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1. Use Publication 17, (in index), find Gross Income. Then go to the page that it indicates and you see a paragraph headed 'Gross Income'. Read here to answer the following.
Gross income includes all income you receive in the form of money, goods, property, and services that is not exempt from tax.
2. Use Publication 17, (in index), find Filing requirements, scroll down to find individuals then go to that page. Then go to that page and look for the 'Do I Have To File a Return? section and read the first paragraph to answer the following.
You must file a federal income tax return if you are a citizen or resident or the United States (unless the exception for not filing apply).
3. Use Publication 17,(in index), find Standard Deduction. Then go to that page and read the first two columns about standard deduction to answer the following question:
What is the 'Standard Deduction'?
- [ ] a. a. Dollar amount that reduces the amount of tax directly.
- [ ] b. b. A variable amount that eliminates the need for taxpayers to file.
- [ ] c. c. An amount that depends on your filing status, and whether you are 65 or older or blind.
- [ ] d. d. All of the above
4. Use Publication 17,(in index), find Filing requirements, scroll down to "When to file", then go to that page to answer the following question:
For tax year 2007, when is the last day most taxpayers have to file their tax return?
- [ ] a. a. October 15, 2008.
- [ ] b. b. April 15, 2008.
- [ ] c. c. April 17, 2008.
- [ ] d. d. June 16, 2008.
5. Use Publication 17,(in index), find Penalties. Then go to that page and read the the "frivolous return" section to answer the following question:
You understate your tax if the tax shown on your return is less than the correct tax. You may have to pay a penalty if you file a frivolous return in the amount of
- [ ] a. a. $ 1,000.
- [ ] b. b. $ 2,000.
- [ ] c. c. $ 3,000.
- [ ] d. d. $ 5,000.
6. Use Publication 17,(in index), find Penalties. Then go to that page and just read the the "Paying tax late" section to answer the following question:
What is the penalty for failure to pay for each month or part of each month, after the due date that the return is not paid?
- [ ] a. a. 1/2 of 1% of your unpaid taxes.
- [ ] b. b. 1/2 of 2% of your unpaid taxes.
- [ ] c. c. 1/2 of 3% of your unpaid taxes.
- [ ] d. d. 1/4 of 1% of your unpaid taxes.
7. Use Publication 17,(in index), find Penalties. Then go to that page and read the the "filing late" section to answer the following question:
What is the penalty if you do not file your return by the due date?
- [ ] a. a. 1/2 of 1% for each month or part of a month that return is late.
- [ ] b. b. 5% for each month or part of a month that return is late.
- [ ] c. c. 3% for each month or part of a month that return is late.
- [ ] d. d. 1% for each month or part of a month that return is late.
8. In 1862, Congress enacted the nation's first income tax law
- [ ] a. a. in order to support the Civil War effort.
- [ ] b. b. in order to support the campaigns of political parties.
- [ ] c. c. in order for the government to have more spending money for leisure activities.
- [ ] d. d. in order for the government to give bonuses to its employees.
9. The Act of 1862 established the office of Commissioner of Internal Revenue. The Commissioner was given the power to
- [ ] a. a. assess taxes.
- [ ] b. b. levy and collect taxes.
- [ ] c. c. to enforce the tax laws through seizure of property and income and through prosecution.
- [ ] d. d. all of the above.
10. The powers and authority of the office of Commissioner of Internal Revenue remain very much the same today.
11. In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. The amendment gave Congress legal authority to tax income and resulted in a revenue law that taxed incomes of both individuals and corporations.
12. On Oct. 22, 1986, President Reagan signed into law the Tax Reform Act of 1986. The act called for and increase in individual taxation over a five-year period.
13. The Revenue Reconciliation Act of 1990 was signed into law on Nov. 5, 1990. The emphasis of the 1990 act was increased taxes on the wealthy.
14. On Aug. 10, 1993, President Clinton signed the Revenue Reconciliation Act of 1993 into law. The act's main purpose was to reduce
- [ ] a. a. the federal deficit.
- [ ] b. b. taxes of individuals.
- [ ] c. c. taxation of small business.
- [ ] d. d. taxation on corporations.
15. Public assistance benefits from a public welfare fund based upon need, such as payments due to blindness. You must include in your income any
- [ ] a. a. Welfare payments.
- [ ] b. b. Welfare payments that are compensation for services or that are obtained fraudulently.
- [ ] c. c. Payments from a welfare state fund for the victims of crime.
- [ ] d. d. All of the above.
16. Generally, property you receive as a gift, bequest, or inheritance is not included in income. If property you receive this way later produces income such as interest, dividends, or rents,
- [ ] a. a. That income is not taxable to you.
