Chapter 02: Expanded Tax Formula, Form 1040, and Basic Concepts - Smartbook

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

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

When can the married filing jointly or married filing separately filing status be used?

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

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

True or false: There is no underpayment penalty assessed if the taxpayer chooses to pay nothing throughout the year, but sends in just enough of an estimated payment at year-end to meet the tax due.

False

True or false: There is no underpayment penalty assessed if the taxpayer chooses to pay nothing throughout the year, but sends in just enough of an estimated payment at year-end to meet the tax due. True false question.

False

A taxpayer may file as a single taxpayer when: Multiple choice question.

she is unmarried at the end of the tax year

In 2022 Oba files as single and has taxable income of $123,212. None of her taxable income consists of capital gains or qualified dividends. What is Oba's tax liability for 2022 using the tax rate schedule in Appendix F? Multiple choice question.

$23,406

Kara is single with no dependents. She has itemized deductions of $4,100. What is the total of her from AGI deductions for 2022?

$12,950

Taj and Roshin are married and file a joint return for 2022. Their taxable income is $128,300. What is the amount of their tax liability using the tax rate schedule in Appendix F?

$13,762

Antoine Jones is single with two dependent children. During 2022, he has gross income of $99,800, deductions for AGI of $3,000, itemized deductions of $13,500 and tax credits of $4,000. Antoine had $7,895 withheld by his employer for federal income tax. They have total tax of $ and a refund of $ (Use the tax tables in Appendix D)

11151 744

Antoine Jones is single with two dependent children. During 2022, he has gross income of $99,800, deductions for AGI of $3,000, itemized deductions of $13,500 and tax credits of $4,000. Antoine had $7,895 withheld by his employer for federal income tax. They have total tax of $ and a refund of $. (Use the tax tables in Appendix D)

11151 744

What is the penalty for negligent reporting on a tax return?

20% penalty

The late filing penalty equals % of the amount of tax owed for each month that the tax return is late, with a maximum penalty of %.

5 25

Sheila and Joe Wells are married with two dependent children. During 2022, they have gross income of $99,800, deductions for AGI of $3,500, itemized deductions of $10,000 and tax credits of $2,000. The Wells' had $6,000 withheld by their employer for federal income tax. They have a total tax of $ and an amount due/refund of $. (Use the tax table in Appendix D)

8040 40

A taxpayer's required annual payment for estimated taxes must equal the lesser of % of the tax shown on the return or % of the tax shown on the return for the preceding year.

90 100

In order to avoid an underpayment penalty, a taxpayer's withholdings and estimated tax payments must equal or exceed which of the following measures?

90% of their current tax liability 100% of their previous year tax liability

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

False

Which of the following would most likely not qualify as support for meeting the support test? Multiple choice question.

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

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

The tax code defines ______ ______ _____ as gross income minus a list of permitted deductions.

Adjusted Gross Income

Which of the choices below is not one of the tests that must be met to qualify as a qualifying relative? Multiple choice question.

Age

Which one of the following individuals cannot meet the residence test for being a qualifying child of another taxpayer? Multiple choice question.

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

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 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.

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)? Multiple choice question.

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

A(n) penalty will be assessed on a taxpayer who pays her taxes due after the due date of the return.

failure to pay

The IRS credits withholding to the account of the appropriate taxpayer. Withholding Blank______ the amount otherwise due the IRS on the due date of the return.

reduces

Unmarried taxpayers will file as if they do not qualify for head of household or qualifying widow(er) status.

single

A taxpayer who has income that is not subject to withholding may be required to make during the year.

tax payments

The income tax is paid on a pay-as-you-go basis through or tax payments.

withholding estimated

Taxpayers with a(n) tax liability in the previous year or whose tax payable after subtracting their withholding amounts is less than $ are NOT subject to underpayment penalties.

0 1,000

Put the following items in the order in which they are found in the individual income tax formula.

1. Taxable Income 2. Times Tax Rate 3. Equals Income Tax Liability 4. Minus Tax Credits and prepayments 5. Equals Taxes due or refund

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.

Which of the following statements is true regarding the individual income tax formula? Multiple choice question.

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

Which of the following individuals would meet the relationship test for being a qualifying child of the taxpayer?

