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

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Question 61

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

A) relationship test
B) gross income test
C) support test
D) residence test

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

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Question 62

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In certain circumstances, a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

A) True
B) False

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Question 63

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The Dashwoods have calculated their taxable income to be $88,000 for 2018, which includes $2,000 of long-term capital gains. Using the appropriate tax rate schedule, calculate the Dashwood's income tax liability assuming they are married and file a joint return.

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.

Beginning in 2018, taxpayers are allowed to deduct dependency exemptions but they are not allowed to deduct personal exemptions.

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

Which of the following relationships does NOT pass the relationship test for a qualifying child?

In 2018, Brittany, who is single, cares for her father Raymond. Brittany pays the bills relating to Raymond's home. She also buys groceries and provides the rest of his support. Raymond has no gross income. Brittany received $45,000 of salary from her employer during the year. Brittany reports $3,000 of itemized deductions. What is Brittany's taxable income?

Jennifer and Stephan are married at year-end and they file separate tax returns. If Jennifer itemizes deductions on her return, Stephan must also itemize deductions on his return even if his itemized deductions don't exceed his standard deduction.

Tax credits reduce taxable income dollar for dollar.

Taxpayers may prepay their tax liability through withholdings and through estimated tax payments.

Miguel, a widower whose wife died in year 1, maintains a household for himself and his daughter who qualifies as his dependent. Miguel did not remarry. What is the most favorable filing status that Miguel qualifies for in year 3?

Madison's gross tax liability is $9,000. Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer. What is Madison's taxes due (or taxes refunded) with her 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.

Sullivan's wife Susan died four years ago. Sullivan has not remarried and he maintains a home for his dependent child Sammy. In 2018, Sullivan received $70,000 of salary from his employer, $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 2018?

Inventory is a capital asset.

Katy has one child, Dustin, who is 18 years old at the end of the year. Dustin lived at home for three months during the year before leaving home to work full-time in another city. During the year, Dustin earned $15,000. Katy provided more than half of Dustin's support for the year. Which of the following statements regarding whether Katy may claim Dustin as a dependent for the current year is accurate?

Certain types of income are taxed at a lower rate than ordinary income.

Jeremy and Annie are married. During the year Jeremy dies. When Annie files her tax return for the year in which her husband dies, she may file under the married filing jointly filing status even if she does not remarry.

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