Taxpayers and Dependents

Doug is 67 and single at the end of 2021. He is required to file a tax return if his gross income is: - at least $5 - at least $12,550 - at least $14,250 - more than his amount of itemized deductions

At least $14,250

John and Joanne are the sole supporters of the following individuals, all U.S. citizens, none of whom lives with them. None of these individuals file a joint return or have any gross income. Jennie, John's mother Julie, Joanne's stepmother Jonathan, father of John's first wife How many dependents may John and Joanne claim on their joint return? - 3 - 2 - 1 - 0

3

How much income should Devin, who uses the cash method of accounting, report on his 20X0 return from the following separate transactions? $300 (gross) was garnished from his wages to pay his debts on his December 14, 20X0 paycheck $500 (gross) paycheck received December 28, 20X0, but not cashed until January 2, 20X1 $900 (gross) wages paid directly to his mother at his request on November 30, 20X0 - $1,200 - $1,700 - $1,400 - $800

$1,700

In September 20X1, Charlie, a self-employed lawyer, performed legal services for a client that has a men's clothing store. In payment for his services, Charlie received store credit of $3,500 in 20X1. Charlie uses $1,500 of his store credit in 20X1 and the balance in 20X2. How should Charlie include the income? 20X1 / 20X2 - $3,500 / $0 - $1,500 / $2,000 - $0 / $3,500 - None of the above

$3,500 / $0

In 20X0 Jerry signed a 5-year lease to rent space to the MacBee restaurant. MacBee paid Jerry $24,000 for the first year's rent and $24,000 in advance rent for the final year of the lease. Jerry reports his income using the accrual method of accounting. How much of the $48,000 is included in Jerry's 20X0 income? - $24,000 - $28,800 - $48,000 - $0

$48,000

Jeremiah, a cash basis taxpayer, is a salesman. He sold $100,000 of merchandise in March 20X1. His commission is 2% of sales. In November 20X1, he received $2,000 in commissions for those sales and an advance of $7,000 in commissions for future sales in 20X2. What amount must Jeremiah include in his income for 20X1? - $9,000 - $2,000 - $3,167 - $0

$9,000

All of the following are correct EXCEPT: - A brother-in-law must live with the taxpayer the entire year to be claimed as a dependent even if the other tests are met. - A son age 21 was a full-time student who earned $2,700 from his part-time job. The money was used to buy a car. Even though he earned $2,700, his parents can claim him as a dependent if the other tests were met. - For each person claimed as a dependent, the social security number, adoption taxpayer identification number, or individual taxpayer identification number must be listed. - A qualifying relative need not live with the taxpayer to be a dependent of the taxpayer.

A brother-in-law must live with the taxpayer the entire year to be claimed as a dependent even if the other tests are met.

Mr. and Mrs. Valenca have been married since 20X1. His 30-year old brother lost his job and is living with them until he can find work. In 20X2, Mr. Valenca died in an accident. Mrs. Valenca does not remarry. Her brother-in-law continues to live with her all year and qualifies as her dependent. What filing status should she use when filing her income taxes for 20X3? - Single - Head of household - Qualifying widow(er) - Married filing jointly

Head of Household

Which of the following students might qualify as a qualifying child on their parents tax return? - Manuel, who on Dec 31 is age 20 and enrolled part-time at Rutgers - Patsy, who on Dec 31 is age 24 and enrolled full-time at Yale - Jules, who on Dec 31 is age 23. She was enrolled full-time for the first 6 months of the year at UCLA, but has since graduated - Jerimiah, who on Dec 31 is 20 and enrolled full-time at Florida State. Jerimiah provides his own support

Jules, who on Dec 31 is age 23. She was enrolled full-time for the first 6 months of the year at UCLA, but has since graduated

Bob Wilson died on October 1 of the current tax year. Bob was married to Rita. Bob's two children (ages six and eight) lived with the couple full time. The children will continue to live with Rita. What filing status should Rita use in the year of death and subsequent years in which the unmarried children continue to live with her? - Rita should file single, head of household, or married filing separately in the year of death and then head of household for subsequent years - Rita should file as married filing jointly in the year of death and then as a qualifying widow (surviving spouse) for subsequent years - Rita should file married filing jointly in the year of death, then qualifying widow for two years, and then head of household for subsequent years - Rita should file head of household in the year of death and subsequent years