- [ ] b. b. That income is taxable to you.
- [ ] c. c. That gift is taxable to you.
- [ ] d. d. None of the above.
17. If you are a resident alien for the entire year,
- [ ] a. a. you are a dual-status taxpayer.
- [ ] b. b. the rules and forms that apply to you are different from those that apply to U.S. Citizens.
- [ ] c. c. you must file a tax return following the same rules that apply to U.S. Citizens.
- [ ] d. d. any of the above.
18. For tax year 2007, generally you must file a federal income tax return by April 15, 2008. If you are a U.S. citizen or resident, whether you must file a return depends on
- [ ] a. a. your gross income.
- [ ] b. b. your filing status
- [ ] c. c. your age.
- [ ] d. d. All of the above.
19. In regards to penalties, this includes a failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care in preparing a return.
- [ ] a. a. Careless-ness.
- [ ] b. b. Mal-intended.
- [ ] c. c. Sloppy-ness.
- [ ] d. d. Negligence or disregard.
20. In 2007, if you use e-file (electronically filed), your return is considered filed on time if
- [ ] a. a. You mail the copies that the electronic return transmitter gives you by April 15 2008.
- [ ] b. b. The authorized electronic return transmitter postmarks the transmission by April 16, 2008.
- [ ] c. c. Your authorized electronic return transmitter sends all his transmissions by April 17, 2008.
- [ ] d. d. Your authorized electronic return transmitter sends all his transmissions by April 30, 2008.
21. After you have completed your return, peel off the label with your name and address from the back of your tax return package and place it in the appropriate area of the Form 1040 you send to the IRS. If you lived in California and have a balance due and you do not have an addressed envelope or if you moved during the year, mail your return to
- [ ] a. a. Internal Revenue Service Center, Fresno, CA 93888-0102.
- [ ] b. b. Internal Revenue Service Center, Atlanta, GA 39901-0102.
- [ ] c. c. Internal Revenue Service Center, Austin, TX 73301-0102.
- [ ] d. d. Internal Revenue Service Center, Philadelphia, PA 19255-0215.
22. Interest is charged as a penalty on tax you do not pay by the due date of your return. Interest is charged even if you get an extension on time for filing. All or part of any interest you were charged can be forgiven if
- [ ] a. a. The interest is due to an unreasonable error or delay by an officer or employee of the IRS in performing a ministerial or managerial act.
- [ ] b. b. The interest is due to negligence or disregard.
- [ ] c. c. The interest is due to frivolous returns.
- [ ] d. d. The interest is due to failure to furnish social security number.
23. A joint return generally cannot be filed if either spouse is a nonresident alien at any time during the tax year. However, regarding this filing status, if one spouse was a nonresident alien or dual-status alien who was married to a U.S. Citizen or resident alien at the end of the year,
- [ ] a. a. the couple must choose to file separately.
- [ ] b. b. the couple can choose to file a joint return.
- [ ] c. c. the nonresident spouse cannot file a return in this country.
- [ ] d. d. None of the above.
24. Candice, a 27 year old single woman , worked in computer store for around 4 months. Her earnings from work were $ 9,534 for all of tax year 2007. Her withholding for Federal was $590. She has no dependents. Which of the following is true about her filing requirement?
- [ ] a. a. She is absolutely obligated to file a return.
- [ ] b. b. She is not legally obligated to file.
- [ ] c. c. Any one that earns any amount, especially from work has to file a tax return.
- [ ] d. d. None of the above.
25. After you have completed your return, peel off the label with your name and address from the back of your tax return package and place it in the appropriate area of the Form 1040, 1040A, or 1040EZ you send to the IRS. If you lived in California and will get a refund and you do not have an addressed envelope or if you moved during the year, mail your return to
- [ ] a. a. Internal Revenue Service Center, Fresno, CA 93888-0002.
- [ ] b. b. Internal Revenue Service Center, Fresno, CA 93888-0102.
- [ ] c. c. Internal Revenue Service Center, Austin, TX 73301-0002.
- [ ] d. d. Internal Revenue Service Center, Philadelphia, PA 19255-0215.
26. Your income is only from wages, salaries, and tips. Which form is the simplest form to use?
- [ ] a. a. 1040EZ
- [ ] b. b. 1040A
- [ ] c. c. 1040
- [ ] d. d. 1040NR
27. Deductible real state taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property.
28. If you deduct travel, entertainment, gift, or transportation expenses, you must exercise appropriate recordkeeping to be able to prove (or substantiate) certain elements of the expense.
29. The education credits are based on qualified education expenses you pay for
- [ ] a. a. yourself.
- [ ] b. b. your spouse.
- [ ] c. c. a dependent for whom you claim an exemption.
