SB Tax Chapter 4
Kara is single with no dependents. She has itemized deductions of $5,000 in 2021. What is the total of her "FROM AGI" deductions for 2021? Multiple choice question. $12,550 $25,100 $18,800 $5,000
$12,550
Will and Lyndsey are married with no dependents and file a joint tax return. In 2021, they paid $3,000 in qualified student loan interest in addition to $22,850 in itemized deductions. What is the total of their "FROM AGI" deductions in 2021? Multiple choice question. $22,850 $25,850 $25,100 $27,800
$25,100
Put the following items in the order in which they are found in the individual income tax formula. Equals adjusted gross income Minus from AGI deductions Equals taxable income Gross income Minus for AGI deductions
1. Gross income 2. Minus for AGI deductions 3. Equals adjusted gross income 4. Minus from AGI deductions 5. Equals taxable income
Yolanda is your client. With her current level of taxable income, she is paying tax at 24% marginal rate. She received $2,000 in qualified dividends this year. What rate of tax do you expect that Yolanda will pay on her dividends? Multiple choice question. 0% 15% 24% 20% Need help? Review th
15% Reason: Yolanda's 24% marginal tax rate means her taxable income is more than $86,375 but less than $164,925, and for all values in that range, the long term capital gains rate applied to qualified dividends is 15%.
The gross income test requires that a qualifying relative's gross income for 2021 be less than $__________ .
4300
In 2021, Ryan files as single and has taxable income of $47,153. None of his taxable income consists of capital gains or qualified dividends. His tax liability rounded to the nearest dollar totals $____________ (use the tax rate schedules).
6,122
In 2021, Ryan files as single and has taxable income of $47,153. None of his taxable income consists of capital gains or qualified dividends. His tax liability rounded to the nearest dollar totals $_________ (use the tax rate schedules).
61122
Which one of the following assets is classified as a capital asset? Multiple choice question. Accounts receivable from the sale of goods A car used personally Inventory in a business A building used in a business
A car used personally
Which of the following would most likely NOT qualify as support for meeting the support test? Multiple choice question. Medical and dental care Summer camp with horseback riding, swimming, and other activities A riding lawnmower used by a child to mow the family yard A wedding dress
A riding lawnmower used by a child to mow the family yard
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 total adjustments (above the line) for AGI. A taxpayer may deduct the greater of his standard deduction or his total deductions (below the line) from AGI. A taxpayer may deduct the great of his standard deduction or his itemized deductions for AGI to arrive at adjusted gross income. A taxpayer may deduct the greater of his standard deduction or his itemized deductions from AGI to arrive at taxable income.
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 examples results in realized income? A taxpayer held stock that appreciated in value during the year. A taxpayer transferred $1,000 from her checking account to her savings account. A taxpayer borrowed $1,000 from the bank. A taxpayer sold stock for $1,000. She had originally paid $300 for the stock.
A taxpayer sold stock for $1,000. She had originally paid $300 for the stock.
Which of the choices below is NOT one of the tests that must be met to qualify as a qualifying relative? Multiple choice question. Relationship Age Gross income Support
Age
Which of the following items are deductions FOR adjusted gross income? (Check all that apply.) Multiple select question. Alimony paid for divorces finalized before 1/1/2019 Contributions to (non Roth) qualified retirement accounts Health insurance for self-employed persons Capital losses Deduction for Qualified Business Income Mortgage interest on a personal residence
Alimony paid for divorces finalized before 1/1/2019 Contributions to (non Roth) qualified retirement accounts Health insurance for self-employed persons Capital losses
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.) Multiple select question. All other individuals contributing more than 10 percent support provides statements to taxpayer agreeing NOT to claim the individual as a dependent. No one taxpayer paid over one-half of the individual's support. The individual earns more than the exemption amount, but NOT enough to provide half of his support. The taxpayer contributed over 5 percent of the individual's support for the year. 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. 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.
