CPF FINAL EXAM QUESTIONS AND ANSWERS ALL CORRECT
What can be taxed? - Answer- Earned Income (income tax)- wages, salaries, tips (federal and state)
Other Income - winnings
Investment Income - dividends, interest
Capital Gains - profits from sale of an investment
Purchases (sales tax)
Typ...
CPF FINAL EXAM QUESTIONS
AND ANSWERS ALL CORRECT
What can be taxed? - Answer- Earned Income (income tax)- wages, salaries, tips
(federal and state)
Other Income - winnings
Investment Income - dividends, interest
Capital Gains - profits from sale of an investment
Purchases (sales tax)
Types of taxes - Answer- Real Estate Property Taxes - land and buildings
Estate Tax- tax on sale of possessions after death - can be up to 50%!
Gift Tax - gifts over $15,000
Sin Tax - Cigarettes and Alcohol
Hotel Tax - (luxury tax, occupancy tax, city tax)
Excise Taxes - Answer- taxes charged on the purchase of specific goods and services
(tax is built into the price)
IRS (Internal Revenue Service) - Answer- US government agency that is responsible for
the collection and enforcement of taxes; can audit you and keep a copy of your taxes for
7 years
Payroll taxes - Answer- Social Security, Medicare, and Unemployment
Tax avoidance - Answer- the use of legitimate methods to reduce one's taxes
Tax evasion - Answer- the use of illegal actions to reduce one's taxes
W4 form - Answer- Employee's Withholding Allowance Certificate - Determines the
percentage of gross pay
which will be withheld for taxes
Tax brackets - Answer- Show how income tax ranges based on income
Principal - Answer- The amount of money borrowed
Interest - Answer- The price paid for the use of borrowed money
Maturity date - Answer- The date on which an investment becomes due for payment
, Grace period - Answer- A time period during which no finance charges will be added to
your account
Garnishment - Answer- A court ruling that requires that money be deducted from a
person's paycheck involuntarily in order to pay a debt
Universal default - Answer- A clause included in many credit card company agreements
that allows a credit card company to increase your interest rate if you make just one late
payment
Fixed rate - Answer- has a set interest rate that remains constant
Variable rate - Answer- interest rate which can change over time
Introductory rate - Answer- A temporary interest rate, advertised as a low APR to entice
customers to apply for a credit card; after the introductory period, the interest rate will
increase to the regular APR
Warranties - Answer- Promises to repair or replace a faulty product
Vehicle expenses - Answer- Gas, maintenance, title and registration, etc.
Rent vs. Buy - Housing - Answer- Rent: no down payment needed, less maintenance
fees
Buy: more taxes, higher net worth, own an appreciating asset
Types of housing - Answer- Duplex (2 units), townhouse (4-8 units), apartment (many
units), condo (individually owned units with shared common areas), mobile homes
(DEPRECIATE in value)
How to manage risk - Answer- Avoid, Reduce, Accept, Share
Premiums - Answer- the periodic payment made on an insurance policy
Who uses Medicare? - Answer- -65 or over
-People with disabilities
-People with end-stage renal failure
Who uses Medicaid? - Answer- -People with low income
-Elderly
-Disabled
Why are healthcare costs increasing? - Answer- Government policy; lifestyle changes
that increase diabetes, heart disease, and other health issues; new technology
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