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

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Question 51

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Anna is a qualifying child of her parents.However,she was recently married.Anna and her husband filed a joint return.If they had filed separately,Anna would have owed no taxes,though her husband would have owed just $5.Because Anna herself owed no taxes,her parents can still claim her as a dependent.

A) True
B) False

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Question 52

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Which of the following statements regarding personal and dependency exemptions is true?

A) To qualify as a dependent of another, an individual must be a resident of the United States.
B) To qualify as a dependent of another, an individual may not file a joint return with the individual's spouse under any circumstance.
C) To qualify as a dependent of another, an individual must have a family relationship with the other person.
D) To qualify as a dependent of another, an individual must be either a qualifying child or a qualifying relative of the other person.

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

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Question 53

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Michael,Diane,Karen,and Kenny provide support for their mother Janet who is 75 years old.Janet lives by herself in an apartment in Los Angeles.Janet's gross income for the year is $3,000.Janet provides 10% of her own support,Michael provides 40% of Janet's support,Diane provides 8% of Janet's support,Karen provides 10% of Janet's support,and Kenny provides the remaining 32% of Janet's support.Under a multiple support agreement,who may claim a dependency exemption for Janet as a qualifying relative?

Anna is a 21-year-old full-time college student (she plans on returning home at the end of the school year) .Her total support for the year was $34,000 (including $8,000 of tuition) .Anna covered $12,000 of her support costs out of her own pocket (from savings,she did not work) and she received an $8,000 scholarship that covered all of her tuition costs.Which of the following statements regarding who is allowed to claim Anna as an exemption is true?

Sally received $50,000 of compensation from her employer and she received $400 of interest from a corporate bond.What is the amount of Sally's gross income from these items?

Taxpayers need not include an income item in gross income unless there is a specific tax provision requiring the taxpayer to include the income item in gross income.

Which of the following shows the correct relationship among standard deduction amounts for the respective filing statuses?

In year 1,the Bennetts' 25-year-old daughter,Jane,is a full-time student at an out-of-state university but she plans to return home after the school year ends.In previous years,Jane has never worked and her parents have always been able to claim her as a dependent.In year 1,a kind neighbor offers to pay for all of Jane's educational and living expenses.Which of the following statements is most accurate regarding whether Jane's parents would be allowed to claim an exemption for Jane in year 1 assuming the neighbor pays for all of Jane's support?

Which of the following is NOT a from AGI deduction?

If no one qualifies as the dependent of an unmarried taxpayer,the unmarried taxpayer may still be able to qualify for the head of household filing status.

Taxpayers are generally allowed to claim deductions for expenditures unless a specific tax provision indicates the expenditure is not deductible.

In certain circumstances,a taxpayer who provides less than half the support of another may still be able to claim a dependency exemption for that person as a qualifying relative.

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

Joanna received $60,000 compensation from her employer,the value of her stock in ABC company appreciated by $5,000 during the year (but she did not sell any of the stock) ,she received $30,000 of life insurance proceeds from the death of her husband.What is the amount of Joanna's gross income from these items?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially.In 2017,Ed and Jane realized the following items of income and expense: They also qualified for a $1,000 tax credit.Their employers withheld $1,800 in taxes from their paychecks (in the aggregate).Finally,the 2017 standard deduction amount for MFJ taxpayers is $12,700 and the 2017 exemption amount is $4,050. What is the couple's gross income?

A personal automobile is a capital asset.

Taxpayers are allowed to deduct more for each personal exemption they claim than for each dependency exemption they claim.

Tom Suzuki's tax liability for the year is $2,450.He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits.What are Tom's taxes due or tax refund for the year?

Charles,who is single,pays all of the costs of maintaining a home for himself and Damarcus.Charles and Damarcus have no family relationship but Damarcus lives with Charles for the entire year.Damarcus qualifies as a qualifying relative for Charles (Charles claims a dependency exemption for Damarcus on his tax return).Charles qualifies for head of household filing status.

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially.In 2017,Ed and Jane realized the following items of income and expense: They also qualified for a $1,000 tax credit.Their employers withheld $1,800 in taxes from their paychecks (in the aggregate).Finally,the 2017 standard deduction amount for MFJ taxpayers is $12,700 and the 2017 exemption amount is $4,050. What is the couple's taxable income?