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 Capital gains tax Value-added tax Self-employment tax
Alternative minimum tax Self-employment tax
Which of the following choices are forms of tax prepayments? (Check all that apply.) An overpayment of taxes in the prior year that was applied as an estimated payment for the current year Estimated tax payments the taxpayer made directly to the IRS A tax credit used to reduce the tax liability in the current year Income tax withheld from a taxpayer's salary or wages by an employer A tax refund received in the current year for the prior year
An overpayment of taxes in the prior year that was applied as an estimated payment for the current year Estimated tax payments the taxpayer made directly to the IRS Income tax withheld from a taxpayer's salary or wages by an employer
Deductible capital losses can offset capital gains. If the losses exceeds the gains, then a maximum of $ may be used to offset ordinary income in any one year.
Blank 1: 3000
Amy and Ethan are married and file a joint return for 2021. Their taxable income is $192,100. The amount of their tax liability, rounded to the nearest dollar, is $_____________
Blank 1: 34,146
Amy and Ethan are married and file a joint return for 2021. Their taxable income is $192,100. The amount of their tax liability, rounded to the nearest dollar, is $____________________
Blank 1: 34,146
Zack is single and has collected the following information for preparing his 2021 taxes: Gross income $74,000, tax credits $2,500, itemized deductions $9,000, deductions for AGI $5,000, tax prepayments $8,400. Based on this information, Zack's "adjusted gross income" equals $_______, and his "taxable income" equals $____________
Blank 1: 69000 Blank 2: 60000
A taxpayer who is married at the end of the year, but lived apart from the other spouse for the last six months of the year, may qualify as a(n) and be able to use the head of household filing status.
Blank 1: abandoned Blank 2: spouse
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.
Blank 1: alternative Blank 2: minimum
All sources of income are taxable unless specifically excluded through a tax provision. However, __________are NOT permitted unless a specific tax provision allows them.
Blank 1: deductions
Sharon Jones is single. During 2021, 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 ___________(due/refund) rounded to the nearest whole dollar of $_______
Blank 1: due Blank 2: 3,693
Realized income items that taxpayers permanently omit from income are referred to as ____________while items that are taxed in a subsequent year are called _________
Blank 1: exclusions or exclusion Blank 2: deferrals, deferred, or deferral
A taxpayer's __________-,_____________depends on his or her marital status at the end of the year and whether the taxpayer has dependents.
Blank 1: filing Blank 2: status
Deductions______ (for/from) AGI cause a reduction in AGI, which increases the deductibility of___________ (for/from) AGI deductions subject to AGI limitations.
Blank 1: for Blank 2: from
For tax years beginning in 2018, a taxpayer's from AGI deductions include the greater of the standard deduction or the taxpayer's ____________ and 20% of the taxpayer's qualified ________income.
Blank 1: itemized Blank 2: business
Head of household status is (less/more)____________ favorable than the married filing jointly status, but (less/more) _____________favorable than the single filing status
Blank 1: less Blank 2: more
A ______-term capital gain is taxed at favorable rates compared to ordinary income, while a __________-term capital gain is taxed at ordinary income rates.
Blank 1: long Blank 2: short
A taxpayer's filing status depends on his or her _____________status at the end of the year and whether the taxpayer has any______________
Blank 1: marital, marriage, or married Blank 2: dependents
If an individual could be a qualifying child for either her parent or her grandparent, the ___________(parent/grandparent) is entitled to claim the child as a dependent.
Blank 1: parent
Sheila and Joe Wells are married with no dependent children. During 2021, they have gross income of $159,800, deductions for AGI of $5,500, and itemized deductions of $10,000. The Wells' had $22,000 withheld by their employer for federal income tax. They have a tax __________ (due/refund) of $___________
Blank 1: refund Blank 2: 2,079
Sheila and Joe Wells are married with one dependent child. During 2021, they have gross income of $159,800, deductions for AGI of $5,500, itemized deductions of $26,000 and a dependent tax credit of $2,000. The Wells' had $22,000 withheld by their employer for federal income tax. They have a tax_______ (due/refund) of $_____________
Blank 1: refund Blank 2: 4,277
In addition to the individual income tax, individuals may be required to pay other taxes. Owners of unincorporated businesses may have to pay______________ -_____________ tax.
