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Thread: Americans get an ‘F’ on income tax quiz

  1. #1

    Americans get an ‘F’ on income tax quiz

    http://www.marketwatch.com/story/ame...uiz-2015-02-24

    Apr 18, 2017

    Take this 10-question tax quiz and see how you do



    American adults appear to be confused — very confused — by the U.S. tax code.

    More than half of taxpayers don’t understand many basic personal finance questions about federal income tax returns as they relate to retirement, college savings and health care, a result not much changed from previous years, based on a recent survey of more than 2,300 adults given by personal finance site NerdWallet. That is a fail by academic standards.

    Indeed, more people are also delaying filing their taxes this year. Earlier this month, tax software service TurboTax issued a profit warning and said that the tax season is “forming more slowly than usual.” It cited Internal Revenue Service data which said total tax return volume through Jan. 27 was down 33% from a year ago.

    One theory: They simply don’t know what they’re doing. Some 57% of taxpayers don’t know what a W-4 is, the Nerdwallet survey found, and 59% don’t know that April 18, 2017 is the deadline for making a tax-deductible contribution to a traditional individual retirement account for the 2016 tax year. What’s more, 58% of taxpayers incorrectly believe that getting a tax extension means they can delay the due date of their income tax payment.

    The majority knew about tax withholdings from their paycheck, but they understandably struggled with more complex questions about Roth IRA and individual retirement accounts, says Alex McAdams, product manager at NerdWallet. People shouldn’t be too quick to celebrate an income tax refund, which averaged $2,860 in 2016. “You are essentially giving the government a free loan as opposed to having control of that money all year long and putting it in a savings account or maybe even investing it,” he says.

    “Some of the questions were easy, but others I wouldn’t expect people to know,” says Ian Gillespie, founder of IGG Software and creator of iBank, an online personal finance manager. “American tax law is extremely complicated and a lot of these feel like they could be trick questions.”

    Among the list of questions listed (below), he said No. 2 (“Can married couples file taxes separately?”) easy, but wouldn’t expect a lot of people to know the answer to No. 7 (“If you lend money to a friend and she doesn’t pay you back, can you write it off?”).

    Here are 10 questions (with the answers on the following page):

    1. Is the money you put in a Roth IRA pretax or post-tax?
    A) Pretax.
    B) Post-tax.
    C) None of the above.
    42% got the right answer.

    2. Can married couples file taxes separately?
    A) Yes.
    B) No.
    90% got the right answer.

    3. When can you adjust your withholdings and exemptions on your W-4 with your employer?
    A) Any time of the year.
    B) Any time before Jan. 1 of each year.
    C) After you receive your W-2 from the previous year’s earnings.
    D) By the end-of-year tax deadline.
    67% got the right answer.

    4. A 529 plan is:
    A) A way to make tax-deductible contributions for college savings.
    B) A college investment plan that earns tax-free income as it grows.
    C) A plan that allows qualified users to defer their tax payments.
    42% got the right answer.

    5. What is a flexible spending account?
    A) A tax-exempt savings account exclusively for health benefits.
    B) A tax-exempt savings account that allows you to make home improvements.
    C) A tax-exempt account for medical purposes or child care.
    47% got the right answer.

    6. If you foster a pet from a nonprofit charitable organization, can you claim a tax deduction?
    A) Yes, but you can only write off certain items like food, shelter and medical expenses.
    B) Yes, you can write off all expenses.
    C) No, you can’t write this off.
    45% got the right answer.

    7. If you lend money to a friend and she doesn’t pay you back, can you write it off?
    A) Yes, you can write off the entire loan.
    B) Under certain circumstances, it can be deducted under capital loss rules.
    C) No, you can’t write it off.
    42% got the right answer.

    8. Which of the following is tax-deductible?
    A) Gambling losses.
    B) Sex-reassignment surgery.
    C) Babysitting (if you’re a parent doing charity work).
    D) All of the above.
    E) None of the above.
    39% got the right answer.

    9. Which of these is the worst mistake?
    A) If you owe, not filing your taxes by the deadline (April 18 this year).
    B) Filing but not paying your taxes by the deadline.
    C) You are owed a refund, but you file late.
    D) You are owed a refund, but you don’t file at all.
    36% got the right answer.

    10. If your exemptions and withholdings are correct, your tax refund should be:
    A) $2,500, or more.
    B) $1,500 to $2,500.
    C) $500 to $1,500.
    D) As close to $0 as possible.
    56% got the right answer.




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  3. #2
    I fail
    Disclaimer: any post made after midnight and before 8AM is made before the coffee dip stick has come up to optomim level - expect some level of silliness,

    The problems we face today exist because the people who work for a living are out numbered by those who vote for a living !!!!!!!

  4. #3
    In true Suzanimal fashion, I got a C -. I've always been a solid C- student.
    Quote Originally Posted by Ron Paul View Post
    The intellectual battle for liberty can appear to be a lonely one at times. However, the numbers are not as important as the principles that we hold. Leonard Read always taught that "it's not a numbers game, but an ideological game." That's why it's important to continue to provide a principled philosophy as to what the role of government ought to be, despite the numbers that stare us in the face.
    Quote Originally Posted by Origanalist View Post
    This intellectually stimulating conversation is the reason I keep coming here.

  5. #4
    Q.10 is wrong.

    Americans on average got a refund of $2,800 in 2015, but if exemptions and withholdings are correct, it should be zero. (56% got the right answer.)
    Some time ago I got fined by IRS for claiming more dependents on W-4 in order to avoid waiting for a refund. IRS prefers to hold on to your money for a while.

  6. #5
    Quote Originally Posted by Suzanimal View Post
    In true Suzanimal fashion, I got a C -. I've always been a solid C- student.
    I only know about half of them for sure . Charity dog crap is way out there .
    Do something Danke

  7. #6
    I know so little about it I haven't filed in many years.

  8. #7
    If you know them, it means the slave system is working perfectly.

  9. #8
    Quote Originally Posted by oyarde View Post
    I only know about half of them for sure . Charity dog crap is way out there .
    I knew you could deduct gambling losses (why?) but didn't think charity dogs could be. Also missed "flexible spending" accounts applying to child care. Thought they only applied to medical expenses.



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  11. #9
    Quote Originally Posted by Zippyjuan View Post
    I knew you could deduct gambling losses (why?) but didn't think charity dogs could be. Also missed "flexible spending" accounts applying to child care. Thought they only applied to medical expenses.
    Yep , same . I knew you could write off gambling losses .I only knew flex accounts were for med and I would not have guessed you can write off charity dogs, LOL . That charity dog thing seems laughable to me . My guess is they let you write off gambling losses so there is a mechanism in place to track everything for the casinos themselves and tax peoples winnings .
    Do something Danke

  12. #10
    Quote Originally Posted by Zippyjuan View Post
    I knew you could deduct gambling losses (why?) but didn't think charity dogs could be. Also missed "flexible spending" accounts applying to child care. Thought they only applied to medical expenses.
    You can deduct gambling losses against gambling wins not against ordinary income. Otherwise you would get taxed on an inflated income.

  13. #11
    For paying taxes I would say we get an "A" for effort. We take great pride in paying our taxes, to support the Greatest Nation Ever
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Crenshaw 2024!!!!

    My pronouns are he/him/his

  14. #12
    taxes don't make america great



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