- [ ] d. d. All of the above.
30. Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance.
31. Use California 540/ 540A Booklet, (the forms serve as index), on Form 540A find section 'Taxable Income' then go to line 14 'California Income Adjustments' and it reads 'See instructions". On that page look for 'Line 13b-Unemployement Compensation' to answer the following question:
Unemployment compensation is taxable for California.
32. Use California 540/ 540A Booklet, (the forms serve as index), on Form 540 find section 'Interest, late return penalties, and late payment penalties' then in instructions find line 63 and you should find your answer there.
The penalty is ____ on the tax not paid when due plus 1/2% for each month, or part of a month, the tax remains unpaid.
- [ ] a. a. 1%.
- [ ] b. b. 3%.
- [ ] c. c. 4%.
- [ ] d. d. 5%.
33. Use California 540/ 540A Booklet, (the forms serve as index), on Form 540A find section 'Tax and Credits' then go to line 28 Nonrefundable renter's credit. See instructions". On that page look for 'Line 28 - Nonrefundable Renter's Credit (its instructs you to go to page 14) to answer the following question:
In tax year 2007, if you are head of household and you would like to qualify for renter's credit, you would not qualify if your income is over what amount?
- [ ] a. a. $32,272.
- [ ] b. b. $61,588.
- [ ] c. c. $64,544.
- [ ] d. d. $120.
34. Use California 540/ 540A Booklet, (the forms serve as index), on Form 540A find section 'Exemptions' then this whole section is about exemptions. However, go to that page to get details on each specific exemption. You can use the form itself to answer the following question:
What is the 2007 exemption amount for California?
- [ ] a. a. $ 94 Personal exemption.
- [ ] b. b. $ 94 Spousal exemption.
- [ ] c. c. $ 294 Dependent exemption.
- [ ] d. d. All of the above.
35. Use California 540/ 540A Booklet (the forms serve as index), on Form 540A find section 'Taxable Income and California Income Adjustments' then go to line 18 where it asks you about itemized or standard deduction. This line reads that if circle on line 6 is filled in, STOP. See instructions". (This circle would be filled in if taxpayer is a dependent of someone else). Go to that page and read section 'Standard deduction' and do the worksheet; 'California Standard Deduction Worksheet for Dependents'. Answer the following question:
What is the California standard deduction amount for a single dependent who earned $4,000 from her job?
- [ ] a. a. $ 3,516
- [ ] b. b. $ 850
- [ ] c. c. $ 4,000
- [ ] d. d. $ 4,850
36. For California, if you and your spouse/RDP paid estimated taxes but are now filing separate returns,
- [ ] a. a. either you or your spouse/RDP may claim the entire amount paid.
- [ ] b. b. each may claim part of the joint estimated tax payments.
- [ ] c. c. notify the FTB before you file the tax returns so the payments can be applied to the proper account.
- [ ] d. d. All of the above.
37. You may make contributions to the California Seniors Special Fund or make other voluntary contributions of $1 or more in whole dollar amounts. The amount you contribute either reduces your overpaid tax or increases your tax due. You may contribute only to the funds listed and
- [ ] a. a. Claim the amount you contributed as an itemize deductions expense.
- [ ] b. b. You can change the amount you contributed by filing an amended 540X return.
- [ ] c. c. Cannot change the amount you contributed after you file your return.
- [ ] d. d. None of the above.
38. For California, you may be entitled to claim a credit for excess State Disability Insurance (SDI) or Voluntary Plan Disability Insurance (VPDI) only you
- [ ] a. a. Had two or more California employers during 2007.
- [ ] b. b. Received more than $ 83,389 in wages.
- [ ] c. c. Had amounts of SDI (VPDI) withheld that appear on your Forms W-2.
- [ ] d. d. All of the above.
39. For California, this filing status is for unmarried individuals and certain married individuals living apart (considered unmarried) who provide a home for which you paid more than half of the upkeep for certain other persons. The qualifying person lived in your home for more than half of the year and you were not a nonresident alien at any time during the tax year 2007. You are entitled to use the
- [ ] a. a. Single filing status.
- [ ] b. b. Married filing jointly filing status.
- [ ] c. c. Head of household filing status.
- [ ] d. d. Married filing separately filing status.
40. If you were 65 of age or older by December 31, 2007, you should claim an additional exemption credit on line 9 Form 540A. For claiming this exemption purposes, you are considered to be 65 on December 31, 2007 if
- [ ] a. a. Your 65th birthday is on January 1, 2008.
- [ ] b. b. Your 65th birthday is on December 31, 2007.
- [ ] c. c. Your 65th birthday is on February 28, 2007.
- [ ] d. d. All of the above.