Chapter 4

Which of the following choices is NOT a form of a tax prepayment?

A tax refund received in the current year for the prior year

A taxpayer's (1) (2) depends on his or her marital status at the end of the year and whether the taxpayer has dependents.

1. filing 2. status

Which of the choices below is NOT one of the tests that must be met to qualify as a qualifying relative?

Age

Which of the following statements is INCORRECT?

Both tax deductions and tax credits reduce taxable income.

Which two filing statuses have the same standard deduction amount?

Married filing separately and single

Ruida divorced on October 31 of the current year. He does NOT have any dependents. Which filing status should Ruida use for the current year?

Single

Kayla and Ben were married in November of the current year. What will be their filing status for the current year?

Married filing jointly (or separately) because they were married as of the end of the year

Select all that apply Which of the following criteria is necessary to qualify as a dependent of another taxpayer? (Check all that apply.)

Must be a citizen of the U.S. or a resident of the U.S., Canada, or Mexico Must be considered either a qualifying child or a qualifying relative Must NOT file a joint return unless there is no tax liability on the couple's return and no tax liability on either return if they filed separately

The U.S. tax laws are based on the all-inclusive concept where gross income includes all realized income from "whatever (1) (2)."

1. source 2. derived

In order to meet the (1) test, the taxpayer must pay more than half of the living expenses for the qualifying relative.

1. support

Select all that apply Under a multiple support agreement, taxpayers who DON'T pay over half of an individual's support may still be allowed to claim an exemption if which of the following rules apply? (Check all that apply.)

No one taxpayer paid over one-half of the individual's support. The taxpayer and a least one other person provided over one-half of the support of the individual. All other individuals contributing more than 10 percent support provides statements to taxpayer agreeing NOT to claim the individual as a dependent.

Select all that apply Which of the following individuals would meet the relationship test for being a qualifying relative of the taxpayer if s/he has only lived with the taxpayer for eight months of the year? (Check all that apply.)

Niece Grandchild Brother Father

Which one of the following individuals meet the requirements to be a a qualifying relative (not a qualifying child) for Owen?

Owen provides over half of his son, Vinnie's (age 20) support. Vinnie, a part-time college student, earned $3,800 and lived with Owen.

The three tests that must be met to qualify as a qualifying relative are: (1), (2), and (3). (Each blank may contain more than one word.)

1. support 2. relationship 3. gross income

Andrew is trying to determine if Annie will qualify as his dependent. She will NOT meet the criteria for a qualifying child, so Andrew is checking to see if she is a qualifying relative. Assuming there is NOT a multiple support agreement involved, which one of the following criteria for the support test must be met in order for Annie to be considered a qualifying relative for Andrew?

Andrew must provide over half of Annie's support for the year.

Click and drag on elements in order Put the following items in the order in which they are found in the individual income tax formula.

1. Gross income 2. Minus for AGI deductions 3. Equals adjusted gross income 4. Minus from AGI deductions 5. Equals taxable income

A tax (1) reduces taxable income and a tax (2) reduces the tax liability dollar for dollar.

1. deduction 2. credit

For tax years beginning in 2018, a taxpayer's from AGI deductions include the greater of the standard deduction or the taxpayer's (1) deductions and 20% of the taxpayer's qualified (2) income.

1. itemized 2. business

Head of household status is (less/more) (1) favorable than the married filing jointly status, but (less/more) (2) favorable than the single filing status.

1. less 2. more

A taxpayer's filing status depends on his or her (1) status at the end of the year and whether the taxpayer has any (2).

1. marital 2. dependents

When a divorced taxpayer pays over half the cost of maintaining a home where she and a dependent child lived for over half the year, she qualifies for which filing status?

Head of household

When is it possible for a qualifying person for determining head of household status to NOT live with the taxpayer?

If the person is the parent of the taxpayer

Which one of the following choices is the definition of realized income?

Income from a transaction with a second party where there is a measurable change in property rights between parties

Lan is from Vietnam and has lived in the U.S. for five months during the year. He is not yet considered a resident because he hasn't lived in the U.S. for long enough. He resides with his uncle who is a U.S. citizen. Lan is single and a full-time student. If eligible, Lan would otherwise be considered a qualifying child of his uncle. Which of the following is correct regarding Lan's status as a dependent?

Lan can NOT be claimed as a dependent by his uncle because he is not a citizen or resident of the U.S..

If an individual is a qualifying child for both of his parents who divorced during the year, which parent is entitled to claim the child as a dependent?

The parent with whom the child has lived with the longest during the year

When can a single taxpayer's mother or father be a qualifying person for determining head of household filing status?

When the taxpayer can claim a dependency exemption for the parent and the taxpayer pays over half the cost of maintaining the parent's home

Income that is taxed in the current year according to the tax rate schedule is referred to as ______ income.

ordinary

Assuming no multiple-support agreement, to meet the support test to be a qualifying relative of a taxpayer, the taxpayer must pay ______ of the individual's support.

over half

In addition to the individual income tax, individuals may be required to pay other taxes. Taxpayers with a large amount of tax preference items and itemized deductions may be subject to the (1) (2) tax.

