1C. Tax Review Questions only

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Northern Virginia Community College *

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408

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Economics

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Feb 20, 2024

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Uploaded by vanq12345

Tax review questions Ch 1 1. This year, I have $10,000. I’m deciding whether I should purchase a used car and drive for Uber to earn some additional income versus invest in the stock market. What tax rate should be used to evaluate this decision? 2. My friend works at Google. We want to compare our tax burdens. Should we use the average or effective tax rate? 3. Is the sales tax a flat, regressive, or progressive tax rate? Ch 4 1. Jim is single and earns $50,000 in wages. What is his tax liability? 2. Jim is single and earns $40,000 in wages and $10,000 in dividends. What is his tax liability? 3. Jim is single and earns $500,000. What is his tax liability? 4. Jim files married filing jointly and earns $500,000. What is his tax liability? 5. As Amazon stock soared during the pandemic, Jeff Bezos taxable income has remained steady at nearly $0. Why? 6. What are the preferential tax rates for LTCG and dividends? 7. I am filing MFJ and considering two investments. These investments only generate tax benefits (no income). Investment A generates $100 of deductions and Investment B generates $30 of credits. My current taxable income is $375,000. What investment should I choose? 8. What is the most common reason for people to file married filing separately? Ch 5 1. This year, I purchased 100 shares of stock and elected to participate in a dividend reinvestment program. This program automatically uses dividends to purchase additional shares of stock. This year the stock paid $350 of dividends, and the stock broker immediately purchased additional shares of stock. These additional shares are worth $375 at year-end. Are the dividends taxable income? Ch 6 1. Why are self-employed taxpayers allowed to deduct the employer portion of their self- employment tax? 2. This year Evan graduated from college, and took a job as a deliveryman in the city. Evan was paid a salary of $72,300 and he received $700 in hourly pay for part-time work over the weekends. Evan summarized his expenses as follows. Cost of moving his possessions to the city (125 miles away) $ 1,200 Interest paid on accumulated student loans 2,800 Cost of purchasing a delivery uniform 1,400 Contribution to State University deliveryman program 1,300 Calculate Evan’s AGI and taxable income if he files single. Assume that interest payments were initially required on Evan’s student loans this year.

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