Acct 145

Employers can reimburse employees for up to _________________ per year of educational assistance, whether or not job-related.

5250

When there is fraud on a return, the IRS charges a penalty of ________ on any portion of understatement of tax that is attributable to the fraud.

75%

Determine the amount of taxable income that should be reported by a cash-basis taxpayer in 2019 in each of the following independent cases: A taxpayer completes $500 of accounting services in December 2019 for a client who pays for the accounting work in January 2020. A taxpayer is in the business of renting computers on a short-term basis. On December 1, 2019, she rents a computer for a $200 rental fee and receives a $500 deposit. The customer returns the computer and is refunded the deposit on December 20, 2019. Same facts as (b) except that the computer is returned on January 5, 2020. On December 18, 2019, a landlord rents an apartment for $700 per month and collects the first and last months' rent up front. It is customary that tenants apply the security deposit to their last month's rent upon moving out. An accountant agrees to perform $500 of tax services for an auto mechanic who has agreed to perform repairs on the car of the accountant's wife. The mechanic repairs the car in December 2019 and the accountant starts and completes the tax work in March 2020.

A. 0 b.200 c.200 d.1400

The educator's expense deduction is taken:

Above the line on Schedule 1 of the Form 1040.

Income may be realized in the form of:

All of these.

Even if the total of the itemized deductions is lower than the standard deduction, a taxpayer should choose to itemize on his or her tax return.

false

For 2019, the amount of the student loan interest deduction is limited to $3,500.

false

For self-employed taxpayers, ¾ of the amount of self-employment taxes are deductible as an above-the-line deduction.

false

Income can only be realized in money or services.

false

Payments received by a taxpayer for unemployment compensation are not taxable.

false

Student loan interest is deductible only by the person who actually attended the educational institution.

false

The tax tables stop at taxable income of $115,000.

false

Under a divorce agreement executed in 2019, periodic payments of either cash or property must be made at regular intervals to be deductible as alimony.

false

f a taxpayer's spouse dies during the tax year, the taxpayer must file as a qualifying widow(er).

false

Taxpayers who contribute to or withdraw from an HSA during the year must:

file a Form 8889, record the amount on Schedule 1, and attach it to their Form 1040.

Items that must be reported on line 8 (other income) of Schedule 1 include:

jury duty pay.

For tax purposes, marital status is determined as of the __________ day of the year.

last

Income may be realized in the form of:

money, services, or property.

To be eligible to deduct moving expenses, a taxpayer:

must meet all of the provided criteria.

An individual must complete Schedule B if the following situation occurs:

receives interest income over $1,500.

Taxable income includes:

sick pay

When filing their tax returns, almost all individuals use:

the cash receipts and disbursements method.

The basis of the property received as a dividend by a shareholder of a corporation is:

the fair market value at the date of distribution

A Health Savings Account (HSA) is a tax-exempt savings account to be used for qualified medical expenses.

true

A de minimis benefit is one whose benefit is so small that keeping track of the value which employees received is administratively impractical.

true

A proportional tax rate structure is a tax where the tax rate remains at the same rate regardless of the tax base.

true

A taxpayer who either is 65 or older or blind can claim an additional standard deduction.

true

Almost all individuals use the cash receipts and disbursements method of accounting.

true

At the beginning of June 2019, Julia left her husband and is currently living in an apartment. The couple has no children. At the end of the current year, no formal proceedings have occurred in relation to the separation or potential divorce. Julia has been making a $2,000 a month maintenance payment since moving out. How much can Julia deduct in total as alimony for 2019?

$0.

Which amount represents the standard deduction for a taxpayer who is 44 years old and claims head of household status?

$18,350.

Freya, who is single, had a student loan for qualified education expenses on which interest was due. For 2019, the total interest payments were $2,000. Assuming she has AGI under $70,000, how much may she deduct in arriving at adjusted gross income for 2019?

$2,000. With AGI less than $70K, she is under the phase-out floor; therefore the full amount is deductible (up to the maximum of $2,500

The basic standard deduction in 2019 for a taxpayer, 67 and not blind, filing head of household is:

$20,000. Standard deduction of $18,350 plus the additional amount of $1,650.