Blank 1: self Blank 2: employment
The U.S. tax laws are based on the all-inclusive concept where gross income includes all realized income from "whatever______,______"
Blank 1: source or sources Blank 2: derived
In order to meet the____________ test, the taxpayer must pay more than half of the living expenses for the qualifying relative.
Blank 1: support
The three tests that must be met to qualify as a qualifying relative are:__________ ,_______________ ,________________ and . (Each blank may contain more than one word.)
Blank 1: support or support test Blank 2: relationship or relationship test Blank 3: gross income or gross income test
Which filing status is best for a married couple that lives together, but one spouse does NOT want to be liable for the other spouse's tax liability? Multiple choice question. Both individuals should file "single." Both individuals should file "married filing separately." Both individuals will be liable for the tax liability if they are married. Filing status is irrelevant. One individual should file "head of household" and the other individual should file "single."
Both individuals should file "married filing separately."
Which of the following statements is INCORRECT? Multiple choice question. Both tax deductions and tax credits are specifically defined by Congress and are narrowly defined. Both tax deductions and tax credits reduce taxable income. Both tax deductions and tax credits are a matter of legislative grace.
Both tax deductions and tax credits reduce taxable income.
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) Cousin (younger than the taxpayer) Father Grandchild Child Niece (younger than the taxpayer)
Brother (younger than the taxpayer) Grandchild Child Niece (younger than the taxpayer)
Which of the following statements is INCORRECT? Multiple choice question. Realized income items that are permanently excluded from gross income are referred to as exclusions. Realized income items that taxpayers include in gross income in a subsequent year are called deferrals. Certain types of realized income items may be deferred to a subsequent year, but no income may be excluded from taxation.
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 items are deductions FOR adjusted gross income? (Check all that apply.) Multiple select question. Mortgage interest on a personal residence Contributions to (non Roth) qualified retirement accounts Capital losses Health insurance for self-employed persons Alimony paid for divorces finalized before 1/1/2019 Deduction for Qualified Business Income
Contributions to (non Roth) qualified retirement accounts Capital losses Health insurance for self-employed persons Alimony paid for divorces finalized before 1/1/2019
Which one of the following individuals would NOT meet the relationship test for being a qualifying relative of the taxpayer through a qualifying family relationship? Multiple choice question. Cousin Aunt Grandmother Sister-in-law Nephew Mother
Cousin
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? Multiple choice question. No one Only Craig Hillary, Craig and David Craig and David
Craig and David Craig or David can claim the dependency since they both provided more than 10% of her support.
True or false: Depreciable assets used in a trade or business are classified as capital assets. True false question. True False
False Reason: Capital assets do not include accounts receivable from the sale of goods and services, inventory, or assets used in a trade or business.
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. True false question. True False
False Reason: The child may be receiving support from someone other than the taxpayer. The rule is that the CHILD cannot provide over half of his/her own support.
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. True False
False Reason: The individual must satisfy the requirements of ALL of the four tests listed.
True or False: Commuting costs are classified as itemized deductions for tax purposes. True false question. True False
False Reason: Commuting costs are personal expenses which are not deductible.
