2
FICEP Final CUNA Review questions with verified detailed answers || || || || || || || ||
Select the statement that correctly describes a progressive tax. - ✔✔A progressive tax requires
|| || || || || || || || || || || || || ||
people to pay more as they earn more. || || || || || || ||
Pick the statement that best describes a regressive tax. - ✔✔A regressive tax charges the same tax
|| || || || || || || || || || || || || || || || ||
rate regardless of the taxpayer's income.
|| || || || ||
Why are government fees and surcharges sometimes described as a form of tax? - ✔✔Because
|| || || || || || || || || || || || || || ||
they generate income for the government.
|| || || || ||
Which taxing authorities are worthy of the member's attention? - ✔✔The member must attend to
|| || || || || || || || || || || || || || ||
all tax authorities at all levels of government to maintain their financial well-being.
|| || || || || || || || || || || ||
How do taxes impact your personal spending? - ✔✔Taxes can make personal spending go up or
|| || || || || || || || || || || || || || || ||
down.
Which is larger: the penalty for failing to pay federal income taxes on time, or the penalty for
|| || || || || || || || || || || || || || || || || ||
failing to file a tax return when taxes are owed? - ✔✔The penalty for failing to file a tax return is
|| || || || || || || || || || || || || || || || || || || || ||
significantly higher. ||
What is the right attitude to take toward taxes to protect your financial well-being? - ✔✔Taxes are
|| || || || || || || || || || || || || || || ||
an essential financial responsibility.
|| || || ||
When is the IRS most likely to impose the maximum penalty on taxpayers? - ✔✔When they are
|| || || || || || || || || || || || || || || || ||
forced to track down the taxpayer. || || || || ||
What is a good rule to follow when dealing with a tax auditor or another issue involving the IRS?
|| || || || || || || || || || || || || || || || || || ||
- ✔✔Never assume the IRS is always correct.
|| || || || || || ||
,2
What is the financial counselor's role in aiding members with complex tax issues? - ✔✔The
|| || || || || || || || || || || || || || ||
counselor provides basic information and refers members to tax programs or tax experts.
|| || || || || || || || || || || ||
What happens when taxpayers who file a late return for any or all of the 4 most recent tax years
|| || || || || || || || || || || || || || || || || || || ||
are owed a refund? - ✔✔No penalty is charged and the taxpayer gets the full refund amount.
|| || || || || || || || || || || || || || || ||
What tax services are provided by the Volunteer Income Tax Assistance (VITA) program? -
|| || || || || || || || || || || || || ||
✔✔Free tax return assistance to low- or moderate-income taxpayers.
|| || || || || || || ||
What benefit is offered when VITA services are combined with credit union programs that
|| || || || || || || || || || || || || ||
encourage taxpayers to open accounts for direct deposit of tax refunds? - ✔✔Direct deposit
|| || || || || || || || || || || || || ||
reduces the time required to get a refund, which counters the appeal of refund anticipation loans.
|| || || || || || || || || || || || || || ||
What is the name of the organization that offers free tax assistance to taxpayers age 60 or older,
|| || || || || || || || || || || || || || || || || ||
those with disabilities or special needs, or who qualify for earned income or homestead tax
|| || || || || || || || || || || || || || ||
credits? - ✔✔Tax Counseling for the Elderly (TCE)
|| || || || || || ||
What percent of tax payers are eligible to use the "Free File Online" service offered as a
|| || || || || || || || || || || || || || || || ||
partnership between the IRS and tax software companies? - ✔✔70% are eligible
|| || || || || || || || || || ||
When members use tax refunds to pay down debts, which debts should be paid first? -
|| || || || || || || || || || || || || || || ||
✔✔Always pay the debts with high interest rates or that could prompt garnishments.
|| || || || || || || || || || || ||
How have education, information, and direct deposit programs impacted taxpayers' use of refund
|| || || || || || || || || || || || ||
anticipation loans? - ✔✔The use of refund anticipation loans is decreasing. || || || || || || || || || ||
What rule of thumb should be used when defining taxable income? - ✔✔If you benefit
|| || || || || || || || || || || || || || ||
financially, you are likely to be taxed for it. || || || || || || || ||
Which type of qualified IRA withdrawal is exempt from income tax? - ✔✔Roth IRA withdrawals
|| || || || || || || || || || || || || ||
are exempt.
