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Exam 4: Individual Tax Overview

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Question 61

True/False

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Tax credits are generally more valuable than tax deductions because tax credits reduce a taxpayer's gross tax liability dollar for dollar while tax deductions do not.

A) True
B) False

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Question 62

Multiple Choice

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Which of the following statements regarding the difference between the requirements for a qualifying child and the requirements for a qualifying relative is false?

A) The relationship requirement is more broadly defined (more inclusive) for qualifying relatives than for qualifying children.
B) Qualifying children are subject to age restrictions while qualifying relatives are not.
C) The support test for qualifying relatives focuses on the support the potential dependent self provides while the support test for qualifying children focuses on the support the taxpayer provides.
D) Qualifying relatives are subject to a gross income restriction while qualifying children are not.The support test for a qualifying child considers the amount of support the child provided for herself.The support test for a qualifying relative considers the amount of support the taxpayer provided for the prospective dependent.

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

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Question 63

Multiple Choice

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

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

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.

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?

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

Jamison's gross tax liability is $7,000.Jamison had $2,000 of available credits and he had $4,000 of taxes withheld by his employer.What is Jamison's taxes due (or taxes refunded) with his tax return?

A child who is her parents' qualifying child can claim a personal exemption for herself as long as her parents choose not to claim her as a dependent.

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?

For filing status purposes,the taxpayer's marital status is determined at what point during the year?

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.