Personal Income Tax Essentials Quiz

Form 1040 is the primary form for filing personal income taxes in the United States.

Passive income refers to earnings from sources other than active employment, such as investments or rental income.

A tax deduction reduces the taxpayer's taxable income, potentially lowering the amount of taxes owed.

The Child Tax Credit is an example of a tax credit that can directly reduce the amount of taxes owed.

Tax-exempt income is income that is not subject to taxation.

Entertainment expenses may not be fully deductible for self-employed individuals for tax purposes.

Vacation expenses are generally not deductible for personal income tax purposes.

Claiming dependents on a tax return can qualify the taxpayer for various tax credits.

Failure to file a tax return by the deadline can result in penalties, interest, and other consequences.

Child support payments are not subject to federal income tax.

Early withdrawal from a traditional IRA may incur a 10% penalty.

Unlike traditional IRAs, contributions to Roth IRAs are not tax-deductible.

Single is a valid tax-filing status in the United States.

The maximum contribution limit for a traditional IRA in 2021 is $6,000.

The maximum amount of capital losses deductible against ordinary income in a tax year is $3,000.

Penalties for not paying enough estimated taxes throughout the year may include interest, fines, and other consequences.

To be eligible for the Child Tax Credit, a taxpayer must have a dependent child under the age of 18.