CTC Federal Taxation Principles & Compliance

Question 1

What is the primary purpose of the Internal Revenue Code (IRC)?

Accepted Answer

To govern federal tax rules and regulations

Answer

To determine state tax rates.

Answer

To create job benefits for employers.

Answer

To support international trade agreements.

Question 2

Which form is used by individuals to file their annual income tax return?

Accepted Answer

Form 1040

Answer

Form W-2

Answer

Form 940

Answer

Form 1099

Question 3

What is the standard deduction?

Accepted Answer

A fixed dollar amount reducing taxable income

Answer

A deduction only available to businesses.

Answer

A deduction for state taxes only.

Answer

A refund issued by the IRS.

Question 4

Which tax form is used to report self-employment income?

Accepted Answer

Schedule C

Answer

Schedule A

Answer

Schedule B

Answer

Schedule D

Question 5

What is the penalty for not filing taxes on time?

Accepted Answer

Monetary penalty and interest on unpaid taxes

Answer

Community service.

Answer

Increased refund.

Answer

IRS audit guarantee.

Question 6

What is a tax credit?

Accepted Answer

A reduction in tax liability dollar for dollar

Answer

A loan from the IRS.

Answer

A deduction from gross income.

Answer

An additional tax paid.

Question 7

What is the purpose of the W-4 form?

Accepted Answer

To inform employers of tax withholding preferences

Answer

To file taxes with the IRS.

Answer

To apply for employment.

Answer

To report freelance income.

Question 8

Which IRS form reports interest income?

Accepted Answer

Form 1099-INT

Answer

Form 1098

Answer

Form 1040EZ

Answer

Form W-2G

Question 9

Who is responsible for paying self-employment tax?

Accepted Answer

Self-employed individuals

Answer

Only corporate shareholders.

Answer

Employees at large firms.

Answer

Non-resident aliens only.