Accounting Online Program US Tax Accounting 1

Question 1

Which federal agency administers the US tax code?

Accepted Answer

IRS

Answer

The Internal Revenue Service (IRS) is the US federal agency responsible for collecting taxes and administering the Internal Revenue Code.

Question 2

For federal income tax purposes, what is the standard deduction?

Accepted Answer

A fixed dollar amount taxpayers can deduct without itemizing

Answer

The standard deduction is a fixed amount set by the IRS that reduces taxable income for taxpayers who choose not to itemize deductions.

Question 3

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

Accepted Answer

Mortgage interest deduction

Answer

The mortgage interest deduction reduces taxable income (not the tax owed directly), whereas credits reduce the actual tax liability.

Question 4

What is the tax treatment of a long-term capital gain under US federal law?

Accepted Answer

Taxed at preferential (lower) rates of 0%, 15%, or 20%

Answer

Long-term capital gains (assets held more than one year) are taxed at preferential rates of 0%, 15%, or 20% depending on taxable income.

Question 5

What does FICA stand for in US payroll tax accounting?

Accepted Answer

Federal Insurance Contributions Act

Answer

FICA stands for the Federal Insurance Contributions Act and funds Social Security and Medicare through payroll taxes split between employer and employee.

Accounting Online Program Practice Test

Accounting Online Program Practice Test

Accounting Online Program US Tax Accounting 1