Rita should file married filing jointly in the year of death, then qualifying widow for two years, and then head of household for subsequent years

When filing a separate return for a married taxpayer, what information must be provided about the taxpayer's spouse? - SSN only - SSN and date of birth - SSN and full name - No spouse information is necessary on a separate return

SSN and full name

Income and deductions resulting from a trade or business run by a self-employed taxpayer are reported to the IRS on which of the following schedules? - Schedule D - Schedule C - Schedule SE - Schedule A

Schedule C

If a child being adopted is eligible to be claimed as a dependent by the adoptive parents, an identifying number must be obtained for the child. You can file Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS to get an ATIN. Which of the following statement is incorrect regarding the ATIN: - You must have a child living with you who was placed in your home for legal adoption. - You cannot get the child's existing SSN even though you have made a reasonable attempt to get it from the birth parents, the placement agency, and other persons. - You must be eligible to claim the child as a dependent on your tax return. - After the adoption is final, you can continue using the ATIN.

After the adoption is final, you can continue using the ATIN.

A tax preparer must transcribe all TINs correctly. The term TIN includes which of the following numbers? - Social security number - Employer identification number - Individual taxpayer identification number - All of the above

All of the Above

Holly and Harp Oaks were divorced in 20X1. The divorce decree was silent regarding who is entitled to claim their 12-year-old daughter June as a dependent. Holly has legal custody of her daughter and did not sign a statement stating that she won't claim June as a dependent. Holly earned $8,000 and Harp earned $80,000. June had a paper route and earned $3,000. In 20X2, June lived with Harp 4 months of the year and with Holly 8 months. Who is entitled to claim June as a dependent in 20X2? - June may, since she had gross income over $3,000 and files her own return. - Since June lived with both Holly and Harp during the year, they both may claim her as a dependent. - Holly may, since she has legal custody and physical custody for more than half the year. - Harp may, since he earned more than Holly and, therefore, is presumed to have provided more than 50% of June's support.

Holly may, since she has legal custody and physical custody for more than half the year.

A nonresident alien taxpayer does not qualify for a social security number. What identifying number should he use on his tax return? - Individual Taxpayer Identification Number (ITIN) - Immigration & Naturalization Service ID (INSID) - Identification number granted by the taxpayer's home country - Leave the space blank

Individual Taxpayer Identification Number (ITIN)

At the beginning of the current year, John Doe is single. However, during the year he marries Helen on January 23. The couple adopts two infant daughters from Russia on May 1 of that year. Unfortunately, during the year Helen dies in a car accident in November. John Doe does not remarry prior to the end of the year. The children do qualify as dependents. What tax status should John Doe use when filing his income tax return for this year? - Single - Head of household - Qualifying widow - Married filing jointly

Married Filing Jointly

Mr. and Mrs. Morgenstern have been married for several years and have one child who lives at home and is their dependent. Mrs. Morgenstern died suddenly during February of 20X1. Mr. Morgenstern does not remarry prior to the end of 20X1. What filing status should he use when filing his income taxes for 20X1? - Single - Head of household - Qualifying widow(er) - Married filing jointly

Married Filing Jointly

Ann and Jim have been separated for two years as of December 31, 20X4 although they reconciled and lived together during the month of October, 20X4. They have never obtained a separate maintenance agreement or filed for divorce. They have two children who live full time with Ann and qualify as her dependents. What filing status must Ann use? - Head of household - Single - Married filing separately only - Married filing jointly or married filing separately at the taxpayers' option

Married filing jointly or married filing separately at the taxpayers' option

When Susan and Tom were married in June, Susan assumed Tom's last name. In order to prevent delays in processing a return, what should Susan do before filing her return? - Notify the IRS of her name change using the checkbox on Form 1040. - Report the name change to the Social Security Administration (SSA) on Form SS-5. - Notify the Secretary of State in her home state. - Request that the registrar at the county clerk's office notify the IRS of the name change.

Report the name change to the Social Security Administration (SSA) on Form SS-5.

