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

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Question 51

Multiple Choice

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

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Question 52

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

A) True
B) False

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Question 53

Multiple Choice

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Which of the following statements regarding tax credits is true?

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.

Which of the following is not a filing status?

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

Taxpayers who file as qualifying widows/widowers are treated the same for tax purposes in all respects as taxpayers who are married filing jointly for tax purposes.

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

In June of year 1, Edgar's wife Cathy died and Edgar did not remarry during the year. What is his filing status for year 1 (assuming they did not have any dependents) ?

The character of income is a factor in determining the rate at which the income is taxed.

Catherine de Bourgh has one child, Anne, who is 18 years old at the end of the year. Anne lived at home for seven months during the year before leaving home to attend State University for the rest of the year. During the year, Anne earned $6,000 while working part time. Catherine provided 80 percent of Anne's support and Anne provided the rest. Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?

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

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

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: 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 are the couple's taxes due or tax refund (use the tax rate schedules not tax tables)?

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

Inventory is a capital asset.

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?

In June of year 1, Jake's wife Darla died. The couple did not have any children and Jake did not remarry in year 1 or year 2. Which is the most favorable filing status for Jake in year 2?

In order to be a qualifying relative of another, an individual's gross income must be less than ________.

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.