formula to solve the following:
Formula:
adjusted gross income = gross income - adjustments to gross income
Problem:
Jason is an urban planner. His gross income last year was $58,900. He had these adjustments: $1,250 health savings account deduction, $4,000 IRA contribution, and a $1,450 student loan interest deduction. What is Jason’s adjusted gross income?
$56,200
$54,200
$58,900
$52,200
Use the formula to solve the following:
Formula:
adjusted gross income = gross income - adjustments to gross income
Problem:
Mia is an interior designer. Her gross income last year was $72,450. She had the following adjustments: $3,500 IRA contribution, $900 health savings account deduction, and $2,200 student loan interest. What is Mia’s adjusted gross income?
$68,250
$66,050
$65,850
$70,250
What is a capital gain?
The interest earned on a savings account
A loss from selling something for less than you paid for it
A profit made from selling something for more than you paid for it
The total amount of money you invest in a stock or asset
Use the formula to solve the following:
Formula:
capital gains tax = tax rate × capital gain
Problem:
Emma purchased $7,200 worth of stock in a tech company several years ago. She recently sold that stock for $9,120. If the capital gains tax rate is 15%, calculate the amount of capital gains tax Emma will pay.
$1,920, $288
$1,920, $246
$1,920, $192
$1,920, $312
Use the formula to solve the following:
Formula:
taxable income = adjusted gross income – deductions – tax credits
Use the following standard deductions:
Single: $15,000 | Married (filing jointly): $30,000 | Married (filing separately): $15,000 | Head of Household: $22,500
Problem:
Sophia is a single filer with an adjusted gross income of $42,785.60. She will claim the standard deduction and has $2,000 in tax credits. What is her taxable income?
$27,785.60
$29,785.60
$25,785.60
$40,785.60
What information is typically found on a W-2 form?
A breakdown of all deductions and credits claimed by the taxpayer
The taxpayer's estimated tax liability for the year
A summary of an employee's earnings and taxes withheld by the employer
The taxpayer's total gross income from all sources
Use the formula to solve the following:
Formula:
amount of taxes owed or refund = tax due - total withholdings
Use the following table:
Problem:
Ava is single with a taxable income of $24,375. Her total withholdings were $3,000. Using the tax table, how much does she owe or will be refunded?
$3,231 owed
$231 refund
$0 (no tax owed)
$231 owed
Use the formula to solve the following:
Formula:
self-employment tax = tax rate × contract earnings
Problem:
Diego mows lawns for local businesses as a self-employed contractor. In one week, he earned: $150, $175, $160, and $200. If his self-employment tax rate is 10%, how much tax does Diego owe?
$70.00
$69.50
$68.50
$68.00
What is the primary purpose of filing a federal income tax return?
To receive tax credits
To calculate the amount of tax owed to the federal government
To apply for tax deductions
To report investments and savings
Use the formula to solve the following:
Formula:
capital gain/loss = sales price - purchase price
Problem:
Luis purchased shares of stock in an automotive company for $4,500. He also bought shares in a pharmaceutical company for $2,750. A few years later, he sold the automotive company stock for $3,900 and the pharmaceutical company stock for $3,300. What is Luis’s net capital gain or loss?
$50 gain
$100 gain
$100 loss
$50 loss