1. alternative 2. minimum

Ashley and Roland were married and had two dependent children. Roland died last year. What filing status will Ashley use for the year Roland died and for the current year (assuming she does not remarry)?

Ashley will use married filing jointly in the prior year and qualifying widow in the current year.

Which of the following statements is correct regarding the choice of a taxpayer's filing status?

Filing status depends on marital status and whether the taxpayer has dependents.

Select all that apply How does a taxpayer determine which filing status to use? (Check all that apply.)

Filing status may depend on whether or not the taxpayer has dependents. Filing status depends on whether or not the taxpayer is married at the end of the year.

Corey is 25 and has a full-time job. His younger brother, James, is 20 and was enrolled as a full-time student at the community college during the summer and fall semesters. James lives with Corey. Which of the following statements is correct with respect to the age requirement for a qualifying child?

James meets the age test because he is younger than Corey, and he is under age 24 and a full-time student.

If an individual could be a qualifying child for either her parent or her grandparent, the (1) (parent/grandparent) is entitled to claim the child as a dependent.

1. parent

Examples of a tax (1) include income taxes withheld from a taxpayer's salary by an employer, estimated tax payments paid directly to the IRS, and amounts from a prior year overpayment that were applied to the current year's tax liability.

1. prepayment

Which of the following examples results in realized income?

A taxpayer sold stock for $1,000. She had originally paid $300 for the stock.

True or False: The gross income test requires that a qualifying relative's gross income for the year must be equal to or less than $5,000 for tax year 2019.

False

True or false: In order to meet the support test for a qualifying child, the taxpayer must provide more than half of the individual's support for the year.

False

Which filing status is allowed the lowest standard deduction amount?

Single

The four tests that must be met to qualify as a qualifying child are: (1), (2), (3), and (4).

1. relationship 2. age 3. residence 4. support

Why are for AGI deductions preferable to from AGI deductions?

For AGI deductions reduce AGI thus increasing deductibility of from AGI deductions based on AGI.

Which one of the following items is NOT a deduction FOR AGI?

Real estate taxes on personal residence

Select all that apply Which of the following statements are true regarding the qualifying widow or widower filing status? (Check all that apply.)

The surviving spouse must have dependents. The surviving spouse must NOT have remarried during the year. The status may be used for up to two years after the year the other spouse died.

An individual that is unrelated to the taxpayer may meet the relationship test for a qualifying relative if he or she:

lives with the taxpayer for the entire year.

In order to meet the requirements of the residence test for a qualifying child, the individual must live with the taxpayer for:

more than half the year

Kara is single with no dependents. She has itemized deductions of $5,000 in 2019. What is the total of her "FROM AGI" deductions for 2019?

$12,200

The gross income test requires that a qualifying relative's gross income for the year be less than $(1).

1. 4200

In order to meet the criteria for a qualifying (1) (choose either: child/relative), the dependent must NOT have provided more than half of his or her own support for the year. However, the support may have been provided by someone other than the taxpayer.

1. child

Which one of the following assets is classified as a capital asset?

A car used personally

Select all that apply Which of the following assets are classified as capital assets? (Check all that apply.)

A house owned and used by a taxpayer Stock held for investment

Which of the following would most likely NOT qualify as support for meeting the support test?

A riding lawnmower used by a child to mow the family yard

Which one of the following individuals CANNOT meet the residence test for being a qualifying child of another taxpayer?

Amy lived with her parents until the end of April. She moved into an apartment on May 1.

Select all that apply Which of the following requirements are necessary to qualify for head of household status? (Check all that apply.)

Be unmarried (or considered unmarried under the abandoned spouse provisions) at the end of the year Pay more than half the costs of keeping up a home for the year

Select all that apply Which of the following individuals would meet the relationship test for being a qualifying child of the taxpayer? (Check all that apply.)

Brother (younger than the taxpayer) Niece (younger than the taxpayer) Grandchild Child Stepson Nephew (younger than the taxpayer) Half-sister (younger than the taxpayer)

Select all that apply Which of the following choices are forms of tax prepayments? (Check all that apply.)

Estimated tax payments the taxpayer made directly to the IRS Income tax withheld from a taxpayer's salary or wages by an employer An overpayment of taxes in the prior year that was applied as an estimated payment for the current year

True or false: A taxpayer may deduct both his standard deduction and his itemized deductions from AGI in order to calculate taxable income.

False

True or false: An individual will qualify as a qualifying child if he satisfies at least one of the following tests: age, support, relationship, and residence.

False

True or false: Depreciable assets used in a trade or business are classified as capital assets.

False

Which of the choices below is NOT one of the tests that must be met to qualify as a qualifying child?

Gross income

Select all that apply Which of the following criteria will contribute toward qualifying a taxpayer for head of household status? (Check all that apply.)

