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Exam 4: Individual Income Tax Overview, Exemptions, and Filing Status

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Question 61

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Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2016, Ed and Jane realized the following items of income and expense: $\begin{array} { | l | r | } \hline \text { Item } & \text { Amount } \\\hline \text { Ed's Salary } & \$ 35,000 \\\hline \text { Jane's Salary } & 34,400 \\\hline \text { Municipal bond interest income } & 400 \\\hline \text { Alimony paid (for AGl deduction) } & ( 7,000 ) \\\hline \text { Real propery tax (from AGl deduction) } & ( 10,000 ) \\\hline\end{array}$ They also qualified for a $1,000 tax credit. Their employers withheld $1,800 in taxes from their paychecks (in the aggregate). Finally, the 2016 standard deduction amount is $12,600 and the 2016 exemption amount is $4,050. What are the couple's taxes due or tax refund? (use the tax rate schedules not tax tables)

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$1,920.00 ...

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Question 62

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Which of the following statements about a qualifying person for head of household filing status is true?

A) One individual (who is a qualifying person) may qualify more than one taxpayer for head of household filing status.
B) The taxpayer is required to live with a qualifying person for the entire year in order to qualify for head of household filing status.
C) A taxpayer's parent cannot be a qualifying person for purposes of determining head of household filing status.
D) A qualifying person must have a family relationship with the taxpayer in order for the qualifying person to qualify the taxpayer for head of household filing status.

E) B) and D)
F) A) and B)

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Question 63

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A taxpayer may qualify for the head of household filing status if she has no dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father.

Which of the following statements regarding for AGI tax deductions is true?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2016, Ed and Jane realized the following items of income and expense: $\begin{array} { | l | c | l | } \hline \text { Description } & \text { Amount } & \text { Explanation } \\\hline \begin{array} { l } \text { (1) Gross } \\\text { income }\end{array} & \$ 122,000 & \$ 120,000 \text { from business + } \\&&\$ 2,000 \text { interest income } \\\hline \begin{array} { l } \text { (2) Business } \\\text { expenses }\end{array} & ( 40,000 ) & \text { For AGl deduction } \\\hline \begin{array} { l } \text { Adjusted Gross } \\\text { income }\end{array} & \$ 82,000 & ( 1 ) + ( 2 ) \\\hline\end{array}$ They also qualified for a $1,000 tax credit. Their employers withheld $1,800 in taxes from their paychecks (in the aggregate). Finally, the 2016 standard deduction amount is $12,600 and the 2016 exemption amount is $4,050. What is the couple's adjusted gross income?

For purposes of the qualifying child residence test, a child's temporary absence from the taxpayer's home for attending school full-time is counted as though the child lived in the taxpayer's home during the absence.

The Inouyes filed jointly in 2016. Their AGI is $78,000. They reported $16,000 of itemized deductions and they have two children, one of whom qualifies as their dependent. The 2016 standard deduction amount is $12,600 and each exemption is $4,050. What is the total amount of from AGI deductions they are allowed to claim on their 2016 tax return?

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year, the taxpayer will qualify for head of household filing status.

Which of the following series of inequalities is generally most accurate?

Which of the following statements regarding exemptions is correct?

It is generally more advantageous from a tax perspective for a married couple to file separately than it is for them to file jointly.

Sheri and Jake Woodhouse have one daughter, Emma, who is 16 years old. They also have taken in Emma's friend, Harriet, who has lived with them since February of the current year and is also 16 years of age. The Woodhouses have not legally adopted Harriet but Emma often refers to Harriet as "her sister." The Woodhouses provide all of the support for both girls, and both girls live at the Woodhouse residence. Which of the following statements is true regarding the dependency exemptions (and the reason for the exemptions) Sheri and Jake may claim for the current year for these girls?

By the end of year 1, Harold and Jamie Allred had been married for 30 years and have filed a joint return every year of their marriage. Their three sons, Jacob, Larry, and Andi, are ages 13, 16, and 23 respectively and all live at home and are fully supported by their parents. Andi is employed full time, earning $17,000 in year 1. How many exemptions are Harold and Jamie entitled to claim?

Which of the following statements regarding exclusions and/or deferrals is false?

An individual with gross income of $5,000 could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

If an unmarried taxpayer is able to claim a dependency exemption for another individual, the taxpayer is automatically eligible for the head of household filing status.

In order to be a qualifying relative of another, an individual's gross income must be less than _______.

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2016, Ed and Jane realized the following items of income and expense: $\begin{array} { | l | r | } \hline \text { Item } & \text { Amount } \\\hline \text { Ed's Salary } & \$ 35,000 \\\hline \text { Jane's Salary } & 34,400 \\\hline \text { Municipal bond interest income } & 400 \\\hline \text { Alimony paid (for AGl deduction) } & ( 7,000 ) \\\hline \text { Real propery tax (from AGl deduction) } & ( 10,000 ) \\\hline\end{array}$ They also qualified for a $1,000 tax credit. Their employers withheld $1,800 in taxes from their paychecks (in the aggregate). Finally, the 2016 standard deduction amount is $12,600 and the 2016 exemption amount is $4,050. What is the couple's gross income?

In June of year 1, Edgar's wife Cathy died and Edgar did not remarry during the year. What is his filing status for year 1? (assuming they did not have any dependents)

Sullivan's wife Susan died four years ago. Sullivan has not remarried and he maintains a home for his dependent child Sammy. In 2016, Sullivan received $70,000 of salary from his employer and he paid $6,000 of itemized deductions. What is Sullivan's taxable income for 2016?