|| ||
, 2
How do different tax authorities treat items excluded from federal taxable income? -
|| || || || || || || || || || || || ||
✔✔Exclusions vary from state to state. || || || || ||
What is the first step for effectively managing income taxes? - ✔✔Determining your filing status.
|| || || || || || || || || || || || || ||
What should be the goal of managing a taxpayer's income tax withholding? - ✔✔To maintain
|| || || || || || || || || || || || || || ||
cash flow while avoiding a tax bill at filing time.
|| || || || || || || || ||
What happens to year-end balances "left over" in Section 125 plans or health savings accounts
|| || || || || || || || || || || || || || ||
(HSAs)? - ✔✔Section 125 balances are forfeited, while HSA balances are rolled over
|| || || || || || || || || || || ||
How much can a member in the 25% tax bracket save in federal income taxes by depositing pre-
|| || || || || || || || || || || || || || || || ||
tax income into tax-deferred retirement accounts, such as traditional IRAs? - ✔✔One-fourth of
|| || || || || || || || || || || || ||
the deposit.
||
Which statement accurately describes options for reducing income taxes? - ✔✔Tax exemptions,
|| || || || || || || || || || || ||
deductions, and credits all help reduce income taxes. || || || || || || ||
Which group of taxpayers usually qualifies for the Earned Income Tax Credit (EITC)? - ✔✔Low-
|| || || || || || || || || || || || || ||
income families with earned income qualify for the credit.
|| || || || || || || ||
These six expenses are typically accepted by the IRS as itemized deductions: - ✔✔Traditional
|| || || || || || || || || || || || || ||
IRA contributions, alimony payments, real estate taxes paid, state and local income taxes,
|| || || || || || || || || || || || ||
mortgage interest, and casualty and theft losses. || || || || || ||
What is the first step financial counselors can take to determine whether a member is properly
|| || || || || || || || || || || || || || || ||
managing their taxes? - ✔✔Review the member's payroll stub. || || || || || || || ||
What is the meaning of the insurance practice "pooling of risks"? - ✔✔Combining risks among
|| || || || || || || || || || || || || || ||
insurers as well as groups of individuals. || || || || || ||
FICEP Final CUNA Review questions with verified detailed answers || || || || || || || ||
Select the statement that correctly describes a progressive tax. - ✔✔A progressive tax requires
|| || || || || || || || || || || || || ||
people to pay more as they earn more. || || || || || || ||
Pick the statement that best describes a regressive tax. - ✔✔A regressive tax charges the same tax
|| || || || || || || || || || || || || || || || ||
rate regardless of the taxpayer's income.
|| || || || ||
Why are government fees and surcharges sometimes described as a form of tax? - ✔✔Because
|| || || || || || || || || || || || || || ||
they generate income for the government.
|| || || || ||
Which taxing authorities are worthy of the member's attention? - ✔✔The member must attend to
|| || || || || || || || || || || || || || ||
all tax authorities at all levels of government to maintain their financial well-being.
|| || || || || || || || || || || ||
How do taxes impact your personal spending? - ✔✔Taxes can make personal spending go up or
|| || || || || || || || || || || || || || || ||
down.
Which is larger: the penalty for failing to pay federal income taxes on time, or the penalty for
|| || || || || || || || || || || || || || || || || ||
failing to file a tax return when taxes are owed? - ✔✔The penalty for failing to file a tax return is
|| || || || || || || || || || || || || || || || || || || || ||
significantly higher. ||
What is the right attitude to take toward taxes to protect your financial well-being? - ✔✔Taxes are
|| || || || || || || || || || || || || || || ||
an essential financial responsibility.
|| || || ||
When is the IRS most likely to impose the maximum penalty on taxpayers? - ✔✔When they are
|| || || || || || || || || || || || || || || || ||
forced to track down the taxpayer. || || || || ||
What is a good rule to follow when dealing with a tax auditor or another issue involving the IRS?
|| || || || || || || || || || || || || || || || || || ||
- ✔✔Never assume the IRS is always correct.
|| || || || || || ||
,2
What is the financial counselor's role in aiding members with complex tax issues? - ✔✔The
|| || || || || || || || || || || || || || ||
counselor provides basic information and refers members to tax programs or tax experts.
