Chapter 4

If an individual qualifies as a dependent of another taxpayer, which of the following statements is true?

he may NOT claim a personal exemption on his own tax return

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

head of household

The gross income test requires that a qualifying relative's gross income for the year:

be less than the annual personal exemption amount

itemized deducations

certain types of expenditures that Congress allows taxpayers to deduct as from AGI deductions

Which of the following expenses are classified as itemized deductions for tax purposes?

charitable contributions, mortgage interest expense

Which of the following individuals would be considered as an eligible relatives to meet the relationship test for being a qualifying child of the taxpayer?

child, grandchild, brother (younger than the taxpayer), and niece (younger than the taxpayer)

What is meant by the all-inclusive concept when referring to the US tax laws

gross income includes all realized income from whatever source derived

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

gross income, relationship, and support

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

relationship, support, gross income

A taxpayer who is married at the end of the year, but lived apart from the other spouse for the last 6 months of the year, may qualigy as a(n) ______ ________ and be able to use the HOH filing status

abandoned spouse

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?

alternative minimum tax, self-employment tax

Which of the following individals 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 the statement you believe is INCORRECT

Certain types of realized income items may be deferred to a subsequent year, but no income may be excluded from taxation

Which of the following expenses are classified as itemized deductions for tax purposes?

Gambling losses, state and local income taxes, medical and dental expenses

tax tables

IRS-provided tables that specify the federal income tax liability for individuals with taxable income within a specific range. The tables differ by filing status and reflect tax rates that increase with taxable income.

standard deduction

a fixed deduction offered in lieu of itemized deductions. the amount depends on the taxpayers's filing status

Which of the following assets are classified as capital assets

a house owned and used by a taxpayer; stock held for investment

In order to meet the criteria for a qualifying _______ , 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

The gross income test requires that a qualifying relative's gross income for the year be less than the _____ amount

exemption (4150)

A taxpayer's _________ _________________ depends on his or her marital status at the end of the year and whether the taxpayer has dependents. Among other things, this classification determines

filing status

Expenses such as alimony paid for divorces finalized before 1/1/2019, student loan interest, contributions to qualified retirement accounts, and business expenses for self-employed persons are deductions

for

The all-inclusive concept means that ________ __________ generally includes all realized income from whatever source derived

gross income

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

A __________-term capital gain is taxes at favorable rates compared to ordinary income, while a __________-term capital gain is taxed at ordinary income rates

long;short

Which of the following statements is INCORRECT when referring to capital gains and losses?

losses on personal use assets are fully deductible against ordinary income

Which filing status is allowed the highest standard deduction amount?

married filing jointly

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

single

Which of the following choices is NOT a type of exemption granted to taxpayers?

single

Rank the filing statuses according to which is the most favorable for taxpayers

1. Married filing jointly 2. HOH 3. single

Which of the following individuals meet the requirements to be qualifying children for Tonya?

1. Vinnie (17) does not provide half of his own support. He is in high school, earned $5,000, and lives with his mother, Tonya 2. Sandy (23) does not provide half of her own support. She is a full-time college, earned $7,000 this year and lives with her aunt Tonya

Which one of the following individuals meet the requirements to be 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

self-employment taxes

Social Security and Medicare taxes paid by the self-employed on a taxpayer's net earnings from self-employment. For self-employed taxpayers, the terms "self-employment tax" and "FICA tax" are synonymous.

alternative minimum tax (AMT)

a tax on a broader tax base than the base for the "regular" tax; the additional tax paid when the tentative minimum tax (based on the alternative minimum tax base) exceeds the regular tax (based on the regular tax base). The alternative minimum tax is designed to require taxpayers to pay some minimum level of tax even when they have low or no regular taxable income as a result of certain tax breaks in the tax code.

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

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

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 ______________________ ____________ tax. Owners of unincorporated businesses may have to pay _______________ tax

alternative minimum; self-employment

A tax ___________ reduces taxable income and a tax _______________ reduces the tax liability dollar for dollar

deduction; credit

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

ordinary

If an individual could be a qualifying child for either her parent or her grandparent, the ________ is entitled to the dependency exemption

parent

Individuals who qualify as dependents of another taxpayer may not claim a(n) _____________ _______________ on their own tax return

personal exemption

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

stepson, half-sister (younger than the taxpayer) and nephew (younger than the taxpayer)

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

support

WHich of the following describes tax deductions?

tax deductions are a matter of legislative grace, taxpayers are NOT allowed to deduct anything unless a specific tax provision allows them to do so

withholdings

taxes collected and remitted to the government by an employer from an employee's wages.

In order for an individual to be a qualifying relative, rather than a qualifying child, which of the following criteria must be met?

the individual must meet a "gross income test" and the taxpayer must provide over hald of the tindividual's support

What is incorrect when comparing the rules for determining who qualifies as a dependent as a qualifying child and who qualifies as a dependent as a qualifying relative?

the relationship requirement is more broadly defined for qualifying children than for qualifying relatives

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

the status may be used for up to 2 years after the year the other spouse died, the surviving spouse must have dependents, the surviving spouse must NOT have remarried during the year

Which of the following are requirements that must be met to qualify as an abandoned spouse?

the taxpayer pays more than half the costs of maintaining his or her home for the entire year, the taxpayer is still married at the end of the year

Choose the statement you think is INCORRECT when comparing tax deductions and tax credits

both tax deductions and tax credits reduce taxable income

If a taxpayer is unmarried at the end of the year, which of the following filing statuses could possibly be used by the individual?

HOH, Single, Qualifying widow or widower

When can a single taxpayer's mother or father be a qualifying person for determining HOH 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

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

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

tax rate schedule

a schedule of progressive tax rates and the income ranges to which the rates apply that taxpayers may use to compute their gross tax liability.

character of income

a type of income that is treated differently for tax purposes from other types of income. Include ordinary, capital, and qualified dividend

Which of the following choices are forms of tax prepayments?

income tax withheld from a taxpayer's salary or wages by an employer 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

For tax years beginning in 2018, a taxpayer's from AGI deductions include the greater of the standard deduction or the taxpayer's __________ deductions and 20% of the taxpayer's qualified ________ income

itemized;business

tax credits

items that directly reduce a tax payer's tax liability

Which of the following criteria is necessary to qualify as a dependent of another taxpayer?

must be a citizen of the US or resident of US, Canada, or Mexico, must not be considered either a qualifying child or 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

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

estimated tax payments

quarterly tax payment that a taxpayer makes to the government if the tax withholding is insufficient to meet the taxpayer's tax liability

exculsions

realized income that is exempted from income taxation

deferrals

realized income that will be taxed as income in a subsequent year