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Exam 3: Taxes in Your Financial Plan

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Question 21

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Which of the following is an example of a tax credit?

A) mortgage interest
B) amounts withheld for social insurance
C) individual retirement account contributions
D) caregiver and medical expenses
E) net business income

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Question 22

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Capital gains refer to

A) tax-exempt investments.
B) profits from the sale of an investment asset.
C) gains from the sale of capital assets
D) earnings from investments such as dividends or interest.
E) tax-deferred investments.

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Question 23

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Jennifer made $2000 worth of charitable donations.Her total income is $36,000 and she is in the 22% federal tax bracket.What is her charitable donations tax credit?

Earnings from a limited partnership would be an example of ____________ income.

Several courses of appeal are available to taxpayers who disagree with a revenue service ruling on their tax return audit.

An expense that would be included in the deductions of a taxpayer is

A tax on the value of automobiles,boats,or furniture can also be referred to as an investment tax.

A field audit requires that a taxpayer visit an auditing agent to clarify some aspect of his or her tax return.

The principal purpose of taxes is to control economic conditions.

Which of the following is a non-refundable tax credit?

Income from a partnership is included under net business income.

An RPP differs from an RRSP in that

Money received in the form of dividends or interest is ____________ income.

Real-estate property taxes are significant but not a major source of revenue for local governments.

The use of legitimate methods to reduce one's taxes is tax ___________.

How is taxable income computed?

The main purpose of taxes is to

Cameron Nelson wants to complete his own federal income tax return.He has several questions about the tax form to use and what items should be reported as income.What sources of assistance would you recommend for Cameron? Both the CCRA and the Québec Ministère du Revenu offer comprehensive guides to tax returns.You may surf their sites at HYPERLINK "http://www.cra-arc.gc.ca/" ,and others.

Deductions are amounts that a taxpayer is allowed to deduct from taxable income.

A tax credit is an amount subtracted directly from the amount of taxes owed.