Question 1

If a taxpayer does not provide more than half the support of a child,that child cannot qualify as the taxpayer's qualifying child.

Accepted Answer

A) True 
 B)False

Question 2

When determining whether a child meets the qualifying child support test for the parents,scholarships earned by the child do not count as self-support provided by the child.

Accepted Answer

A) True 
 B)False

Question 3

The Inouyes filed jointly in 2018.Their AGI is $78,000.They reported $2,000 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 2018 standard deduction amount for MFJ taxpayers is $24,000.What is the total amount of from AGI deductions they are allowed to claim on their 2018 tax return?

Accepted Answer

$24,400,determined as follows:From AGI d...

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following types of income are not considered ordinary income?

Accepted Answer

A)  Compensation income.
B)  Net long-term capital gains (in excess of short-term capital losses) .
C)  Qualified dividend income.
D)  Both compensation income and qualified dividend income.
E)  Both net long-term capital gains (in excess of short-term capital losses) and qualified dividend income.F) A) and B)
G) A) and C)

Question 6

Qualified dividends are taxed at the same rate as ordinary income.

Accepted Answer

A) True 
 B)False

Question 7

Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond.What is the amount of Sally's gross income from these items?

Accepted Answer

A)  $0.
B)  $500.
C)  $60,000.
D)  $60,500.E) B) and D)
F) C) and D)

Question 8

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially.In 2018,Ed and Jane realized the following items of income and expense:
 $\begin{array}{l}
\begin{array} { l } 
\text { Item }\
\text { Ed's Salary } \
\text { Jarne's Salary } \
\text { Muncipal bend interest income } \
\text { Qualified business income } \
\text { Alimorny paid (for AGI deduction) } \
\text { Real property tax (fron AGI deduction) } \
\text { Charitable contributions (from AGI) }
\end{array}
\begin{array} { r } 
\text { Amount } \
35,000 \
70,000 \
400 \
1,000 \
( 7,000 ) \
( 10,000 ) \
( 15,000 )
\end{array}
\end{array}$ 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 2018 standard deduction amount for MFJ taxpayers is $24,000.
What is the couple's taxable income?

Accepted Answer

$73,800,see calculations below.   \(\begin{array}{l}
\begin{array}{lll}
&\text { Description }\
(1)& \text { Ed's salary}\
(2)& \text { Jane's salary}\
(3) & \text {Qualified business income}\
(4)& \text { Municipal bond interest}\
&\text { income}\
(5)& \text { Gross income}\
(6) & \text {Alimony paid}\
(7) & \text {Adjusted gross income}\
(8)& \text { Standard deduction}\
(9)& \text { Itemized deductions}\
\
(10)& \text {Greater of (8) or (9)}\
\
(11) & \text {Deduction for qualified }\
&\text { business income}\
(12) & \text {Total deductions from AGI}\
(13) & \text {Taxable income}\
\end{array}
\begin{array}{lll}
\text { Amount } \
\$ \quad 35,000 \
70,000 \
1,000 \
0 \
\
106,000 \
(7,000) \
99,000 \
(24,000) \
(25,000) \
\
(25,000) \
\
(200) \
\
(25,200) \
\$ \quad 73,800
\end{array}
\begin{array}{lll}

\text { Explanation }\
\
\
\
 \text {Municipal bond interest is }\
 \text {excluded from gross income }\
Sum(1)-(3)\
 \text {For AGI deduction}\
 (5)+(6)\
 \text {Married filing joint filing}\
 \text {Real property tax and charitable}\
 \text {contributions}\
 \text {Itemized deductions exceed the}\
 \text {standard deduction}\
\$ 10,000 QBI x20 \%\
\
 (10)+(11) \
 (7)+(12) \

\end{array}
\end{array}\)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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.

Accepted Answer

A) True 
 B)False  True

Question 11

An individual receiving $5,000 of tax exempt income during the year could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

Accepted Answer

A) True 
 B)False

Question 12

Even though taxpayers can no longer deduct dependency exemptions,it is still important to determine who qualifies as a taxpayer's dependent.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The relationship requirement is more broadly defined (includes more relationships)for a qualifying relative than it is for a qualifying child.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding tax deductions is false?

Accepted Answer

A)  Taxpayers are not entitled to any deductions unless specific provisions in the tax code allow the deductions.
B)  Deductions can be labeled as deductions above the line or deductions below the line.
C)  From AGI deductions tend to be associated with business activities while for AGI deductions tend to be associated with personal activities.
D)  The standard deduction is a from AGI deduction.E) None of the above
F) C) and D)

Question 16

The standard deduction amount for married filing separately taxpayers (MFS)is less than the standard deduction amount for married filing jointly taxpayers.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true?

Accepted Answer

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) All of the above
F) None of the above

Question 18

Sam and Tracy have been married for 25 years.They have filed a joint return every year of their marriage.They have two sons Christopher and Zachary.Christopher is 19 years old and Zachary is 14 years old.Christopher lived in his parents' home from January through August and he lived in his own apartment from September through December.During the year,Christopher attended college for one month before dropping out.Christopher's living expenses totaled $12,000 for the year.Of that,Christopher paid $5,000 from income he received while working a part time job.Sam and Tracy provided the remaining $7,000 of Christopher's support.Zachary lived at home the entire year and did not earn any income.Who are Sam and Tracy allowed to claim as dependents?

