Introduction to Taxation, the Income Tax Formula,
and Form 1040EZ
A tax rate that decreases as the tax base increases is an example of what kind of tax rate
structure?
a. Progressive.
b. Proportional.
c. Regressive.
d. Recessive.
A tax rate that decreases as the tax base decreases is an example of what kind of tax rate
structure?
a. Progressive.
b. Proportional.
c. Regressive.
d. Recessive.
Jake earned $15,000 and paid $1,500 of income tax; Jill earned $40,000 and paid $3,500 of
income tax. The tax rate structure they are subject to is:
a. Progressive.
b. Proportional.
c. Regressive.
d. Recessive.
Margaret earned $15,000 and paid $1,500 of income tax; Mike earned $50,000 and paid $5,000
of income tax. The tax rate structure they are subject to is:
a. Progressive.
b. Proportional.
c. Regressive.
d. Recessive.
Which of the following is an example of a regressive tax?
a. Federal income tax.
b. State and local taxes levied on property.
c. Sales tax.
d. Social Security tax.
Which of the following is an example of a progressive tax?
a. Federal income tax.
b. State and local taxes levied on property.
c. Sales tax.
d. Social Security tax.
Jennifer and Paul, who file a joint return, have taxable income of $94,625 and the following tax
liability:
$18,650 × 10% =
($75,900 − $18,650) × 15% =
($94,625 − $75,900) × 25% =
Total tax liability
$ 1,865.00
8,587.50
4,681.25
$15,133.75
Their marginal tax rate is.. ?
Jennifer and Paul, who file a joint return, have taxable income of $94,625 and the following tax
liability:
$18,650 × 10% =
($75,900 − $18,650) × 15% =
($94,625 − $75,900) × 25% =
Total tax liability
$ 1,865.00
8,587.50
4,681.25
$15,133.75
Their average tax rate is...?
Which of the following would disqualify a taxpayer from filing Form 1040EZ?
a. The taxpayer is married.
b. The taxpayer is age 66.
c. The taxpayer received unemployment compensation.
d. The taxpayer had adjusted gross income (line 4 of Form 1040EZ) of $101,000.
The most complex individual income tax return is a Form:
a. 1040.
b. 1040A.
c. 1040C.
d. 1040EZ.
Wage income is reported to a taxpayer on a Form:
a. W-2.
b. 1099-G.
c. 1099-W.
d. 1099-INT.
Interest income is reported to a taxpayer on a Form:
a. W-2.
b. W-2-INT.
c. 1099-G.
d. 1099-INT.
On a Form 1040EZ, the amount of the permitted deduction from income for taxpayers filing a
joint return is:
a. $1,500.
b. $10,400.
c. $20,800.
d. $31,200.
Elizabeth determined that her tax liability was $3,492. Her employer withheld $3,942 from her
paychecks during the year. Elizabeth’s tax return would show:
a. a refund of $450.
b. a refund of $3,492.
c. tax due of $450.
d. tax due of $3,942.
Sandra, a single taxpayer, has taxable income of $79,238. Using the tax tables, she has
determined that her tax liability is:
a. $11.284.
b. $14,059.
c. $15,545.
d. $15,625.