Have lived with a qualifying person in the taxpayer's home for more than half the year Provide over half the cost of maintaining a household for a dependent parent not living with the taxpayer Be unmarried (or considered unmarried under the abandoned spouse provisions) at the end of the year Pay more than half the costs of keeping up a home for the year

Melina's daughter, Linda, is considered permanently and totally disabled. Linda is 30 years old and still lives with Melina. Which of the following statements is accurate regarding the age test for a qualifying child as it applies to Linda?

Linda is deemed to meet the age test because she is permanently and totally disabled.

Which filing status is allowed the highest standard deduction amount?

Married filing jointly

Which filing status is used if one spouse dies during the year and the surviving spouse does not remarry before the end of the year?

Married filing jointly (or separately)

Which of the following criteria is NOT necessary to qualify as a dependent of another taxpayer?

Must be unmarried for at least a portion of the year

Which of the following items does NOT constitute support when determining who provided the support for a child of the taxpayer who is a full-time student?

Scholarships

Select all that apply Which of the following taxes may be imposed in addition to the individual income tax and are calculated on tax bases other than the regular taxable income? (Check all that apply.)

Self-employment tax Alternative minimum tax

Match the type or character of income to its definition.

Tax-exempt: Income realized during the year that is excluded from gross income and never taxed. Tax-deferred: Income realized during the year that is not included in gross income until a later year Ordinary: Income included in gross income in the current year and taxed at the ordinary rates per the tax rate schedules Capital: Gains (or losses) on investment or personal use assets that may be taxed at favorable rates

Which of the following individuals meet the requirements of a qualifying person for determining head of household filing status?

The taxpayer's mother who is a dependent of the taxpayer, but lives in her own home which is maintained by the taxpayer

In a situation where the parents are divorced and the child resides with both parents for the same amount of time during the year, the parent with the ______ should claim the child as his or her dependent.

highest AGI

A taxpayer may file as a single taxpayer when:

she is unmarried at the end of the tax year

All sources of income are taxable unless specifically excluded through a tax provision. However, (1) are NOT permitted unless a specific tax provision allows them.

1. deductions

Sharon Jones is single. During 2019, she had gross income of $159,800, deductions for AGI of $5,500, itemized deductions of $14,000 and tax credits of $2,000. Sharon had $22,000 withheld by their employer for federal income tax. She has a tax (1) (due/refund) of $(2).

1. due 2. 3847

Expenses such as alimony paid for divorces finalized before 1/1/2019, contributions to qualified retirement accounts, and business expenses for self-employed persons are deductions (1) AGI.

1. for

Deductions (1) (for/from) AGI cause a reduction in AGI, which increases the deductibility of (2) (for/from) AGI deductions subject to AGI limitations.

1. for 2. from

Some tax deductions are subtracted (1) AGI and some are subtracted (2) AGI.

1. for 2. from

The all-inclusive concept means that (1) (2) generally includes all realized income from whatever source derived.

1. gross 2. income

Click and drag on elements in order Rank the filing statuses according to which is the most favorable for taxpayers.

1. married filing jointly 2. head of household 3. single

Sheila and Joe Wells are married with no dependent children. During 2019, they have gross income of $159,800, deductions for AGI of $5,500, itemized deductions of $10,000, and tax credits of $2,000. The Wells' had $22,000 withheld by their employer for federal income tax. They have a tax (1) (due/refund) of $(2).

1. refund 2. 3705

Sheila and Joe Wells are married with no dependent children. During 2019, they have gross income of $159,800, deductions for AGI of $5,500, itemized deductions of $25,000 and tax credits of $2,000. The Wells' had $22,000 withheld by their employer for federal income tax. They have a tax (1) (due/refund) of $(2).

1. refund 2. 3837

In addition to the individual income tax, individuals may be required to pay other taxes. Owners of unincorporated businesses may have to pay (1) tax.

1. self-employment

Which of the following statements is TRUE regarding the individual income tax formula?

A taxpayer may deduct the greater of his standard deduction or his itemized deductions from AGI to arrive at taxable income.

Select all that apply Which of the following items are deductions FOR adjusted gross income? (Check all that apply.)

Capital losses Contributions to (non Roth) qualified retirement accounts Health insurance for self-employed persons Alimony paid for divorces finalized before 1/1/2019

Hillary, Craig, and David provide 60% of the support for their elderly aunt, Brooke. Hillary provides 8%, while Craig provides 40% and David provides 12%. Which of the taxpayers are eligible to claim Brooke as a dependent?

Craig and David

Which of the following tests states that the qualifying child must NOT have provided more than half his or her own living expenses for the year?

Support

Select all that apply When can the married filing jointly or married filing separately filing status be used? (Check all that apply.)

When the taxpayers are married as of the last day of the tax year When one spouse died during the year and the surviving spouse has not remarried

Chasity is 20, has a full-time job, and supports herself. Her brother, William, age 22, has decided to go back to college. He moved in with Chasity and is attending college full-time. Which of the following statements is accurate regarding the age test for a qualifying child and how it applies to William?

William does NOT meet the age test because he is older than Chasity.