Deck 14: The Individual Tax Formula

Question 1

For the taxable year in which a married person dies,the widow or widower can file a joint return with the deceased.

Answer 1

True

Question 2

In order to be considered a dependent,an individual must be either a qualifying child or a qualifying relative.

Answer 2

True

Question 3

The majority of individual taxpayers take the standard deduction rather than itemizing their deductions.

Answer 3

True

Question 4

Jay Blount,26-years old and a full-time student,lives in his parents' home.Although Jay earned $8,400 from a part-time job,his parents provide at least 75% of his financial support.For tax purposes,this year Jay is considered a dependent of his parents.

Question 5

Mr.and Mrs.Queen provide 90% of the financial support for Mrs.Queen's mother,Doreen,who lives in the couple's home.Doreen's only income this year is a $7,500 taxable pension from her former employer.Doreen is not considered a dependent of Mr.and Mrs.Queen this year for tax purposes.

Question 6

The standard deduction for single individuals equals one-half of the standard deduction for married individuals filing jointly.

Question 7

In computing taxable income,an individual is allowed to deduct both the standard deduction and any itemized deduction for the year.

Question 8

Only natural children,adopted children,and stepchildren can be a qualified dependent for tax purposes.

Question 9

In computing taxable income,an individual will deduct the lesser of itemized deductions or the standard deduction.

Question 10

A taxpayer who knowingly signs a joint return on which his spouse has failed to report her income is liable for any tax assessments made by the IRS on that income.

Question 11

An individual's taxable income equals adjusted gross income less the QBI deduction.

Question 12

Adjusted gross income equals total income less itemized deductions.

Question 13

Mr.Andrews is age 58,legally blind,and files as a single taxpayer.His standard deduction for 2019 is $12,200.

Question 14

An individual's taxable income equals adjusted gross income less the greater of the standard deduction or itemized deductions less the QBI deduction.

Question 15

Harry and Sally were married on December 23,2019.Should they choose to file jointly,their income for the entire year is reported on a joint return.

Question 16

Mr.Lenz died on May 4,2018.His widow,Mrs.Lenz,maintains a home for her three children,ages 4,6,and 11.Mrs.Lenz must file as a head of household in 2019.

Question 17

Charlie is single and provides 100% of the financial support for his dependent mother,Angela,who lives with Charlie.Charlie's filing status is head of household.

Question 18

Bill and Afton are married and file a joint tax return.Bill is 67 and Afton is 66,and neither is legally blind.Their standard deduction for 2019 is $27,000.

Question 19

Mrs.Paley died on July 14,2018.Her husband has not remarried.The Paleys' two children,ages 34 and 36,are financially independent.Mr.Paley may file as a surviving spouse in 2018 and 2019.

Question 20

Mr.Thomas is age 69,has perfect vision,and files as a single taxpayer.His standard deduction for 2019 is $13,850.

Question 21

An itemized deduction doesn't result in any tax savings in a year in which an individual taxpayer takes the standard deduction.

Question 22

The earned income credit offsets the burden of the federal payroll tax on low-income families and encourages individuals to seek employment rather than to depend on welfare.

Question 23

The goal of the QBI deduction is to lower the effective tax rate on business profit earned by pass through entities.

Question 24

Mr.Jackson has $100,000 of qualified business income,he is entitled to a QBI deduction of $25,000.

Question 25

It is impossible for a progressive income tax system to be both marriage neutral and horizontally equitable.

Question 26

An above-the-line deduction reduces both adjusted gross income and taxable income.

Question 27

Mrs.Starling worked for Abbot Inc.from January 1 through September 19.Her salary from Abbot for this period totaled $150,000.Mrs.Starling worked for JJT Inc.from October 1 through December 31.Her salary from JJT for this period totaled $38,000.JJT is not required to withhold Social Security tax from Mrs.Starling's salary because Abbot Inc.already withheld the maximum tax for the year.

Question 28

A taxpayer with a non-child dependent may be eligible for the full $2,000 child tax credit provided the taxpayer's AGI does not exceed the phase-out thresholds.

Question 29

Married individuals who elect to file separate tax returns may use the single rates to compute their tax.

Question 30

Because a QBI deduction affects AGI,it may impact the ability to claim a deduction for unreimbursed medical expenses.

Question 31

Mr.and Mrs.Toliver's AGI on their jointly filed return is $339,000.Regardless of the number of their children,the Tolivers are not eligible for a child credit.

Question 32

The QBI deduction always has the impact of lowering taxable income.

