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Exam 9: Individuals As the Taxpayer

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Question 31

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Mr.Lee is a citizen and resident of Hong Kong,while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income,Hong Kong uses a territorial approach,while the U.S.follows the global system.In terms of effect,explain what this means to Mr.Lee and Mr.Anderson.

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Mr.Lee is taxed only on the income he re...

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Question 32

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Maude's parents live in another state and she cannot claim them as her dependents.If Maude pays their medical expenses,can she derive any tax benefit from doing so? Explain.

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If Maude could otherwise claim...

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Question 33

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In terms of timing as to any one year,the Tax Tables are available before the Tax Rate Schedules.

Currently,the top income tax rate in effect is not the highest it has ever been.

Because they appear on page 1 of Form 1040,itemized deductions are also referred to as "page 1 deductions."

Benjamin,age 16,is claimed as a dependent by his parents.During 2015,he earned $850 at a car wash.Benjamin's standard deduction is $1,400 ($1,050 + $350).

A qualifying child cannot include:

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

In 2015,Hal furnishes more than half of the support of his ex-wife and her father,both of whom live with him.The divorce occurred in 2014.Hal may claim the father-in-law and the ex-wife as dependents.

For dependents who have income,special filing requirements apply.

As opposed to itemizing deductions from AGI,the majority of individual taxpayers choose the standard deduction.

Which,if any,of the following is a correct statement relating to the kiddie tax?

During 2015,Lisa (age 66) furnished more than 50% of the support of the following persons: ∙Lisa's current husband who has no income and is not claimed by someone else as a dependent. ∙Lisa's stepson (age 19) who lives with her and earns $6,000 as a dance instructor.He dropped out of school a year ago. ∙Lisa's ex-husband who does not live with her.The divorce occurred two years ago. ∙Lisa's former brother-in-law who does not live with her. Presuming all other dependency tests are met,on a separate return how many personal and dependency exemptions may Lisa claim?

The additional standard deduction for age and blindness is greater for married taxpayers than for single taxpayers.

Howard,age 82,dies on January 2,2015.On Howard's final income tax return,the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.

In 2015,Ed is 66 and single.If he has itemized deductions of $7,400,he should not claim the standard deduction alternative.

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

An individual taxpayer uses a fiscal year of March 1 to February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

Homer (age 68)and his wife Jean (age 70)file a joint return.They furnish all of the support of Luther (Homer's 90-year old father),who lives with them.In 2015,they received $6,000 of interest income on city of Chicago bonds and interest income on corporate bonds of $48,000.Compute Homer and Jean's taxable income for 2015.

Katelyn is divorced and maintains a household in which she and her daughter,Crissa,live.Crissa,age 22,earns $11,000 during 2015 as a model.Katelyn does not qualify for head of household filing status.