Question
1. Above-the-line deductions are more valuable than below-the-line deductions. (True/False) 2. For purposes of determining above-the-line and below-the-line deductions, the line is: a. gross income
1. Above-the-line deductions are more valuable than below-the-line deductions. (True/False)
2. For purposes of determining "above-the-line" and "below-the-line" deductions, the "line" is:
a. gross income
b. earned income
c. taxable income
d. adjusted gross income
3. Medical and dental expenses are a(n):
a. "above-the-line" deduction
b. "below-the-line" deduction
c. standard deduction
d. personal exemption
4. Your clients are seeking to minimize their tax liability. You advise them to do all of the following, except:
- Maximize their IRA contributions
- Make payments on outstanding student loans
- Contribute to a Health Savings Account
- Postpone stock sales if new capital losses are incurred
5. Individuals are subject to income tax and self-employment tax liability only. Businesses may be subject to income tax, AMT, NIIT, and the Additional Medicare Surtax liability. (True/False)
6. Interest from treasury bonds is subject to federal tax, but is exempt from all state and local income taxes. (True/False)
7. In addition to income tax and self-employment tax, Taxpayers may be subject to:
- the Alternative Minimum Tax.
- the Net Investment Income Tax.
- the Additional Medicare Surtax.
- all of the above.
8. All of the following are examples of above-the-line deductions that are subtracted from gross income, EXCEPT:
- contributions to health savings accounts
- charitable contributions
c. qualified tuition and fees
d. IRA contributions
9. Deductions are better than credits for most taxpayers. (True/False)
10. Filing status has little or no effect on the taxpayers tax liability. (True/False)
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