Question 33

The tax rates for individuals who qualify as a head-of-household are lower than the tax rates for single individuals.

Question 34

Mr.and Mrs.Kline file a joint return on which they claim the standard deduction.If the taxable income on their return is $35,000,they are not paying a marriage penalty.

Question 35

Based on the 2017 tax rates,an individual is indifferent between filing as a single taxpayer or a head of household if he has $8,700 or less of taxable income.

Question 36

The QBI deduction always has the impact of lowering AGI.

Question 37

The earned income credit is available only to low-income taxpayers with dependent children.

Question 38

Mr.and Mrs.Casey have two dependent children,ages 3 and 6.The Caseys spent $10,300 for child care this year.Mrs.Casey is employed full-time as an attorney.Mr.Casey is an unpublished novelist who has yet to earn any money from his writing.The Caseys are eligible for a dependent care credit.

Question 39

An individual who files his own tax return but is claimed as a dependent on another individual's return is not allowed any standard deduction.

Question 40

An individual with $700,000 taxable income has the same marginal rate as a single taxpayer or as a head of household.

Question 41

Mrs.Raines died on June 2,2018.Mr.Raines has not remarried and has no children or other dependents.What is his filing status for 2018 and 2019?

A)Surviving spouse for 2018 and 2019.
B)Surviving spouse for 2018; single for 2019.
C)Married filing jointly for 2018; surviving spouse for 2019.
D)Married filing jointly for 2018; single for 2019.

Question 42

Marie,an unmarried taxpayer,is 26 years old.This year,Marie earned $50,000 gross income.Her itemized deductions totaled $5,100.Marie maintained a home for her 12-year-old sister who qualifies as Marie's dependent.Compute Marie's taxable income.

A)$40,900
B)$31,650
C)$26,550
D)None of the above

Question 43

The standard deduction is not deductible in the computation of alternative minimum taxable income.

Question 44

Miss Blixen's regular income tax is $77,390,and her tentative minimum tax is $74,100.Consequently,Miss Blixen's alternative minimum tax (AMT)is zero.

Question 45

Mr.Pearl's total income and self-employment tax on this year's Form 1040 is $72,610.If Mr.Pearl paid at least $65,349 of this tax in the form of withholding or quarterly estimated payments,he will not incur an underpayment penalty.

Question 46

Leon died on August 23,2016,and his wife Mary has not remarried.Since her husband's death,Mary has maintained a home for her two dependent children,who were ages 7 and 4 when their father died.Which of the following describes Mary's filing status for 2017,2018,and 2019?

A)Surviving spouse for 2017,2018,and 2019.
B)Surviving spouse for 2017 and 2018; head of household for 2019.
C)Head of household for 2017,2018,and 2019.
D)Surviving spouse for 2017; head of household for 2018 and 2019.

Question 47

Samantha died on January 18,2018.Her husband Dave lived by himself until he remarried in 2019.What was Dave's filing status in 2018 and 2019?

A)Married filing jointly in 2018; surviving spouse in 2019.
B)Married filing jointly in 2018; single in 2019.
C)Surviving spouse in 2018 and 2019.
D)Surviving spouse in 2018; single in 2019.

Question 48

Kent,an unmarried individual,invited his widowed father,Martin,to move into his home in January of this year.Martin's only income item was a $14,000 taxable pension from his former employer.Kent provides about 75% of his father's financial support.What is Kent's filing status for the year?

A)Single
B)Head of household
C)Married filing separately
D)None of the above

Question 49

The unextended due date for the individual tax return (Form 1040)is the 15^th day of the third month following the close of the taxable year.

Question 50

Individual taxpayers can obtain an automatic extension of time to file a calendar year Form 1040 until October 15 of the following year.

Question 51

Mr.and Mrs.Eller's AGI last year was $287,300,and their total tax was $70,268.The couple's safe-harbor estimate of current year tax is $77,295.

Question 52

Mr.and Mrs.Warren's AGI last year was $90,300,and their total tax was $13,988.This year,the couple's total tax is $14,700.Unless the Warrens paid at least $13,988 in the form of withholding and quarterly estimated payments,they will incur an underpayment penalty this year.

Question 53

The highest individual marginal rate for regular tax purposes is 37%,while the highest individual marginal rate for alternative minimum tax (AMT)purposes is only 28%.

Question 54

Which of the following taxpayers can't use the tax rates for married filing jointly in 2019?

