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

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Question 41

Multiple Choice

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Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond.What is the amount of Sally's gross income from these items?

A) $0.
B) $500.
C) $60,000.
D) $60,500.

E) B) and D)
F) All of the above

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Question 42

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The test for a qualifying child includes a gross income restriction while the test for qualifying relative does not.

A) True
B) False

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Question 43

Multiple Choice

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Which of the following statements regarding dependents is true?

For AGI deductions are commonly referred to as deductions "above the line."

To determine filing status,a taxpayer's marital status is determined on January 1 of each tax year in question.

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) ?

All of the following are tests for determining qualifying relative status except ________.

Jane is unmarried and has no children,but provides more than half of her mother's financial support.Jane's mother lives in an apartment across town and has a part-time job earning $5,000 a year.Which is the most advantageous filing status available to Jane?

In February of 2018,Lorna and Kirk were married.During 2019,Lorna received $40,000 of compensation from her employer and Kirk received $30,000 of compensation from his employer.The couple together reported $2,000 of itemized deductions.Lorna and Kirk filed separately in 2019.What is Lorna's taxable income and what is her tax liability? (Use the applicable tax rate schedule and round your answer to the nearest whole number.)

Jane and Ed Rochester are married with a 2-year-old child,who lives with them and whom they support financially.In 2019,Ed and Jane realized the following items of income and expense: They also qualified for a $2,000 child tax credit.Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate).Finally,the 2019 standard deduction amount for MFJ taxpayers is $24,400. What is the couple's gross income?

A taxpayer may not qualify for the head of household filing status if she does not have any dependent children.

An individual may be considered as a qualifying child of her parents and a qualifying child of her grandparents in the same year.

William and Charlotte Collins divorced in November of Year 1.William moved out and Charlotte remained in their house with their 10-month-old daughter,Autumn.Diana,Charlotte's mother,lived in the home and acted as Autumn's nanny for all of Year 1.William provided 70 percent of Autumn's support,Diana provided 20 percent,and Charlotte provided 10 percent.When the time came to file their tax returns for Year 1,William,Charlotte,and Diana each wanted to claim Autumn as a dependent.Their respective AGIs for Year 1 were $50,000,$35,000,and $52,000.Who has priority to claim Autumn as a dependent?

An individual may meet the relationship test to be a taxpayer's qualifying relative even if the individual has no family relationship with the taxpayer.

The standard deduction amount varies by filing status.

Sam and Tracy have been married for 25 years.They have filed a joint return every year of their marriage.They have two sons,Christopher and Zachary.Christopher is 19 years old and Zachary is 14 years old.Christopher lived in his parents' home from January through August and he lived in his own apartment from September through December.During the year,Christopher attended college for one month before dropping out.Christopher's living expenses totaled $12,000 for the year.Of that,Christopher paid $5,000 from income he received while working a part-time job.Sam and Tracy provided the remaining $7,000 of Christopher's support.Zachary lived at home the entire year and did not earn any income.Whom are Sam and Tracy allowed to claim as dependents?

Greg is single.During 2019,he received $60,000 of salary from his employer.That was his only source of income.He reported $3,000 of for AGI deductions and $9,000 of itemized deductions.The 2019 standard deduction amount for a single taxpayer is $12,200.What is Greg's taxable income?

Sullivan's wife,Susan,died four years ago.Sullivan has not remarried and he maintains a home for his dependent child,Sammy.In 2019,Sullivan received $70,000 of salary from his employer and $3,000 of qualified business income from a business investment,and he paid $10,000 of itemized deductions.What is Sullivan's taxable income for 2019?

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.Whom can the Allreds claim as dependents?

Jane and Ed Rochester are married with a 2-year-old child,who lives with them and whom they support financially.In 2019,Ed and Jane realized the following items of income and expense: They also qualified for a $2,000 child tax credit.Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate).Finally,the 2019 standard deduction amount for MFJ taxpayers is $24,400. What is the couple's taxable income?