Accepted Answer

They can claim Zachary as a dependent qualifying child but they are not allowed to claim Christopher as a dependent.He does not qualify as either a qualifying child or qualifying relative.See analysis below. Qualifying child test $\begin{array} { l l l } 
\text { Test } &  { \text { Curistopher } } &  { \text { Zachary } } \
\text { Relationship } & \text { Yes, son } & \text { Yes, son } \
\text { Age } & \text { No, not under 19 years of age and } & \text { Yes, under age } 19 \text { at end of } \
&  \text { not a full-time student.}&\text {   year.}\
\text { Residence } & \text { Yes, lived in parent's home for } & \text { Yes, lived at home entire year. } \
& \text { more thar half the year. } & \
\text { Support } & \text { Yes. Did not provide rnore thar } & \text { Yes. Did not provide More } \
& \text { half of own support. } & \text { than helf of own support. }
\end{array}$ Qualifying relative test: $\text { Test }$   $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\text { Christopher }$

$\text { Relationship}$   $ \quad $ $\text { Yes, son}$ 
$\text { Age}$  $ \quad $ $ \quad $$ \quad $$ \quad $$ \quad $$\text { Not applicable to qualifying relative.}$ 
$\text { Residence }$ $ \quad $ $ \quad $ $\text { Not applicable to qualifying relative.}$ 
$\text { Support }$  $ \quad $$ \quad $$ \quad $ $\text { Yes. Sam and Tacy provided more than half of Christopher's}$ 
$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\text {  support $ (\$ 7,000 / \$ 12,000) $.}$ 
$\text { Gross income No, Christopher's gross income is not less than $ \$ 4,150 $.}$

Question 19

Greg is single.During 2018,he received $60,000 of salary from his employer.That was his only source of income.He reported $3,000 of for AGI deductions and $9,000 of itemized deductions.The 2018 standard deduction amount for a single taxpayer is $12,000.What is Greg's taxable income?

Accepted Answer

$45,000,co...

Question 20

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?

Accepted Answer

A)  Single.
B)  Qualifying widower.
C)  Head household.
D)  Married,filing separately.E) All of the above
F) B) and C)

Exam 4: Individual Income Tax Overview dependents and Filing Status

If a taxpayer does not provide more than half the support of a child,that child cannot qualify as the taxpayer's qualifying child.

Correct Answer
verified

When determining whether a child meets the qualifying child support test for the parents,scholarships earned by the child do not count as self-support provided by the child.

Correct Answer
verified

Correct Answer
verified
$24,400,determined as follows:From AGI d...
View Answer

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

Correct Answer
verified

Which of the following types of income are not considered ordinary income?

Correct Answer
verified

Qualified dividends are taxed at the same rate as ordinary income.

Correct Answer
verified

Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond.What is the amount of Sally's gross income from these items?

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified
True

An individual receiving $5,000 of tax exempt income during the year could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

Correct Answer
verified

Even though taxpayers can no longer deduct dependency exemptions,it is still important to determine who qualifies as a taxpayer's dependent.

Correct Answer
verified

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

Correct Answer
verified

The relationship requirement is more broadly defined (includes more relationships)for a qualifying relative than it is for a qualifying child.

Correct Answer
verified

Which of the following statements regarding tax deductions is false?

Correct Answer
verified

The standard deduction amount for married filing separately taxpayers (MFS)is less than the standard deduction amount for married filing jointly taxpayers.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Greg is single.During 2018,he received $60,000 of salary from his employer.That was his only source of income.He reported $3,000 of for AGI deductions and $9,000 of itemized deductions.The 2018 standard deduction amount for a single taxpayer is $12,000.What is Greg's taxable income?

Correct Answer
verified
$45,000,co...
View Answer

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?

Correct Answer
verified

Exam 4: Individual Income Tax Overview dependents and Filing Status

If a taxpayer does not provide more than half the support of a child,that child cannot qualify as the taxpayer's qualifying child.

Correct AnswerverifiedShow Answer

When determining whether a child meets the qualifying child support test for the parents,scholarships earned by the child do not count as self-support provided by the child.

Correct AnswerverifiedShow Answer

Correct Answerverified$24,400,determined as follows:From AGI d...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following types of income are not considered ordinary income?

Correct AnswerverifiedShow Answer

Qualified dividends are taxed at the same rate as ordinary income.

Correct AnswerverifiedShow Answer

Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond.What is the amount of Sally's gross income from these items?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedTrue

An individual receiving $5,000 of tax exempt income during the year could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

Correct AnswerverifiedShow Answer

Even though taxpayers can no longer deduct dependency exemptions,it is still important to determine who qualifies as a taxpayer's dependent.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The relationship requirement is more broadly defined (includes more relationships)for a qualifying relative than it is for a qualifying child.

Correct AnswerverifiedShow Answer

Which of the following statements regarding tax deductions is false?

Correct AnswerverifiedShow Answer

The standard deduction amount for married filing separately taxpayers (MFS)is less than the standard deduction amount for married filing jointly taxpayers.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Greg is single.During 2018,he received $60,000 of salary from his employer.That was his only source of income.He reported $3,000 of for AGI deductions and $9,000 of itemized deductions.The 2018 standard deduction amount for a single taxpayer is $12,000.What is Greg's taxable income?

Correct Answerverified$45,000,co...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$24,400,determined as follows:From AGI d...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$45,000,co...
View Answer

Correct Answer
verified