CBS Tax Planning & Preparation 3

Question 1

Which filing status generally results in the lowest federal income tax liability for an eligible taxpayer?

Accepted Answer

Married Filing Jointly

Answer

Married Filing Jointly typically provides the widest tax brackets and largest standard deduction, resulting in the lowest tax for most couples.

Question 2

What is tax-loss harvesting?

Accepted Answer

Selling investments at a loss to offset capital gains and reduce taxable income

Answer

Tax-loss harvesting sells depreciated securities to realize capital losses that offset gains and up to $3,000 of ordinary income annually.

Question 3

For 2024, what is the standard mileage rate for business driving that a self-employed taxpayer may deduct?

Accepted Answer

67 cents per mile

Answer

The IRS set the standard business mileage rate at 67 cents per mile for 2024.

Question 4

A taxpayer who cannot file by April 15 files Form 4868. What does this extension grant?

Accepted Answer

A 6-month extension to file the return, but taxes are still due April 15

Answer

Form 4868 grants a 6-month filing extension to October 15 but does not extend the deadline to pay taxes owed, which remain due April 15.

Question 5

Which provision allows a self-employed individual to deduct 100% of health insurance premiums paid for themselves and their family?

Accepted Answer

Self-Employed Health Insurance Deduction (above-the-line)

Answer

Self-employed individuals may deduct 100% of health insurance premiums as an above-the-line deduction on Form 1040, reducing AGI.

(CBS) Certified Budget Specialist Practice Test