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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 parent.

A) True
B) False

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Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, Ed and Jane realized the following items of income and expense: Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, 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 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the couple's tax due or tax refund? (Use the tax rate schedules, not tax tables.) 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 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the couple's tax due or tax refund? (Use the tax rate schedules, not tax tables.)

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$661 tax d...

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A personal automobile is a capital asset.

A) True
B) False

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In April of Year 1, Martin left his wife, Marianne. The couple has two children under the age of 15. While the couple was apart, they were not legally divorced. Marianne remained in the home and paid all the costs of maintaining the home for the remainder of the year. Assuming the couple does not file jointly, which of the following statements regarding filing status is true?


A) No matter the post-separation residence(s) of the children, both spouses must file as married filing separately.
B) No matter the post-separation residence(s) of the children, Martin must file as married filing separately but Marianne may qualify to file as head of household.
C) No matter the post-separation residence(s) of the children, Marianne must file as married filing separately but Martin may qualify to file as head of household.
D) Depending on the post-separation residence(s) of the children, both spouses may qualify to file as head of household.

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

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

A) True
B) False

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Which of the following statements regarding exclusions and/or deferrals is false?


A) Exclusions are favorable because taxpayers never pay tax on income that is excluded.
B) Interest income from municipal bonds is excluded from gross income.
C) Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year.
D) An income item need not be realized in order to qualify as an exclusion item.

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

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The relationship requirement for qualifying relative includes cousins.

A) True
B) False

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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?


A) Single.
B) Qualifying widower.
C) Head of household.
D) Married filing separately.

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

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For purposes ofdetermining filing status, which of the following is not a requirement for a married taxpayer to be treated as unmarried at the end of the year?


A) The taxpayer claims a child as a dependent.
B) The taxpayer pays more than half the costs of maintaining his or her home for the entire year and the home is the principal residence for a dependent qualifying child for more than half the year.
C) The taxpayer files a tax return separate from the other spouse.
D) The spouse does not live in the taxpayer's home at all during the year.

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

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


A) Taxpayers subtract for AGI deductions from gross income to determine AGI.
B) A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's standard deduction amount.
C) The deduction for qualified business income is a for AGI deduction.
D) A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's itemized deductions.

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

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An individual may never be considered as both a qualifying relative and a qualifying child of the same taxpayer.

A) True
B) False

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In addition to the individual income tax, individuals may be required to pay taxes imposed on tax bases other than individual taxable income.

A) True
B) False

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The Inouyes filed jointly in 2020. Their AGI is $78,000. They reported $3,000 of qualified business income and $22,000 of itemized deductions. They have two children, one of whom qualifies as their dependent as a qualifying child. The 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the total amount of from AGI deductions they are allowed to claim on their 2020 tax return?

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$25,400, determined as follows:
From AGI...

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Which of the following statements is true?


A) Income character determines the tax year in which the income is taxed.
B) Income character depends on the taxpayer's filing status.
C) Qualified dividend income is taxed at a lower rate than an equal amount of ordinary income.
D) A taxpayer selling a capital asset at a gain recognizes ordinary income.

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

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Filing status determines all of the following except ___________


A) the applicable standard deduction amount.
B) the appropriate tax rate schedule or tax table.
C) the top-stated marginal rate in the tax rate schedule.
D) the AGI threshold for reductions in certain tax benefits.

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

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

A) True
B) False

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It is generally more advantageous from a tax perspective for a married couple to file separately than it is for them to file jointly.

A) True
B) False

Correct Answer

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Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, Ed and Jane realized the following items of income and expense: Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, Ed and Jane realized the following items of income and expense: The Rochester's qualified for a $2,000 child tax credit and $2,900 in recovery rebate credit ($2,400 for themselves and $500 for their child). Assume the Rochesters did not receive the recovery rebate in advance. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the couple's tax due or tax refund? (Use the tax rate schedules, not tax tables.) The Rochester's qualified for a $2,000 child tax credit and $2,900 in recovery rebate credit ($2,400 for themselves and $500 for their child). Assume the Rochesters did not receive the recovery rebate in advance. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the couple's tax due or tax refund? (Use the tax rate schedules, not tax tables.)

Correct Answer

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$2,239 tax...

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The relationship test for qualifying relative requires the potential qualifying relative to have a family relationship with the taxpayer.

A) True
B) False

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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?


A) Even if Anna's parents provided the remaining $14,000 of support for Anna ($34,000 minus $12,000 minus $8,000) , they would not be able to claim her as a dependent.
B) Even if Anna's grandparents provided the remaining $14,000 of support for Anna ($34,000 minus $12,000 minus $8,000) , they would not be able to claim her as a dependent.
C) Because she provided more than half her own support, Anna would not qualify as her parents' dependent.
D) None of these statements are true.

E) None of the above
F) B) and C)

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