The Ultimate Filing Income Taxes Quiz

By: Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

Preparing your tax return can be a complicated process, but it is one that can have a major impact on your bank account. Should you prepare your own or hire a professional? What should you do if you can't afford to pay the tax that you owe? This quiz will test your knowledge of the tax preparation and filing process.

Where does income tax rank among most Americans' expenses?

For most Americans, the only larger expense they have is housing. However, since the bulk of it is taken out of your paycheck before you ever receive the funds, most people don't realize how big a portion it is.


What do you need in order to be able to deduct an expense on your taxes?

Receipts are typically the easiest, but as long as you can prove that the expense was incurred you can deduct it. A detailed journal is enough or even documentation of people who can verify your expenses.


What is the best way to ensure that you don't miss any large tax deductions for which you may be eligible?

Whether a professional or you prepare your tax return, it is more likely that a legitimate deduction will be missed if you do not keep your records in an organized fashion.


For whom are tax preparation courses often free?

Such courses are given at local universities and community college continuing education departments. Even if they are not free, the tuition is usually fairly low, and may be made up by what you save on your taxes.


What is the name of the IRS' free tax return filing system?

If you prepare your taxes using a computer tax preparation program, you may also be able to use freefile to file your return.


What is the problem with getting information from the IRS toll-free information line?

Since the information you receive on the toll-free line may actually be inaccurate, you should always write down whom you spoke to and when. Then, if there's a problem you will not have to pay a penalty, though you will still have to pay the proper taxes.


When might it make sense for a married couple to file separate tax returns?

If you are married, you should always check how much it will cost both if you file separately and together. This way you will know which way is less expensive.


How might you be able to lower the amount of tax you owe on investment income?

Since children are often taxed at a lower rate, you can sometimes save on taxes by shifting some of the earnings to them.


When should you ideally file your U.S. tax return?

Prepare your tax return as soon as you have all of the relevant information so you can find out if you will be getting a refund. If so, file right away, and if not then earn interest on your money for as long as you can before filing.


When would it make sense to hire a professional tax preparer?

The more complicated your tax return is, the more likely it is that a professional might be able to save you money. Such circumstances include selling a house or itemizing deductions.


What should you do first when hiring a professional tax preparer?

Particularly if you work with a private tax preparer, as opposed to a large company, you may be able to negotiate a lower fee. Always ask what you can do to keep the fee as low as possible.


Why might you not want to get an "instant refund" from a tax preparation company?

The "instant refunds" from such companies are actually loans on the money you will later be getting back. The interest rates on these loans can equal to 50% annually or more!


Who is responsible if your tax preparer makes a mistake on your tax return?

Always read over your tax return and make sure you understand it, even if it was prepared by a professional.


What might happen if you don't respond in a timely fashion to inquiries from the IRS?

You should always respond immediately to contact from the IRS. If you can't pay an amount that you owe, you can usually work out a payment plan with the IRS.


Why is it not ideal to get a refund on your taxes each year?

It would be preferable to withhold the correct amount that you owe. If you see a refund check as a "savings plan," you can instead set up a direct deposit from your paycheck into an interest-bearing savings account.


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