A)Mr.Lane died on August 10,2019.Mrs.Lane has not remarried and has no dependent children.
B)Mrs.Holden died on January 15,2018.Mr.Holden has not remarried and maintains a home for two dependent children.
C)Mr.and Mrs.West were legally divorced on December 21,2019.Mrs.West has not remarried and maintains a home for three dependent children.
D)All of the above taxpayers qualify for married filing jointly filing status.

Question 55

An extension of the time to file an individual tax return also extends the time to pay any balance of tax due with the return.

Question 56

An individual must pay the greater of her regular income tax or her alternative minimum tax (AMT)for the year.

Question 57

Mr.Jones and his first wife were legally divorced on February 19,2019.Mr.Jones remarried the second Mrs.Jones on December 20,2019.Which of the following describes Mr.Jones' filing status in 2019?

A)Married filing jointly with the second Mrs.Jones
B)Married filing jointly with the first Mrs.Jones
C)Married filing separately (can't file jointly with either spouse)
D)None of the above

Question 58

Which of the following statements regarding filing status is false?

A)A widow or widower maintaining a home for a dependent child qualifies as surviving spouse for two tax years following the year of the spouse's death.
B)Marital status for tax purposes is determined on the last day of the year.
C)Any unmarried individual with a dependent child qualifies as head of household.
D)An unmarried individual without children or other dependents files as a single taxpayer.

Question 59

Every individual taxpayer is entitled to an AMT exemption,the amount of which varies with filing status.

Question 60

Ms.Dolan,a divorced individual,invited her elderly uncle,Martin,to move into her home in January of this year.Martin's only income item was $2,390 of taxable interest on a savings account.Ms.Dolan provides over 90% of her uncle's financial support.What is Ms.Dolan's filing status for the year?

A)Single
B)Head of household
C)Married filing separately
D)None of the above

Question 61

Melissa,age 16,is claimed as a dependent on her parents' tax return.This year,Melissa earned $2,000 from babysitting and $1,280 interest income from a savings account.Compute Melissa's standard deduction.

A)$2,000
B)$2,350
C)$0
D)$1,100

Question 62

Tamara and Todd Goble,ages 66 and 60,file a joint return.Todd is legally blind.Compute their standard deduction.

A)$21,400
B)$24,400
C)$25,700
D)$27,000

Question 63

Julie,an unmarried individual,lives in a home with her 13-year-old dependent son,Oscar.This year,Julie had the following tax information: Standard Deduction Table. Compute Julie's adjusted gross income (AGI)and taxable income.

A)AGI $118,000; taxable income $92,750
B)AGI $118,000; taxable income $90,900
C)AGI $118,000; taxable income $99,650
D)AGI $107,000; taxable income $88,700

Question 64

Hunter,age 17,is considered a dependent of his parents for tax purposes.This year,Hunter earned $16,000 for appearing in a television commercial.Compute Hunter's standard deduction.

A)$12,550
B)$16,000
C)$12,200
D)$0

Question 65

Mr.and Mrs.Jelk file a joint return.They provide 65% of the financial support for David,the 14-year old son of a friend who died three years ago.David lives in the home of his aunt Sarah,who provides 35% of his financial support.Which of the following statements is true?

A)David is a qualifying child of the Jelks.
B)If David earns less than $4,150 gross income this year,he is a qualifying child of the Jelks.
C)If David earns less than $4,150 gross income this year,he is a qualifying relative of the Jelks.
D)David is neither a qualifying child nor a qualifying relative of the Jelks.

Question 66

Mr.and Mrs.Kay,ages 68 and 66,file a joint return.Mrs.Kay is legally blind.Compute their standard deduction.

A)$24,400
B)$28,300
C)$25,700
D)$27,000

Question 67

Mr.and Mrs.Upton's marginal tax rate on their joint return is 32%.This year,their itemized deductions totaled $25,200,and their standard deduction (MFJ)was $24,400.Compute their incremental tax savings from their itemized deductions.

A)$0
B)$256
C)$7,808
D)$8,064

Question 68

Mr.and Mrs.Steel,who file a joint return,have $513,200 taxable income in 2019.Compute their regular tax liability.

A)$105,062
B)$130,007
C)$154,872
D)None of the above

Question 69

Ms.Lewis maintains a household which is the principal place of residence for Kathy.Ms.Lewis provides more than 50% of Kathy's financial support.In which of the following cases can Ms.Lewis claim Kathy as a qualifying child?

A)Kathy is age 8 and the child of Ms.Lewis' best friend,who died three years ago.
B)Kathy is Ms.Lewis' 15-year-old niece.
C)Kathy is Ms.Lewis' 30-year-old unmarried sister.
D)Both B.and C.