Frank, who is single, received $7,000 of social security benefits. His AGI before the social security benefits was $15,000. He also had $100 of tax-exempt interest. What is the amount of taxable social security benefits?

0, The provisional income of $18,600 ($15,000 + $100 + $3,500) does not exceed the threshold of $25,000.

Which of the following fringe benefits provided by the employer is not taxable to the employee?

10% discount on products sold by the business; the gross profit percentage for the business is 20%.

n 2014, Marie borrowed $10,000. In 2019, the debt was forgiven. Marie does not believe she should report the forgiveness of debt as income because she received nothing at the time the debt was forgiven in 2019. Required: What amount of income should Marie record in her tax return in relation to debt forgone?

10,000

As a for AGI deduction, self-employed health insurance premiums are deductible at:

100%.

Student loan interest is reported on Form:

1098-E.

What is the amount of the tax liability for a married couple filing jointly having taxable income of $96,843?

13,019.

When an individual, who is single, has taxable income of $60,000, the tax rate on qualified dividends is:

15%.

When there is negligence on a return, the IRS charges a penalty of ________ of the tax due.

20%.

Shanika is a self-employed hair stylist and had net earnings from self-employment of $4,100. She paid $375 per month for health insurance over the last year. Shanika is entitled to a for AGI deduction for health insurance premiums of:

375x12=4500, but the deduction is limited to the net earnings from self-employment of $4,100 if less than the total cost of the premiums.

The failure to file penalty is ________ of the tax shown on the return for each month (or fraction of a month) the tax return is not filed, up to a maximum of 25%.

5.0%

The taxpayer must provide over ________ of the qualifying relative's support to be able to claim a dependency exemption.

50%

In order to open a Health Savings Account (HSA) account, a taxpayer must qualify under which category: C

A.An uninsured employee of a company that does not offer health coverage, who purchases high-deductible health coverage on his or her own. B. self-employed individual. C.Any one of these Correct D.An employee (or spouse) who works for an employer with a high deductible health plan.

In which of the following cases may the taxpayer claim head of household filing status? a. The taxpayer is single and maintains a household that is the principal place of abode of her infant son. b.The taxpayer is single, maintains a household for herself, and maintains a separate household that is the principal place of abode of her dependent widowed mother. c. The taxpayer was married from January to October and lived with his spouse from January to May. From June 1 to December 31, the taxpayer maintained a household that was the principal place of abode of his married son and daughter-in-law, whom the taxpayer can claim as dependents. d.Same as (c) except the taxpayer lived with his ex-spouse until August and maintained the household from September 1 to the end of the year.

A.The taxpayer can claim head of household status. b.The taxpayer can claim head of household status. c.The taxpayer can claim head of household status. d.The taxpayer can not claim head of household status

Subject to meeting the qualifying rules for a military move, a service member can deduct the reasonable unreimbursed expenses of moving themselves and members of their household, including B

A.Travel, including auto, bus, train, or air transportation B.All of the above. Correct C.Moving household goods and personal effects D.The cost of storing and insuring your household goods and personal effects for a limited period of time.

If Janelle, an accountant, agrees to provide accounting services to Fred, a friend, in exchange for Fred fixing Janelle's office floor, then:

Both of them must report income on their tax returns

Compensation for sickness or injury which is exempt from income includes:

Damages (other than punitive damages) received as a result of personal physical injuries or sickness.

A taxpayer can claim a dependent if the person is a qualifying child or a qualifying relative and the person meets all of the following tests.

Dependent taxpayer, joint return, and citizen or resident tests.

If a taxpayer withdraws his or her deposit on a CD before the instrument matures, the penalty for the early withdrawal on interest will be reported by the financial institution:

In Box 2 of Form 1099-INT.

Determine the average tax rate and the marginal tax rate for each of the following instances: a.A married couple filing jointly with taxable income of $32,991. b.A married couple filing jointly with taxable income of $192,257. c.A married couple filing separately, one spouse with taxable income of $43,885 and the other with $56,218. d.A single person with taxable income of $79,436. e.A single person with taxable income of $297,784. f.A head of household with taxable income of $96,592. g.A qualifying widow with taxable income of $14,019. h.A married couple filing jointly with taxable income of $11,216.

