AFC Tax Planning and Financial Literacy

Question 1

Which filing status generally results in the lowest federal income tax rate for a single parent with a dependent child?

Accepted Answer

Head of Household

Answer

Single

Answer

Married Filing Separately

Answer

Qualifying Surviving Spouse

Question 2

What is the primary purpose of a W-4 form?

Accepted Answer

To tell an employer how much federal income tax to withhold

Answer

To report annual income to the IRS

Answer

To claim a tax refund

Answer

To report self-employment income

Question 3

A tax credit differs from a tax deduction in that a credit:

Accepted Answer

Reduces the actual tax owed dollar-for-dollar

Answer

Reduces taxable income dollar-for-dollar

Answer

Only applies to business expenses

Answer

Must be itemized on Schedule A

Question 4

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

Accepted Answer

Earned Income Tax Credit (EITC)

Answer

Child and Dependent Care Credit

Answer

Lifetime Learning Credit

Answer

Mortgage Interest Credit

Question 5

Capital gains on assets held longer than one year are taxed at:

Accepted Answer

Long-term capital gains rates (0%, 15%, or 20%)

Answer

Ordinary income tax rates

Answer

A flat 28% rate

Answer

The self-employment tax rate

Question 6

What is the standard deduction for a married couple filing jointly for tax year 2024?

Accepted Answer

$29,200

Answer

$13,850

Answer

$20,800

Answer

$27,700