tax ch 4 sb

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?

$12,550

Will and Lyndsey are married with no dependents and file a joint tax return. In 2020, they paid $3,000 in qualified student loan interest in addition to $22,550 in itemized deductions. What is the total of their "FROM AGI" deductions in 2020?

$12,550

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 - Income tax withheld from a taxpayer's salary or wages by an employer - Estimated tax payments the taxpayer made directly to the IRS

Which of the following criteria is necessary to qualify as a dependent of another taxpayer? (Check all that apply.)

- 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

Yolanda is your client. With her current level of taxable income, she is paying tax at a 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?

15%

In 2021, Ryan files as head of household and has taxable income of $122,500. None of his taxable income consists of capital gains or qualified dividends. Using the tax rate schedule, his tax liability rounded to the nearest dollar, totals $______

21,969

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 $

34,146

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 itemized deductions from AGI to arrive at taxable income.

Which of the choices below is NOT one of the tests that must be met to qualify as a qualifying relative?

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 one of the following criteria for the support test must be met in order for Annie to be considered a qualifying relative for Andrew?

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

Ashley and Roland were married and had two dependent children. Roland died last year. What filing status will Ashley use for the year Roland died and for the current year (assuming she does not remarry)?

Ashley will use married filing jointly in the prior year and qualifying widow in the current year.

Which of the following statements is INCORRECT?

Both tax deductions and tax credits reduce taxable income.

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? (Check all that apply.)

Brother Father Niece Grandchild

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

Which of the following individuals would meet the relationship test for being a qualifying child of the taxpayer? (Check all that apply.)

Grandchild Niece (younger than the taxpayer) Brother (younger than the taxpayer) Child

What is meant by the all-inclusive concept when referring to the U.S. tax laws?

Gross income includes all realized income from whatever source derived.

Which of the following criteria will contribute toward qualifying a taxpayer for head of household status? (Check all that apply.)

Have lived with a qualifying person in the taxpayer's home for more than half 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 Pay more than half the costs of keeping up a home for the year

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 summer and fall semesters. James lives with Corey. Which of the following statements is correct with respect to the age requirement for a qualifying child?

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

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 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?

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

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?

Married filing jointly (or separately)

Which of the following individuals would meet the relationship test for being a qualifying child of the taxpayer? (Check all that apply.)

Nephew (younger than the taxpayer) Stepson Half-sister (younger than the taxpayer)

Which one of the following individuals meet the requirements to be a 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.

Which of the following requirements are necessary to qualify for head of household status? (Check all that apply.)

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 taxes may be imposed in addition to the individual income tax and are calculated on tax bases other than the regular taxable income? (Check all that apply.)

Self-employment tax Alternative minimum tax

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?

Single

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?

Support

Match the type or character of income to its definition.

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 Gains (or losses) on investment or personal use assets that may be taxed at favorable rates

Which of the following statements are true regarding the qualifying widow or widower filing status? (Check all that apply.)

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

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

When can the married filing jointly or married filing separately filing status be used? (Check all that apply.)

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

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

alternative minimum

In order to meet the criteria for a qualifying ______ (choose either: 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 tax ______ reduces taxable income and a tax ______ reduces the tax liability dollar for dollar.

deduction credit

A taxpayer's ______ ______ depends on his or her marital status at the end of the year and whether the taxpayer has dependents.

filing status

Put the following items in the order in which they are found in the individual income tax formula

gross income - for AGI = AGI - from AGI = taxable 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 taxpayer's filing status depends on his or her ______ status at the end of the year and whether the taxpayer has any ______

marital dependents

Examples of a tax ______ include 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

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 $_____

refund 2,079

The four tests that must be met to qualify as a qualifying child are: ______, ______, ______, and ______

relationship, age, residence, and support

In addition to the individual income tax, individuals may be required to pay other taxes. Owners of unincorporated businesses may have to pay ______ - ______ tax

self-employment

A taxpayer may file as a single taxpayer when:

she is unmarried at the end of the tax year

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