How many filing statuses are available to taxpayers? Multiple choice question. Five Four Two Three
Five Married filing jointly, married filing separately, qualifying widow/er, single, head of household
Which of the choices below are the tests that must be met to qualify as a qualifying relative? (Check all that apply.) Multiple select question. Occupation Gross income Age Support Relationship
Gross income Support Relationship
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? Multiple choice question. Head of household Single Qualifying widower Married filing separately
Head of household
If a taxpayer is unmarried for the entire year, which of the following filing statuses could possibly be used by the individual? (Check all that apply.) Multiple select question. Married filing jointly Divorced Married filing separately Head of household Qualifying widow or widower Single
Head of household Qualifying widow or widower Single
When is it possible for a qualifying person for determining head of household status to NOT live with the taxpayer? Multiple choice question. If the person is the married child of the taxpayer If the person is the parent of the taxpayer If the person is the child of the taxpayer, but lives with the other parent
If the person is the parent of the taxpayer
Which one of the following choices is the definition of realized income? Multiple choice question. Income from a transaction with a second party where there is a measurable change in property rights between parties Income consisting of cash receipts only - not bartering or credit transactions Income that must be reported on the current year's tax return Income that is subject to federal income tax
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 be claimed by his uncle because he will not have to file a tax return since he has no income. Lan can be claimed as a dependent by his uncle because his uncle is a citizen and Lan is a qualifying child. Lan can NOT be claimed by his uncle because he would need to meet the qualifying relative requirements, rather than the qualifying child. Lan can NOT be claimed as a dependent by his uncle because he is not a citizen or resident of the U.S..
Lan can NOT be claimed as a dependent by his uncle because he is not a citizen or resident of the U.S..
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? Multiple choice question. Linda does NOT meet the age test because she is not under the age of 19. Linda is deemed to meet the age test because she is permanently and totally disabled. Linda does NOT meet the age test because she is not a full-time student.
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. Single Head of household Married filing separately Married filing jointly
Married filing jointly
Which of the following choices are filing statuses that may be used by a taxpayer? (Check all that apply.) Multiple select question. Unmarried but filing jointly Married filing jointly Divorced Head of household Single Single parent
Married filing jointly Head of household Single
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? Multiple choice question. Qualifying widow or widower Married filing jointly (or separately) Single Head of household
Married filing jointly (or separately) not Qualifying widow or widower Reason: This status is used in the two years following the death of a spouse if there is a dependent child in the household.
Which two filing statuses have the same standard deduction amount? Multiple choice question. Head of household and married filing separately Married filing separately and married filing jointly Qualifying widow/widower and single Married filing separately and single
Married filing separately and single
Which of the following expenses are classified as itemized deductions for tax purposes? (Check all that apply.) Multiple select question. Property insurance Medical and dental expenses Gambling losses Groceries and food items State and local income taxes
Medical and dental expenses Gambling losses State and local income taxes
Which of the following expenses are classified as itemized deductions for tax purposes? (Check all that apply.) Higher education expenses for bachelor's degree Mortgage interest expense Commuting costs Property insurance Charitable contributions
Mortgage interest expense Charitable contributions
Which of the following criteria is necessary to qualify as a dependent of another taxpayer? (Check all that apply.) Multiple select question. 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 Must be considered both a qualifying child and a qualifying relative Must NOT be required to file a tax return of his own Must be considered either a qualifying child or a qualifying relative Must be a citizen of the U.S. or a resident of the U.S., Canada, or Mexico
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 Must be considered either a qualifying child or a qualifying relative Must be a citizen of the U.S. or a resident of the U.S., Canada, or Mexico
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 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 tax return Must be a citizen of the U.S. or a resident of the U.S., Canada, or Mexico
Must be unmarried for at least a portion of the year
Which one of the following individuals meet the requirements to be a a qualifying relative (not a qualifying child) for Owen? Multiple choice question. 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. Ron (age 22) provides over half of his own support. He is a full-time student, earned $12,000, and lived with his cousin, Owen the entire year. Sandy (age 23) does not provide half of her own support. She is a full-time college student, earned $7,000 this year, and lives with her uncle, Owen. Owen provides over half of his niece, Rani's (age 21) support. Rani is a full-time college student, earned $6,000, and lived with 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.
