Tax Forms

Question 1

What is income tax?

Answer 1

A tax imposed by governments on individuals’ or entities’ income.

Question 2

True or False: Income tax is a progressive tax.

Answer 2

True

Question 3

What form is used to report individual income tax in the United States?

Answer 3

Form 1040

Question 4

Fill in the blank: The __________ is the amount of income that is not subject to tax.

Answer 4

tax-exempt income

Question 5

What is a W-2 form?

Answer 5

A form that employers send to employees and the IRS, reporting annual wages and the amount of taxes withheld.

Question 6

Which of the following is NOT a type of income? A) Wages B) Dividends C) Personal expenses

Answer 6

C) Personal expenses

Question 7

What does the term ‘deduction’ refer to?

Answer 7

An expense that can be subtracted from gross income to reduce taxable income.

Question 8

True or False: All income is taxable.

Answer 8

False

Question 9

What is the purpose of Form 1099?

Answer 9

To report various types of income other than wages, salaries, and tips.

Question 10

Fill in the blank: A __________ is a tax benefit that reduces a taxpayer’s liability.

Answer 10

tax credit

Question 11

What is the difference between a tax credit and a tax deduction?

Answer 11

A tax credit directly reduces the amount of tax owed, while a tax deduction reduces taxable income.

Question 12

What is the standard deduction?

Answer 12

A fixed dollar amount that reduces the income on which you are taxed.

Question 13

Which form is used by self-employed individuals to report their income?

Answer 13

Schedule C (Form 1040)

Question 14

True or False: The IRS is responsible for collecting federal income tax.

Answer 14

True

Question 15

What is the tax year?

Answer 15

The annual period for which income is reported and taxed.

Question 16

Fill in the blank: __________ refers to the total income before any deductions or taxes.

Answer 16

Gross income

Question 17

What is a tax return?

Answer 17

A form filed with the IRS that reports income, deductions, and taxes owed.

Question 18

Which of the following is a common tax filing status? A) Single B) Married Filing Jointly C) Head of Household D) All of the above

Answer 18

D) All of the above

Question 19

What is the purpose of Form 1040-SR?

Answer 19

To provide a simplified tax return for seniors aged 65 and older.

Question 20

True or False: Capital gains are always taxed at the same rate as ordinary income.

Answer 20

False

Question 21

What is the deadline for filing individual income tax returns in the U.S.?

Answer 21

April 15

Question 22

Fill in the blank: __________ income refers to income earned from investments, such as stocks and bonds.

Answer 22

Investment

Question 23

What is the difference between short-term and long-term capital gains?

Answer 23

Short-term capital gains are from assets held for one year or less, while long-term gains are from assets held for more than one year.

Question 24

What is a tax audit?

Answer 24

An examination of an individual’s or organization’s tax return by the IRS.

Question 25

True or False: You can e-file your tax return through the IRS website.

Answer 25

True

Question 26

What does the term 'withholding' refer to?

Answer 26

The portion of an employee's earnings withheld by the employer for tax purposes.

Question 27

Fill in the blank: A __________ is a form of income that comes from a business or self-employment.

Answer 27

business income

Question 28

What is the purpose of Schedule A (Form 1040)?

Answer 28

To itemize deductions on your tax return.

Question 29

Which of the following is taxable income? A) Child support B) Unemployment benefits C) Inheritance

Answer 29

B) Unemployment benefits

Question 30

What is a tax refund?

Answer 30

The amount returned to a taxpayer when they have overpaid their taxes.

Question 31

True or False: You can carry forward unused tax credits to future tax years.

Answer 31

True

Question 32

What is the significance of the tax bracket?

Answer 32

It determines the rate at which income is taxed.

Question 33

Fill in the blank: __________ refers to the income earned from work or services rendered.

Answer 33

Earned income

Question 34

What does Form 4868 allow you to do?

Answer 34

File for an automatic extension to file your tax return.

Question 35

Which of the following is a requirement for claiming a dependent? A) They must live with you B) They must be a relative C) They must be under a certain age D) All of the above

Answer 35

D) All of the above

Question 36

What is a tax shelter?

Answer 36

A financial strategy used to minimize taxable income.

Question 37

True or False: You can deduct personal living expenses on your tax return.

Answer 37

False

Question 38

What does the acronym AGI stand for?

Answer 38

Adjusted Gross Income

Question 39

Fill in the blank: __________ tax is charged on the income earned by corporations.

Answer 39

Corporate

Question 40

What is the purpose of Form 8889?

Answer 40

To report Health Savings Account (HSA) contributions and distributions.

Question 41

Which of the following types of income is generally tax-exempt? A) Municipal bond interest B) Lottery winnings C) Salary

Answer 41

A) Municipal bond interest

Question 42

What does the term 'tax liability' mean?

Answer 42

The total amount of tax that an individual or entity is legally obligated to pay.

Question 43

True or False: You can amend a tax return if you made a mistake.

Answer 43

True

Question 44

What is the main purpose of the IRS?

Answer 44

To administer and enforce federal tax laws.

Question 45

Fill in the blank: A __________ tax is based on the value of property owned.

Answer 45

property

Question 46

What is the form used for estate tax returns?

Answer 46

Form 706

Question 47

Which of the following is a type of tax audit? A) Correspondence audit B) Field audit C) Office audit D) All of the above

Answer 47

D) All of the above

Question 48

What does the term 'tax evasion' refer to?

Answer 48

The illegal act of not paying taxes owed.