|| || || || || || || || || || || ||
What happens when taxpayers who file a late return for any or all of the 4 most recent tax years
|| || || || || || || || || || || || || || || || || || || ||
are owed a refund? - ✔✔No penalty is charged and the taxpayer gets the full refund amount.
|| || || || || || || || || || || || || || || ||
What tax services are provided by the Volunteer Income Tax Assistance (VITA) program? -
|| || || || || || || || || || || || || ||
✔✔Free tax return assistance to low- or moderate-income taxpayers.
|| || || || || || || ||
What benefit is offered when VITA services are combined with credit union programs that
|| || || || || || || || || || || || || ||
encourage taxpayers to open accounts for direct deposit of tax refunds? - ✔✔Direct deposit
|| || || || || || || || || || || || || ||
reduces the time required to get a refund, which counters the appeal of refund anticipation loans.
|| || || || || || || || || || || || || || ||
What is the name of the organization that offers free tax assistance to taxpayers age 60 or older,
|| || || || || || || || || || || || || || || || || ||
those with disabilities or special needs, or who qualify for earned income or homestead tax
|| || || || || || || || || || || || || || ||
credits? - ✔✔Tax Counseling for the Elderly (TCE)
|| || || || || || ||
What percent of tax payers are eligible to use the "Free File Online" service offered as a
|| || || || || || || || || || || || || || || || ||
partnership between the IRS and tax software companies? - ✔✔70% are eligible
|| || || || || || || || || || ||
When members use tax refunds to pay down debts, which debts should be paid first? -
|| || || || || || || || || || || || || || || ||
✔✔Always pay the debts with high interest rates or that could prompt garnishments.
|| || || || || || || || || || || ||
How have education, information, and direct deposit programs impacted taxpayers' use of refund
|| || || || || || || || || || || || ||
anticipation loans? - ✔✔The use of refund anticipation loans is decreasing. || || || || || || || || || ||
What rule of thumb should be used when defining taxable income? - ✔✔If you benefit
|| || || || || || || || || || || || || || ||
financially, you are likely to be taxed for it. || || || || || || || ||
Which type of qualified IRA withdrawal is exempt from income tax? - ✔✔Roth IRA withdrawals
|| || || || || || || || || || || || || ||
are exempt.
|| ||
, 2
How do different tax authorities treat items excluded from federal taxable income? -
|| || || || || || || || || || || || ||
✔✔Exclusions vary from state to state. || || || || ||
What is the first step for effectively managing income taxes? - ✔✔Determining your filing status.
|| || || || || || || || || || || || || ||
What should be the goal of managing a taxpayer's income tax withholding? - ✔✔To maintain
|| || || || || || || || || || || || || || ||
cash flow while avoiding a tax bill at filing time.
|| || || || || || || || ||
What happens to year-end balances "left over" in Section 125 plans or health savings accounts
|| || || || || || || || || || || || || || ||
(HSAs)? - ✔✔Section 125 balances are forfeited, while HSA balances are rolled over
|| || || || || || || || || || || ||
How much can a member in the 25% tax bracket save in federal income taxes by depositing pre-
|| || || || || || || || || || || || || || || || ||
tax income into tax-deferred retirement accounts, such as traditional IRAs? - ✔✔One-fourth of
|| || || || || || || || || || || || ||
the deposit.
||
Which statement accurately describes options for reducing income taxes? - ✔✔Tax exemptions,
|| || || || || || || || || || || ||
deductions, and credits all help reduce income taxes. || || || || || || ||
Which group of taxpayers usually qualifies for the Earned Income Tax Credit (EITC)? - ✔✔Low-
|| || || || || || || || || || || || || ||
income families with earned income qualify for the credit.
|| || || || || || || ||
These six expenses are typically accepted by the IRS as itemized deductions: - ✔✔Traditional
|| || || || || || || || || || || || || ||
IRA contributions, alimony payments, real estate taxes paid, state and local income taxes,
|| || || || || || || || || || || || ||
mortgage interest, and casualty and theft losses. || || || || || ||
What is the first step financial counselors can take to determine whether a member is properly
|| || || || || || || || || || || || || || || ||
managing their taxes? - ✔✔Review the member's payroll stub. || || || || || || || ||
What is the meaning of the insurance practice "pooling of risks"? - ✔✔Combining risks among
|| || || || || || || || || || || || || || ||
insurers as well as groups of individuals. || || || || || ||
