Chapter 2 Review - Expanded Tax Formula, Form 1040, and Basic Concepts

Which of the choices below is not one of the tests that must be met to qualify as a qualifying relative? A. Support B. Relationship C. Age D. Gross income

C. Age

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%

Which of the following statements is true regarding the individual income tax formula? A. A taxpayer may deduct the greater of his standard deduction or his itemized deductions from AGI to arrive at taxable income. B. A taxpayer may deduct the greater of his standard deduction or his itemized deductions for AGI to arrive at adjusted gross income. C. A taxpayer may deduct the greater of his standard deduction or his personal exemption from AGI to arrive at taxable income. D. A taxpayer may deduct the greater of his standard deduction or his personal exemption for AGI to arrive at adjusted gross income.

A. 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 correct regarding the choice of a taxpayer's filing status? A. Filing status depends on marital status and whether the taxpayer has dependents. B. Filing status depends on the age of the taxpayer. C. Filing status depends on the race and gender of the taxpayer. D. Filing status depends on the level of income generated by the taxpayer.

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

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? A. Linda is deemed to meet the age test because she is permanently and totally disabled. B. Linda does NOT meet the age test because she is not a full-time student. C. Linda does NOT meet the age test because she is not under the age of 19.

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

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? A. Support B. Residence C. Relationship D. Gross income

A. Support

How can taxpayers protect themselves from incurring an underpayment penalty? A. Taxpayers should meet one of the safe harbor provisions for estimated tax payment requirements. B. As long as the tax return is filed and taxes are paid by the due date, there is no underpayment penalty. C. When income is unpredictable, the tax return should be filed by the end of the year. D. The taxpayer should file an extension if they can NOT pay the taxes that are due.

A. Taxpayers should meet one of the safe harbor provisions for estimated tax payment requirements.

Which of the following individuals would meet the relationship test for being a qualifying relative of the taxpayer through a qualifying family relationship? A. Sister-in-law B. Mother C. Nephew D. Grandmother E. Aunt F. Cousin

Answers: A, B, C, D, E

Which of the following individuals would meet the relationship test for being a qualifying child of the taxpayer? A. Brother (younger than the taxpayer) B. Grandchild C. Niece (younger than the taxpayer) D. Father E. Child F. Cousin (younger than the taxpayer)

Answers: A, B, C, E

Which of the following criteria will contribute toward qualifying a taxpayer for head of household status? A. Be unmarried (or considered unmarried under the abandoned spouse provisions) at the end of the year B. Provide over half the cost of a household for a dependent parent not living with the taxpayer C. Be a qualifying widow or widower D. Be married with a spouse that is not employed outside the home E. Pay more than half the costs of keeping up a home for the year F. Living with a qualifying person (other than parents) in the taxpayer's home for more than half the year

Answers: A, B, E, F

Which of the following items may be subtracted from adjusted gross income to arrive at taxable income? A. Itemized deductions B. Tax prepayments C. Standard deduction D. Tax credits E. Dependency exemptions

Answers: A, C, E

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? A. Brother B. Cousin C. Grandchild D. Friend E. Father F. Niece

Answers: A, C, E, F

Which of the following requirements are necessary to qualify for head of household status? A. Pay more than half the costs of keeping up a home for the year B. Be a qualifying widow or widower C. Have lived with a qualifying person in the taxpayer's home for the entire year D. Be unmarried (or considered unmarried under the abandoned spouse provisions) at the end of the year

Answers: A, D

When can the married filing jointly or married filing separately filing status be used? A. When the taxpayers are unmarried, but have lived together for the entire year B. When the taxpayers are married as of the last day of the tax year C. When one spouse died during the year and the surviving spouse has not remarried D. When the taxpayers are unmarried, but have a dependent child living with them

Answers: B, C

Which of the choices below are the tests that must be met to qualify as a qualifying child? A. Gross income B. Age C. Relationship D. Occupation E. Support F. Residence

Answers: B, C, E, F

Which of the following choices are forms of tax prepayments? A. A tax credit used to reduce the tax liability in the current year B. A tax refund received in the current year for the prior year C. An overpayment of taxes in the prior year that was applied as an estimated payment for the current year D. Estimated tax payments the taxpayer made directly to the IRS E. Income tax withheld from a taxpayer's salary or wages by an employer

Answers: C, D, E

Which of the following individuals would meet the relationship test for being a qualifying child of the taxpayer? A. Aunt B. Cousin (younger than the taxpayer) C. Nephew (younger than the taxpayer) D. Half-sister (younger than the taxpayer) E. Stepson F. Grandmother

Answers: C, D, E

Put the following items in the order in which they are found in the individual income tax formula. A. Equals Taxes Due or Refunded B. Minus tax credits and prepayments C. Taxable Income D. Equals Income Tax Liability E. Times Tax Rates

Answers: C, E, D, B, A

Kara is single with no dependents. She has itemized deductions of $4,100. What is the total of her from AGI deductions for 2018? A. $8,150 B. $12,000 C. $16,100 D. $4,100

B. $12,000

Which one of the following individuals cannot meet the residence test for being a qualifying child of another taxpayer? A. Justin attends college in a different state than where his parents live. B. Amy lived with her parents until the end of April. She moved into an apartment on May 1. C. Cathy was injured in a car accident in February. She remained in the hospital until September. D. Steven graduated from college in May and moved back in with his parents for two months. He moved out on July 15.