Marg Tax rate Avg tax rate a.10.8% 12% b.17.9% 24% c.43,885 56,218 12.6% 14.6 22% 22% d.16.8% 22% e.26.7% 35% f.16.5% 24% g.10.0% 10% h.10.0% 10%

For a qualified service member, deductible expenses for moving do not include

Meals incurred during the move.

A taxpayer can exclude from income interest received from:

Municipal bonds issued by the state.

All of the following are requirements for a payment to be considered alimony except,

Payments can either be in cash or property

Juan, who is single, is a self-employed carpenter as well as an employee of Frame It, Inc. His self-employment net income is $35,000, and he received a W-2 from Frame It for wages of $25,000. He is covered by his employer's pension plan, but his employer does not offer a health plan in which he could participate.

Percentage of self-employment insurance deductible100% Maximum amount of self-employment insurance premium deductible$35,000 .Percentage of self-employment taxes deductible50%

The self-employment tax is calculated on:

Schedule SE.

A taxpayer's spouse died on December 31, 2018. He has no qualifying child. Which status should the taxpayer select when filing his 2019 tax return?

Single.

Indicate whether each of the following items is considered a for AGI, (above-the-line) deduction for the 2019 tax year. Assume divorce was executed on or before December 31, 2018 and not subsequently modified

Student loan interest early withdrawal penalty one half of self employment taxes alimony moving exp for service members self-employed health insuarance premiums

For purposes of determining taxability of social security benefits, provisional income is calculated by starting with Adjusted Gross Income (AGI) before social security benefits and adding back specific items. One of these items is:

employer-provided adoption benefits.

A taxpayer must be married to claim Head of Household status.

false

An eligible educator for the educator expense deduction must work at least 600 hours during the school year.

false

An extension to file a tax return is an extension of time to file and an extension of time to pay.

false

Deductible moving expenses for active military personnel may include moving household goods and personal effects from one place of station to another.

true

For most individuals, interest income comes from interest-earning deposits at banks, savings and loans, or credit unions.

true

If a divorce agreement executed before 2019 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.

true

Madison is a teacher at a parochial elementary school. If she spends $600 on art supplies for her classes, $250 of this amount can be claimed as a deduction for AGI.

true

Many deductions and credits are determined with reference to adjusted gross income (AGI).

true

Marital status of a taxpayer is determined on the last day of the tax year.

true

The tax code defines adjusted gross income (AGI) as gross income minus a list of permitted deductions.

true

To be claimed as a dependent, a person must be a qualifying child or a qualifying relative.

true

A taxpayer must file a Schedule B if he or she has received taxable interest of $1,550.

true, Schedule B must be filed if the taxpayer had more than $1,500 in interest income.

If a student must perform certain services for the educational institution (e.g., graduate assistantships), the amount paid for services is considered:

wages

What is the amount of the tax liability for a single person having taxable income of $59,200

$8,888.

What is the amount of the tax liability for a married couple filing jointly with taxable income of $135,500? Use the appropriate Tax Rate Schedules.

$21,527.

What is the tax liability for a single individual who has taxable income of $115,500, that includes a taxable qualified dividend of $2

$21,715, tax on $113,500 using the schedule tax rate plus $300 ($2,000 qualified dividend at the rate of 15%).

A married, filing jointly taxpayer's lower limit of provisional income for social security purposes is:

$32,000.

Employers can pay (or reimburse) employees for up to _________ per year of educational assistance, whether or not the education is job-related.

$5,250.

Mia is required under a 2018 divorce decree, that has remained unchanged, to pay $600 of alimony and $300 of child support per month for 12 years. In addition, Mia makes a voluntary payment of $100 per month. How much of each total monthly payment can Mia deduct in 2019?

$600.

For 2019, the maximum aggregate annual contribution that a taxpayer, under age 55, can make to a Health Savings Account (HSA) for family coverage is:

$7,000.

A married couple, both of whom are under 65 years old, decided to file as married filing separately. One of the spouses is going to itemize deductions instead of taking the standard deduction. What is the standard deduction permitted to the other spouse when she files her tax return?

