Reference no: EM131728363

Multiple Choice Questions

Q1. You cannot keep funds in a traditional IRA indefinitely. To avoid penalties, required minimum distributions must start:

a. When you fully retire

b. At age 65

c. At age 59 1/2

d. In the year you reach 70 ½

Q2. If your modified adjusted gross income is less than $80,000 ($160,000 married filing jointly), there is a special deduction for paying interest on student loans. For 2015, the maximum deduction you can take is:

a. $5,000

b. $2,500

c. 10% of adjusted gross income

d. 2% of adjusted gross income

Q3. Which of the following is not an expense deductible as an itemized deduction? C

a. Medical expense

b. Charitable deductions

c. Moving expenses

d. Mortgage interest

Q4. The standard deduction is based on filing status. Your standard deduction may also be increased if you are:

a. Over 65 years old and/or retired

b. Over 70 years old and/or blind

c. Over 70 years old and /or disabled

d. Over 65 years old and/or blind

Q5. If you are itemizing your deductions and have medical expenses, you may deduct mileage on your automobile. For 2015, the standard medical mileage rate is:

a. $50 per day

b. $200 per week

c. 30 cents per mile

d. 23 cents per mile

Q6. State income taxes are deductible on Schedule A. In states that don't have state income taxes, the taxpayers may take another deduction instead (for 2015). What is that deduction?

a. General sales tax

b. Excise tax

c. Alternative minimum tax

d. Social security tax

Q7. The time you donate to a tax-exempt organization through volunteer hours is valuable. Can you deduct the value of your time?

a. Yes, up to $500

b. No

c. It depends on how your volunteer hours are valued

d. Yes, but only up to the federal minimum wage per hour

Q8. A casualty loss is damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, and unusual. Which of the following are examples of deductible casualty losses?

a. Earthquakes, fires, termites

b. Government ordered demolition, shipwrecks, and damage done by family pet

c. Earthquakes, fires, terrorist attacks

d. Fires, Vandalism, accidental breaking of household glassware under normal conditions

Q9. You may deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. In general, you can only deduct _____% of your business-related meal and entertainment expenses.

a. 75%

b. 90%

c. 25%

d. 50%

Q10. The IRS has a test to determine if an activity is a true business carried on for profit or just a hobby. You can generally deduct hobby expenses, but only:

a. Up to $100 per year

b. Up to the amount of hobby income

c. 2% of adjusted gross income

d. 10% of adjusted gross income

Q11. The IRS provides a list of nondeductible expenses. Which of the following expenses can be taken as a deduction?

a. Funeral expenses

b. Marriage licenses

c. Loss from the sale of your home

d. Donations of used cars