Which of the following schedules must be filed to report income and deductions resulting from a trade or business? - Schedule A - Schedule B - Schedule C - Schedule D

Schedule C

In 20X1, Nancy's husband died. They had three children, two of whom were still dependents. Nancy does not remarry and the two children remain as her dependents living with her until 20X5. What is her filing status for federal income tax purposes? - She is head of household for 20X1 through 20X4. - She is a qualifying widow (surviving spouse) for Years 20X1 through 20X4. - She is a qualifying widow (surviving spouse) for 20X2 and 20X3 and head of household for 20X4. - She is a qualifying widow (surviving spouse) for 20X1 and head of household for 20X2 through 20X4.

She is a qualifying widow (surviving spouse) for 20X2 and 20X3 and head of household for 20X4.

Jon and Marlena were married several years ago and have lived together since that time. They have no children. On December 29 of the prior year, they were granted a decree of separate maintenance and they moved into two separate apartments. In January, Marlena came to you to advise her on filing her income tax return for the prior year. What filing status would you most likely advise her to take? - Single - Head of Household - Married filing Jointly - Married Filing Separately

Single

Which of the following statements is true with respect to filing status in connection with an individual tax return? - Taxpayers who meet the requirements for qualifying widow(er) status might want to choose to file as head of household. - Taxpayers who file as head of household get the same standard deduction as single filers but are taxed at a lower effective tax rate. - Taxpayers who file joint returns are taxed at the same effective tax rate as individuals who file as head of household, but the standard deduction is higher. - Single taxpayers pay a higher effective tax rate than individuals who file as head of household or joint filers. They also have the lowest standard deduction of the three.

Single taxpayers pay a higher effective tax rate than individuals who file as head of household or joint filers. They also have the lowest standard deduction of the three.

Wilson Metalis is trying to determine whether a particular person qualifies as a dependent on his individual income tax return for this year. To qualify, a dependent must be either a qualifying relative or a qualifying child. Which of the following would not be considered a qualifying relative in making the determination as to whether a person is a qualifying dependent? - Taxpayer's cousin who has lived in the taxpayer's household for 9.2 months - Taxpayer's mother-in-law who lives in the taxpayer's guest house free of charge - Taxpayer's grandmother who lived in a nursing home this year - Taxpayer's brother-in-law who lived in the household all year

Taxpayer's cousin who has lived in the taxpayer's household for 9.2 months

Abbey and Ben have several people who lived with them during the latest tax year. Which of the following individuals qualifies as their dependent? - The 19-year-old daughter of a friend who lives with the taxpayers while attending college from September through May. She lives free of charge and pays no expenses. - The taxpayer's 24-year-old son who only lives with the taxpayers during the summer months and holidays. The rest of the year he is a college student and makes $12,000 per year in salary. - The taxpayer's 20-year-old married daughter whose husband is away on military duty. The daughter will file a joint return with her husband to pay tax due. - The taxpayer's 12-year-old daughter who attends boarding school during the year.

The taxpayer's 12-year-old daughter who attends boarding school during the year.

David and Diane were married on December 31, 20X1. Throughout 20X1, they each had their own personal residences and qualified dependents. They combined the two families and moved into a new residence on the day they married. What option do they have for 20X1 filing status? - They can both file head of household because they each maintained a home for qualified dependents during 20X1. - They can file as married filing jointly or they can file as married filing separately because they were married as of December 31, 20X1. - They can both file head of household because they were unmarried for a majority of the tax year. - They must file married filing jointly because they were married at the end of the year and the combined family now lives in the same residence.

They can file as married filing jointly or they can file as married filing separately because they were married as of December 31, 20X1.

Gina and George, a married couple, visit their tax preparer Robert. Robert informs them that if they file separately, they will have a lower combined tax than if they file jointly. Gina and George have been married for 10 years and have always filed jointly. What options do they have? - They must continue to file jointly. - They can file separately this year and must continue to file separately in future years. - They can file separately this year and may file either jointly or separately in future years. - They must file separately.

They can file separately this year and may file either jointly or separately in future years.

Jay and Vonda have been married for a number of years and file a joint tax return for 2021. They provide over half of the support for several children who are single. Their daughter Jane is 17 and made $9,000 during the current tax year but is not in school. Their son Theodore is 20 and made $9,000 and is not in school. Their daughter Nanci is 23 and made $9,000 and is in school full-time. Their son Franklin is 25 and made $9,000 and is in school full-time. How many of these four children qualify as dependents for income tax purposes? - One - Two - Three - Four

Two