Which of the following requirements are necessary to qualify for head of household status? (Check all that apply.) Multiple select question. Pay more than half the costs of keeping up a home for the year Have lived with a qualifying person in the taxpayer's home for the entire year Be a qualifying widow or widower 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 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? (Check all that apply.) Multiple select question. Provide over half the cost of maintaining a household for a dependent parent not living with the taxpayer Be a qualifying widow or widower Be unmarried (or considered unmarried under the abandoned spouse provisions) at the end of the year Have lived with a qualifying person in the taxpayer's home for more than half the year Be married with a spouse that is not employed outside the home Pay more than half the costs of keeping up a home for 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 Have lived with a qualifying person in the taxpayer's home for more than half the year Pay more than half the costs of keeping up a home for the year
Which one of the following items is NOT a deduction FOR AGI? Multiple choice question. Real estate taxes on personal residence Self employment expenses Rental property expenses One-half of self-employment taxes
Real estate taxes on personal residence
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? Multiple choice question. Allowances and gifts Recreational activities and camps Scholarships Food and clothing
Scholarships
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? Multiple choice question. Single Head of household Qualifying widow Married filing separately
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? Multiple choice question. Single Married filing separately Qualifying widow Head of household
Single
Which filing status is allowed the lowest standard deduction amount? Multiple choice question. Qualifying widow or widower Married filing jointly Head of household Single
Single
Which of the following choices describe tax deductions? (Choose all that apply.) Multiple select question. Tax deductions, like income, follow the all-inclusive concept. 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. Tax deductions reduce an individual's tax liability dollar for dollar.
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.
Tax-exempt Tax-exempt drop zone empty. Tax-deferred Tax-deferred drop zone empty. Ordinary Ordinary drop zone empty. Capital
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 statements are correct concerning the married filing separately (MFS) filing status? (Check all that apply.) Multiple select question. The MFS status is the only status that may be used when a spouse dies during the tax year. MFS taxpayers can capitalize on deductions when one spouse itemizes deductions, while the other spouse uses the standard deduction. The MFS status may be useful when one spouse does NOT want to be liable for the tax liability of the other spouse. Tax-related items for MFS taxpayers (i.e. tax rate schedules, standard deduction amounts), are half the amounts for married filing jointly taxpayers.
The MFS status may be useful when one spouse does NOT want to be liable for the tax liability of the other spouse. Tax-related items for MFS taxpayers (i.e. tax rate schedules, standard deduction amounts), are half the amounts for married filing jointly taxpayers.
In order for an individual to be a qualifying relative, rather than a qualifying child, which of the following criteria must be met? (Check all that apply.) Multiple select question. The individual must meet an "age test." The individual must meet a "residence test." The individual must meet a "gross income test." The taxpayer does not have to provide over half of the individual's support, but the individual cannot provide over half of his/her own support. The taxpayer must provide over half of the individual's support.
The individual must meet a "gross income test." The taxpayer must provide over half of the individual's support.
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? Multiple choice question. The parent with the lowest adjusted gross income The parent with whom the child has lived with the longest during the year The child gets to choose which parent to whom they are dependent The parent who files his/her tax return the earliest
The parent with whom the child has lived with the longest during the year
Select the statement you believe 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. Multiple choice question. Qualifying children are subject to age restrictions while qualifying relatives are not. Taxpayers need NOT provide more than half a qualifying child's support, but they must provide more than half the support of a qualifying relative. Qualifying relatives are subject to a gross income restriction while qualifying children are not. The relationship requirement is more broadly defined for qualifying children than for qualifying relatives.
The relationship requirement is more broadly defined for qualifying children than for qualifying relatives.
Select the statement you believe 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. Multiple choice question. Qualifying relatives are subject to a gross income restriction while qualifying children are not. Qualifying children are subject to age restrictions while qualifying relatives are not. The relationship requirement is more broadly defined for qualifying children than for qualifying relatives. Taxpayers need NOT provide more than half a qualifying child's support, but they must provide more than half the support of a qualifying relative.
The relationship requirement is more broadly defined for qualifying children than for qualifying relatives.