Question 70

Mr.and Mrs.Liddy,ages 39 and 41,file a joint return and have no dependents for the year.Here is their relevant information: Standard Deduction Table. Compute their adjusted gross income (AGI)and taxable income.

A)AGI $50,200; taxable income $25,800.
B)AGI $52,000; taxable income $35,750.
C)AGI $52,000; taxable income $33,550.
D)AGI $50,200; taxable income $9,950.

Question 71

Mr.and Mrs.Dell,ages 29 and 26,file a joint return and have no dependents for the year.Here is their relevant information: Standard Deduction Table. Compute their adjusted gross income (AGI)and taxable income.

A)AGI $164,900; taxable income $134,700
B)AGI $158,700; taxable income $132,500
C)AGI $158,700; taxable income $108,500
D)AGI $164,900; taxable income $8,500

Question 72

Which of the following statements describing individual tax deductions is false?

A)In a year in which an individual takes the standard deduction,any itemized deductions yield no tax benefit.
B)The majority of individual taxpayers itemize rather than taking the standard deduction.
C)Individuals elect to itemize deductions in a tax year in which total itemized deductions exceed the standard deduction.
D)Individuals who pay self-employment tax can deduct one half of the tax as an above-the-line deduction.

Question 73

Which of the following statements regarding the calculation of taxable income is false?

A)The first step in the calculation of taxable income is determining the taxpayer's total income.
B)Adjusted gross income is equal to total income less above-the-line deductions.
C)Adjusted gross income can be reduced by the greater of the standard deduction or itemized deductions.
D)Taxpayers are allowed to deduct the greater of itemized deductions or above-the-line deductions in calculating taxable income.

Question 74

Which of the following statements regarding a qualifying child is false?

A)The child must have been alive at least 180 days during the tax year.
B)The child must be a U.S.citizen or resident of the United States,Canada,or Mexico.
C)The child must not have provided more than 50% of his or her own financial support during the year.
D)The child must not have filed a joint return with a spouse unless the return was filed only as a refund claim.

Question 75

Which of the following statements describing individual tax deductions is false?

A)Individuals can take both above-the-line and the standard deduction in the same year.
B)Individuals elect to itemize deductions in a tax year in which total itemized deductions exceed the standard deduction.
C)In a year in which an individual takes the standard deduction,any itemized deductions yield no tax benefit.
D)Individuals who pay self-employment tax can deduct the tax as an itemized deduction.

Question 76

Meraleigh,age 16,is claimed as a dependent on her parents' tax return.This year,Meraleigh earned $510 from babysitting and $220 interest income from a savings account.Compute Meraleigh's standard deduction.

A)$730
B)$860
C)$510
D)$1,100

Question 77

Jennifer and Jamar are married and live in a home with their 13-year-old dependent son,Oscar.This year,they had the following tax information. Compute adjusted gross income (AGI)and taxable income.

A)AGI $157,800; taxable income $124,188.
B)AGI $157,800; taxable income $130,900.
C)AGI $151,088; taxable income $89,888.
D)AGI $151,088; taxable income $107,888.

Question 78

Which of the following statements is false?

A)The determination that an individual is a qualifying child of the taxpayer has the potential to impact the availability of certain credits for the taxpayer.
B)A qualifying child must be the natural child,the adopted child,or the stepchild of the taxpayer.
C)A qualifying relative may include an unrelated individual who is a member of the taxpayer's household for the year.
D)There is no limit on the amount of gross income that a qualifying child may earn in a year.

Question 79

Mr.and Mrs.Anderson file a joint return.They provide more than 50% of the financial support of their two children,Dana,age 26,and John,age 17.Both children live in the Andersons' home.Dana earned $7,100 from a part-time job,while John earned no income this year.Which of the following statements is true?

A)Both Dana and John are qualifying children of the Andersons.
B)Dana is a qualifying relative and John is a qualifying child of the Andersons.
C)John is a qualifying child of the Andersons.
D)Neither Dana nor John is a qualifying child of the Andersons.

Question 80

In determining the standard deduction,which of the following statements is true?

A)The standard deduction is a function of filing status.
B)An individual who is both blind and age 65 by the last day of the taxable year is entitled to one additional standard deduction amount.
C)An individual who is considered a dependent of another person for tax purposes is not allowed a standard deduction.
D)The standard deduction for a head of household is twice the standard deduction for a single individual.