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Self-Employed Tax Quiz

Answers & Explanations - EXPLANATIONS ARE COMING SOON

1. For the IRS, your new consulting business started when you:

A. Began researching potential market
B. Started asking friends for referrals
C. Registered your DBA name
D. Received your 1st payment 		  B.
 

2. You can reduce taxes on your home-based business by:

A. Keeping detailed records
B. Hiring your wife as a secretary
C. Omitting business from your tax returns
D. Creating an LLC 		  A.
 

3. Jim bought an old house for $50K, fixed it for $30K and sold for $100K. He is taxed on:

A. $100,000
B. $50,000
C. $20,000
D. $0 - only losers pay taxes 		  C.
 

4. What % of Jim's taxable profit will be lost to Uncle Sam's taxes?

A. 15%
B. 25%
C. 40%
D. Anywhere between 15% and 40% 		  D.
 

5. IRS depreciation rules allow you to write off the cost of a new computer:

A. The entire cost in the 1st year of use
B. Spread over 2 years
C. Spread over 3 years
D. Spread over 7 years 		  A.
 

6. On your business-only trip, all these are legitimate business deductions, except:

A. Cash tips left for the hotel maid
B. Speeding ticket on the way to a meeting
C. Shining your shoes before a meeting
D. Having a dinner and a drink by yourself 		  B.
 

7. To maximize your business automobile deduction, you need to maintain:

A. Detailed mileage log
B. Record of actual expenses such as gas
C. Either A. or B.
D. Both A. and B. 		  D.
 

8. The "home office" deduction includes all of the following, except:

A. Office furniture
B. Electricity, gas, and water
C. Depreciation
D. Rent if you do not own the place 		  A.
 

9. You paid a lawyer $2,000 to incorporate your future business. $2,000 is deductible:

A. Right away, as "professional fees"
B. When the place opens for business
C. When the business is closed or sold
D. Not deductible at all 		  B.
 

10. You realized that you missed a large deduction 2 years ago. You can recover it:

A. By adding it to this year's tax return
B. By requesting an audit of the old return
C. By filing an "amended" tax return
D. You cannot. It is too late to fix the error. 		  C.