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

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Question 21

Multiple Choice

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Which of the following relationships does NOT pass the relationship test for a qualifying child?

A) Stepsister's daughter
B) Half-brother
C) Cousin
D) Stepsister

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

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Question 22

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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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Question 23

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The income tax base for an individual tax return is:

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

Which of the following statements regarding tax credits is true?

Sullivan's wife Susan died four years ago. Sullivan has not remarried and he maintains a home for his dependent child Sammy. In 2014, Sullivan received $70,000 of salary from his employer and he paid $6,000 of itemized deductions. What is Sullivan's taxable income for 2014?

John Maylor is a self-employed plumber of John's John Service, his sole proprietorship. In the current year, John's John Service had revenue of $120,000 and $40,000 of business expenses. John also received $2,000 of interest income from corporate bonds. What is John's adjusted gross income assuming he had no other income or expenses (ignore any deduction for self-employment tax)?

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

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?

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

In year 1, Harold Weston's wife died. Since her death, he has maintained a household for their son Frank (age 3) , his qualifying child. Which is the most advantageous filing status available to Harold in year 4?

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.

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.

All of the following represents a type or character of income except:

Bonnie and Ernie file a joint return. Bonnie works and receives income during the year but Ernie does not. If the couple files a joint tax return, Ernie is responsible for paying any taxes due if Bonnie is unable to pay the taxes.

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.

An individual may be considered as a qualifying child of her parents and a qualifying child of her grandparents in the same year.

Jeremy and Annie are married. During the year Jeremy dies. When Annie files her tax return for the year in which her husband dies, she may file under the married filing jointly filing status even if she does not remarry.

To determine filing status, a taxpayer's marital status is determined on January 1 of the tax year in question.

Taxpayers may prepay their tax liability through withholdings and through estimated tax payments.