Child Grandchild Niece (younger than the taxpayer) Brother (younger than the taxpayer)

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 choices are forms of tax prepayments?

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

Taxpayers with income entirely comprised of wages should ensure they pay quarterly income tax so they do not risk an underpayment penalty.

False

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 2022.

False

True or false: A six-month extension will allow the taxpayer to extend the tax payment date without penalty.

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

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.

There is one tax infraction that incurs a penalty calculated as 15% of the amount of tax owed per month with a maximum penalty of 75%. What violation incurs this level of penalty? Multiple choice question.

Fraudulent failure to file

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

Gross income

Which of the choices below are the tests that must be met to qualify as a qualifying relative?

Gross income Relationship Support

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 fall semester. James lives with Corey. Which of the following statements is correct with respect to the age requirement for a qualifying child? Multiple choice question.

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

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? Multiple choice question.

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

Which of the following choices are filing statuses that may be used by a taxpayer?

Married filing jointly Single Head of household

Which two filing statuses have the same standard deduction amount? Multiple choice question.

Married filing separately and single

Which of the following individuals would meet the relationship test for being a qualifying relative of the taxpayer through a qualifying family relationship?

Mother Stepchild Aunt Sister-in-law

Which of the following criteria is necessary to qualify as a dependent of another taxpayer? Multiple select question.

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

Which of the following criteria is not necessary to qualify as a dependent of another taxpayer? Multiple choice question.

Must be unmarried for at least a portion of the year

In which of the following situations may the IRS impose a 20% penalty?

Negligence Erroneous claim for refund

Which of the following individuals would meet the relationship test for being a qualifying child of the taxpayer? Multiple select question.

Nephew (younger than the taxpayer) Half-sister (younger than the taxpayer) Stepson

Under a multiple support agreement, taxpayers who don't pay over half of an individual's support may still be allowed to claim a dependent if which of the following rules 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% support provides statements to taxpayer agreeing NOT to claim the individual as a dependent.

Which of the following requirements are necessary to qualify for head of household status?

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

Which of the following criteria will contribute toward qualifying a taxpayer for head of household status?

Provide over half the cost of 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 Living with a qualifying person (other than parents) in the taxpayer's home for more than half the year

Which of the choices below are the tests that must be met to qualify as a qualifying child?

Residence Age Support Relationship

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

Which of the following items may be subtracted from adjusted gross income to arrive at taxable income? Multiple select question.

Standard deduction Itemized deductions

Which of the following individuals would meet the relationship test for being a qualifying relative of the taxpayer if they have only lived with the taxpayer for eight months of the year?

Stepbrother Grandchild Father Brother

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

Which of the following tests states that the taxpayer must pay over half of the living expenses for the qualifying relative?

Support

Which of the following statements are correct concerning the married filing separately (MFS) filing status?

Tax-related items for MFS taxpayers (i.e. tax rate schedules, standard deduction amounts) are almost half the amounts for MFJ taxpayers. The MFS status may be useful when one spouse does NOT want to be in contact with the other spouse.

How can taxpayers with significant income that is not considered "wages" protect themselves from incurring an underpayment penalty? Multiple choice question.

Taxpayers should use quarterly payments throughout the year to pre-pay their tax.

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

The parent that had custody for the most time during the year.

Which of the following is true regarding the qualifying widow or widower filing status?

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

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

Other than the safe harbor provisions, what other tax due circumstances will prevent a taxpayer from incurring an underpayment payment penalty?

The taxpayer's tax payable after subtracting estimated payments is less than $1,000. The taxpayer had no tax liability in the previous year. The taxpayer's tax payable after subtracting withheld taxes is less than $1,000.

Kaiji would like to claim his mother as his dependent. His mother's only income is $5,000 of interest from a tax-exempt bond and Kaiji pays for the rest of her expenses. Kaiji can claim his mother as a dependent.

True

A taxpayer who files as married filing separately must show the name and social security number of their spouse on Form 1040. The standard deduction can be taken only if of them choose the standard deduction.

both

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 criteria for a qualifying (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.

child

Expenses such as contributions to qualified retirement accounts and business expenses for self-employed persons are deductions (FOR/FROM) AGI.

for

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 qualifying child should be reported on the return for the parent with the

highest AGI.