0

Elena is required under a divorce agreement effective January 1, 2019 to pay $800 of alimony and $250 of child support per month for 10 years. Elena also makes a voluntary payment of $150 per month. How much of each monthly payment can Elena deduct as alimony in 2019?

0

In 2015 through 2018, Korey, who is single, borrowed a total of $25,000 for higher education expenses on qualified education loans. In 2019, while still living at home and being claimed by his parents as a dependent, he began making payments on the loan. The first year's interest on the loan was reported as $550, and his AGI for the year was less than $70,000. The amount that Korey can claim on his 2019 tax return is:

0

A single taxpayer is 26 years old and has wages of $18,000 and interest income of $450. Which Form 1040 Schedule must the taxpayer use?

The taxpayer does not need to use a Schedule.

Which Schedule must the taxpayer use to claim a payment made for alimony?

The taxpayer does not need to use a Schedule.

The following court hears only tax cases:

U.S. Tax Court.

Elisa is 21 years of age and a full-time student living with her parents. She had wages of $680 ($75 of income tax withholding) for 2019. Can Elisa file a tax return even though her parents will claim her as a dependent on their tax return?

Yes, Elisa can file a tax return.

Esmeralda is 20 years of age and a full-time student living with her parents. She had wages of $500 ($50 of income tax withholding) for 2019. Can Esmeralda file a tax return to claim her $50 of income tax withholding even though she is a dependent of her parents?

Yes, Esmeralda can file a tax return.

George is 21 years of age and a full-time student living with his parents who are paying more than 50% of his support. He had wages of $1,375 ($140 of income tax withholding) for 2019. Can George's parents claim him on their tax return even though he will file a tax return to claim his refund of $140?

Yes, George's parents can claim him as a dependent.

Taxpayers eligible to take the student loan interest deduction do not include:

a student who is claimed as a dependent on another's return.

Determine the amount of the standard deduction for each of the following taxpayers for tax year 2019: A.Christina, who is single. B.Adrian and Carol, who are filing a joint return. Their son is blind. C.Peter and Elizabeth, who are married and file separate tax returns. Elizabeth will itemize her deductions. D.Karen, who earned $1,100 working a part-time job. She can be claimed as a dependent by her parents. E.Rodolfo, who is over 65 and is single. F.Bernard, who is a nonresident alien with U.S. income. G.Manuel, who is 70, and Esther, who is 63 and blind, will file a joint return. H.Herman, who is 75 and a qualifying widower with a dependent child.

a.$12,200selected answer b.$24,400selected answer c.$0 d.$1,450selected answer e.$13,850selected answer c f.$0selected answer c g.$27,000selected answer h.$25,700

Determine the amount of tax liability in the following situations. In all cases, the taxpayer is using the filing status of married filing jointly. Use the appropriate Tax Tables or Tax Rate Schedules. Taxable income of $62,449 that includes a qualified dividend of $560. Taxable income of $12,932 that includes a qualified dividend of $322. Taxable income of $144,290 that includes a qualified dividend of $4,384. (Round your intermediate computations to 2 decimal places and final answer to the nearest whole dollar amount.) Taxable income of $43,297 that includes a qualified dividend of $971. Taxable income of $262,403 that includes a qualified dividend of $12,396.

a.$7,037 b.$1,263 c.$23,154 d.$4,691 e.$50,210

To be a qualifying relative, the taxpayer must meet three general tests and four specific tests. Which one is notpart of the four specific tests?

age test

To be eligible to fund a Health Savings Account (HSA), a taxpayer must meet which of the following criteria:

all of these choices are correct.

For AGI, or above-the-line, deductions:

are set by statute.

The deduction for half of the self-employment tax is:

based on the net earnings of the business.

For AGI, or above-the-line, deductions:

can reduce overall tax liability.

An example of nontaxable income is:

child support payment

For a qualifying relative to be claimed as a dependent, a person must either be related to the taxpayer, or be a member of the taxpayer's household for the entire year. Select the relative who must be part of the taxpayer's household for the entire year.

cousin

To be a qualifying relative, who has to live in the home of the taxpayer for the entire year

cousin

Accountants recognize revenue when it is both realized and:

earned