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

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? A. James does NOT meet the age test because he is not under the age of 19. B. James meets the age test because he is younger than Corey, and he is under age 24 and a full-time student. C. James does NOT meet the age test because he was not enrolled as a full-time student for the entire year. D. James must be older than than Corey in order to meet the age test.

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

An individual that is unrelated to the taxpayer may meet the relationship test for a qualifying relative if he or she: A. lives with the taxpayer for less than the entire year, but more than half the year. B. lives with the taxpayer for the entire year. C. marries the taxpayer during the year.

B. lives with the taxpayer for the entire year

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. He is considered a qualifying child of his uncle. Which of the following is correct regarding Lan's status as a dependent? A. Lan can NOT be claimed by his uncle because he would need to meet the qualifying relative requirements, rather than the qualifying child. B. Lan can be claimed as a dependent by his uncle because his uncle is a citizen and An is a qualifying child. C. Lan can NOT be claimed as a dependent by his uncle because he is not a citizen or resident of the U.S.. D. Lan can be claimed by his uncle because he will not have to file a tax return since he has no income.

C.

Which of the following would most likely not qualify as support for meeting the support test? A. A wedding dress B. Summer camp with horseback riding, swimming, and other activities C. A riding lawnmower used by a child to mow the family yard D. Medical and dental care

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

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? A. Underpayment penalty B. Late payment penalty C. Fraudulent failure to file D. Late filing penalty

C. Fraudulent failure to file

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? A. Recreational activities and camps B. Allowances and gifts C. Scholarships D. Food and clothing

C. Scholarships

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? A. William meets the age test because he is full-time student under age 24. B. William does NOT meet the age test because he is not under the age of 19. C. William does NOT meet the age test because he is older than Chasity. D. William does NOT meet the age test because he is not Chasity's child.

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

Which of the following choices is not a form of a tax prepayment? A. An overpayment of taxes in the prior year that was applied as an estimated payment for the current year B. Income tax withheld from a taxpayer's salary or wages by an employer C. Estimated tax payments the taxpayer made directly to the IRS D. A tax refund received in the current year for the prior year

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

Which of the choices below is not one of the tests that must be met to qualify as a qualifying relative? A. Gross income B. Support C. Relationship D. Age

D. Age

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? A. Annie must live with the Andrew for over half of the year in order to meet the support test. B. Annie must be related to the Andrew in order to meet the support test. C. Annie must NOT provide over half of her own support, but it doesn't matter who is providing the support. D. Andrew must provide over half of Annie's support for the year.

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

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? A. Single B. Qualifying widow or widower C. Head of household D. Married filing jointly

D. Married filing jointly

Kayla and Ben were married in November of the current year. What will be their filing status for the current year? A. Married filing separately because they have been married for less than half of the year B. One spouse can file as head of household and the other will file single since they live together but have been married less than half the year C. Single because they were married for less than half of the year D. Married filing jointly (or separately) because they were married as of the end of the year

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

Which of the following criteria is not necessary to qualify as a dependent of another taxpayer? A. Must be a citizen of the U.S. or a resident of the U.S., Canada, or Mexico B. Must be considered either a qualifying child or a qualifying relative C. Must NOT file a joint return unless there is no tax liability on the couple's tax return D. Must be unmarried for at least a portion of the year

D. Must be unmarried for at least a portion of the year

In order to meet the requirements of the residence test for a qualifying child, the individual must live with the taxpayer for: A. at least one-third of the year B. the entire year C. longer than he has resided with anyone else during the year D. more than half the year

D. more than half the year

A taxpayer may file as a single taxpayer when: A. she has been unmarried for over half of the year B. she is separated from her husband, but not yet divorced C. her spouse died during the year D. she is unmarried at the end of the tax year

D. she is unmarried at the end of the tax year

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

False

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

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

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

failure to pay

A taxpayer's filing status depends on his or her _____ _____, at the end of the year and whether the taxpayer has any _____.

marital status, dependents

A tax _____ includes 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.

prepayment

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

single

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

support

The three tests that must be met to qualify as a qualifying relative are: _____, _____, and _____.

support, relationship, gross income

Taxpayers may be subject to a(n) _____ _____ if they have taxes due and have not met the safe harbor provisions.

tax penalty

Fraud on a tax return can also lead to criminal charges. True or False?

true