Question

All earnings from mutual funds are subject to state income tax. True False

If you have several types of debt, credit cards, mortgage, car loan, payday loan, appliance loan, student loans, in what order should you try to pay these off (in addition to minimum monthly payment)? a)Smallest to largest b)Largest to smallest c)Lowest interest rate to highest interest rate d)Highest interest rate to lowest interest rate e)Whichever debt is the oldest f)Whichever debt is the most recent

A health savings account a)Is the same as a flexible spending account. b)Encourages excessive spending on medical care c)Provides a way to save for health costs if you have a high-deductible insurance plan. d)A medicare plan e)Features earnings that are taxable.

Answer 1

1. False:

(Generally, mutual fund earnings are taxable on state level. However, some distributions from investments in certain U.S. federal obligations such as U.S. Treasury securities may be exempt from state tax. They may still be taxable at a federal level though)

2. d)Highest interest rate to lowest interest rate

The principal has to be repaid in any case. Paying off the loan with higher interest rate will result in interest savings for the investor.

3. Provides a way to save for health costs if you have a high-deductible insurance plan

A health savings account is a pre-tax savings instrument for people with high deductible health insurance plans and who want to keep aside money for medical expenses. A health saving account reduces out-of-pocket costs and lowers tax liability