How To File Your Taxes Certification Exam Example Questions.

1. What are the pros and cons of each method for preparing your taxes? a. Old-fashioned paper filing: b. Tax preparation websites: c. Hiring a tax professional: - correct answer a.Pro: You are in control and doesn't cost anything Con: It's possible that you could make mistakes b. Pro: Easy to use and convenient Con: Costs money and, like paper filing, it's possible that you could miss something or make mistakes c. Pro: Peace of mind knowing that a professional is handling what could be a complicated task Con: Most likely will cost the most money out of all the options All of the following people should receive W-2 forms EXCEPT... a. Edgar, who works 10 hours/week cleaning pools for $15/hour at WeCleanPools b. Melinda, who works 40 hours/week at a local ice cream shop during the summer c. Marcus, who is on salary as a sales representative at a shoe store, working full-time d. Serena, who is a freelance wedding photographer - correct answer d. Serena, who is a freelance wedding photographer What are two important items detailed in your W-2 form? (select two correct answers) a. Wages, tips, and other compensation b. Number of dependents you will claim c. Federal and state taxes withheld from your earnings d. Additional money you want withheld from your paycheck - correct answer a. Wages, tips, and other compensation c. Federal and state taxes withheld from your earnings When should you receive your W-2 form from your employer? a. Attached to every pay stub b. By January 1 c. By January 31 d. By April 15 - correct answer c. By January 31 What is the difference between a flat tax rate and progressive tax rate? - correct answer A flat tax rate means you're taxed at the same rate no matter how much you earn. A progressive tax rate means you're taxed more once you reach higher levels of income. If you're looking to pay as little as possible to file your taxes BUT you're worried about making mistakes, which tax preparation method would be your best option? a. Do-it-yourself paper filing b. Online tax preparation service c. Hiring a tax professional d. Requesting the IRS complete your taxes for you - correct answer b. Online tax preparation service All of the following are found on a W-2 form EXCEPT... a. Wages, tips, and other compensation b. Federal and state taxes withheld c. Sales taxes paid d. FICA taxes withheld - correct answer c. Sales taxes paid Which of the following is the term for a tax rate that increases at higher levels of income? a. FICA tax b. Sales tax c. Flat tax d. Progressive tax - correct answer