Which of the following statements are true regarding the qualifying widow or widower filing status? (Check all that apply.) Multiple select question. The surviving spouse can NOT use this status if he or she has dependents. The surviving spouse must NOT have remarried during the year. The surviving spouse must have dependents. The status may be used for up to two years after the year the other spouse died. The status is used in the year that one spouse died.
The surviving spouse must NOT have remarried during the year. The surviving spouse must have dependents. The status may be used for up to two years after the year the other spouse died.
Which of the following are requirements that must be met to qualify as an abandoned spouse? (Check all that apply.) Multiple select question. The taxpayer must have lived apart from the other spouse for the entire year. The taxpayer is still married at the end of the year. The taxpayer's home is the principal residence of a dependent child for over half the year. 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. The taxpayer's home is the principal residence of a dependent child for over half the year. The taxpayer pays more than half the costs of maintaining his or her home for the entire year.
Which of the following individuals meet the requirements of a qualifying person for determining head of household filing status? Multiple choice question. The taxpayer's child who resides with his other parent for over half the year, but where the taxpayer gets the earned income credit A friend of the taxpayer who is a qualifying relative because he lives with the taxpayer for the entire year The taxpayer's mother who is dependent of the taxpayer, but lives in her own home which is maintained by the taxpayer An unmarried son who is NOT a dependent but lives with his father for most of the year
The taxpayer's mother who is dependent of the taxpayer, but lives in her own home which is maintained by the taxpayer
True or false: For AGI deductions are preferable to from AGI deductions. True False
True Reason: Reducing AGI is desirable due to tax deductions and benefits that are dependent on the level of AGI
True or false: The U.S. tax laws are based on the all-inclusive concept where gross income includes all realized income from whatever source derived. True False
True Reason: While certain types of income have been excluded from taxation by Congress, they have the power to tax all income.
When can the married filing jointly or married filing separately filing status be used? (Check all that apply.) Multiple select question. When the taxpayers are unmarried, but have a dependent child living with them When the taxpayers have been married for any part of the tax year When one spouse died during the year and the surviving spouse has not remarried When the taxpayers are unmarried, but have lived together for the entire year 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 When the taxpayers are married as of the last day of the tax year
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 pays over half the cost of maintaining a parent's home. Never; only a qualifying child can cause a taxpayer to qualify for head of household status When the parent lives with the taxpayer regardless of whether he or she is a dependent of the taxpayer
When the taxpayer pays over half the cost of maintaining a parent's home.
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? Multiple choice question. William does NOT meet the age test because he is not under the age of 19. William does NOT meet the age test because he is older than Chasity. William does NOT meet the age test because he is not Chasity's child. William meets the age test because he is full-time student under age 24.
William does NOT meet the age test because he is older than Chasity.
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
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 _________AGI.
for
An individual that is unrelated to the taxpayer may meet the relationship test for a qualifying relative if he or she: Multiple choice question. lives with the taxpayer for less than the entire year, but more than half the year. lives with the taxpayer for the entire year. marries the taxpayer during the year.
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: the entire year at least one-third of the year more than half the year longer than he has resided with anyone else during the year
more than half the year
Income that is taxed in the current year according to the tax rate schedule is referred to as ______ income. Multiple choice question. ordinary tax-deferred tax-exempt long-term capital gains
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. Multiple choice question. more than anyone else pays all at least 10 percent over half
over half The taxpayer must pay over half of the individual's support to meet the test for qualifying relative.
Dividends from corporations that meet certain requirements may be taxed at a favorable rate. These dividends are referred to as: Multiple choice question. special dividends. favorable dividends. capital dividends. qualified dividends.
qualified dividends.
A taxpayer may file as a single taxpayer when: Multiple choice question. she has been unmarried for over half of the year her spouse died during the year she is unmarried at the end of the tax year she is separated from her husband, but not yet divorced
she is unmarried at the end of the tax year
