Deck 4: Personal and Dependency Exemptions; Filing Status; Determination of Tax for an Individual; Filing Requirements

Question 1

In determining the amount spent for support of a potential dependent, amounts spent on entertainment and vacations are included.

Answer 1

True

Question 2

A person who receives more than one-half of his or her support in welfare payments from the state cannot qualify as a dependent of another individual.

Answer 2

True

Question 3

A person whose spouse died in 20X1 may qualify as a surviving spouse only in 20X1 and 20X2, if all other requirements are met.

Answer 3

False

Question 4

A multiple support agreement allows a group of individuals to divide the exemption amount so that each member of the group has a proportional share of the total exemption deduction for the common dependent.

Question 5

A 16-year-old child with earned income of $8,000 cannot be claimed as a dependent on his or her parents' tax return.

Question 6

Under a multiple support agreement, A, who provided 55 percent of the support of his mother, may assign the exemption to his sister, L, who provided 25 percent of the support.

Question 7

A single woman whose only income is taxable interest of $2,900 and Social Security benefits of $7,300 for 2012 cannot qualify as a dependent of her son because she fails to meet the gross income test.

Question 8

A single taxpayer with one dependent receives a total exemption deduction that is less than that of a head of household with one dependent.

Question 9

To qualify as an abandoned spouse, a taxpayer must claim at least one dependency exemption.

Question 10

The general rule for children of divorced or separated parents who together provide over one-half the support and together have custody more than one-half the year is that the exemption goes to the custodial parent.

Question 11

A taxpayer may not claim an exemption for any child who filed a joint return with her spouse.

Question 12

When support is provided in a form other than a current cash expenditure (e.g., a home in which the dependent is living), it is the cost of the support item that is considered in determining whether the support test is met.

Question 13

A taxpayer with adjusted gross income in excess of a certain amount can lose the entire exemption deduction.

Question 14

A U.S.citizen's family member who is a French citizen and Mexican resident could meet the citizenship test for purposes of the dependency exemption.

Question 15

A person who is claimed as a dependent on another person's return claims a personal exemption of zero on his or her own return.

Question 16

The general rule for children of divorced or separated parents who together provide over one-half the support and together have custody more than one-half the year is that the exemption goes to the parent providing the greater amount of support.

Question 17

Individual F lives with his daughter W and her husband H, and is their dependent.If W dies, H may continue to support F and claim him as a dependent.

Question 18

Social Security benefits spent on food and lodging are not included in support for an individual.

Question 19

A person who qualifies as an abandoned spouse can file as a head of household.

Question 20

Once a married couple files a joint return for a year, they may not file amended separate returns for that year after the due date.

Question 21

An extension of time to file a return for an individual taxpayer for up to six months is automatic (i.e., no explanation is required so long as the proper form is filed before the due date).

Question 22

A taxpayer who does not file a tax return is protected by a seven-year statute of limitations (i.e., the IRS cannot assess a deficiency after seven years).

Question 23

In what situation is a married person generally required to file separately?

A)They are separated and planning a divorce.
B)Another taxpayer could claim one spouse as a dependent.
C)Either spouse is a nonresident alien.
D)Use of the separate return tables yields a lower tax than use of the joint return tables.

Question 24

A taxpayer who files late and fails to get the proper extension must pay a penalty of 0.5 percent per month (up to a maximum of 25%), beginning with the due date of the tax return (usually April 15 for calendar year individuals) and ending with the date the return is filed.

Question 25

Which one of the following statements is true of returns filed by married persons filing jointly?

A)Each spouse is liable for one-half the tax due if there are any deficiencies.
B)Each spouse is liable for his or her proportional share due, based on percentage of total income, if there are any deficiencies.
C)Once a married couple files a joint return for a year, they may not switch to separate returns after the due date for that return.
D)The joint return is available more for convenience than for tax savings.

Question 26

A taxpayer whose estimated tax due after withholding is less than $1,000 need not make estimated payments even if the other requirements are met.

Question 27

A taxpayer filing as a head of household whose taxable income in 2012 is $60,000 owes Federal income tax of $15,000 (25% × $60,000).

Question 28

F and B were divorced in 1996, their divorce decree gave custody of their child to B, and under a separate written agreement, B surrendered the dependency exemption to F for the current year.F paid child support of $800 in the current year.B provided the other support of $2,000 for their only child.What is B's filing status and her number of exemptions?

A)Head of household and one
B)Head of household and two
C)Single and one
D)Single and two

Question 29

D, whose parents are deceased, is supported by her grandparents and other relatives.Her support this year was provided as follows: $$\begin{array} { l r } \text { Interest income } & \$ 1,500 \\\text { Social security surv iv or's benefits } & 2,000 \\\text { Contributions by maternal grandparents } & 1,500 \\\text { Contributions by paternal grandparents } & 1,500 \\\text { Contributions by mother's brother } & 1,000 \\\text { Contributions by father's sister } & 600\end{array}$$ Under a multiple support agreement, who may claim a dependency exemption for D?

A)Any of those listed
B)Either set of grandparents
C)Either set of grandparents or the mother's brother
D)None of those listed because the Social Security benefits and interest income exceed the exemption amount

Question 30

Which one of the following is not included in determining the amount of support given to a dependent?

A)Services performed by the parent for the dependent
B)Gifts of toys
C)Expenditures for recreation
D)Expenses for education

Question 31

G and J are married and have three children: R, S, and C.R, age 19, was the star of the men's volleyball team at State University, where he was a full-time student in the current year.He received a scholarship valued at $8,000.G and J provide his other support of $5,000.S, who was a full-time high school student all year, worked part-time, earning $3,700.G and J spent $4,000 toward S's support.C was a high school freshman and had no income during the year.How many exemptions may G and J claim on their joint tax return?

A)Two
B)Three
C)Four
D)Five

Question 32

Which one of the following items when spent is not included in support?

A)Social security old age benefits spent on food
B)State aid to dependent children spent on rent
C)University scholarships for academic excellence
D)Charitable contributions paid on one's behalf by a parent

Question 33

A single taxpayer whose only income is from a sole proprietorship with gross income of $8,700 and net income of $3,800 is not required to file a tax return for 2012.

Question 34

A taxpayer generally may amend his or her tax return for any missed deductions within three years of the original due date.

Question 35

Which of the following generally has the least favorable tax rates?

A)Head of household
B)Married, filing jointly
C)Married, filing separately
D)Single

Question 36

V is 11 years of age, her only income is interest from savings of $3,200, and she has no itemized deductions.V is claimed as a dependent by her parents.V's taxable income is $2,250 for 2012, $1,300 of which is taxed at her parents' marginal tax rate.

Question 37

A parent whose 12-year-old child's only income is interest of $4,100 may elect to report the income on his own return and pay the tax with that return.

Question 38

Which of the following is not true of the gross income test for the dependency exemption (i.e., in testing to determine if the individual is a qualifying relative)?

A)Generally, a dependent's gross income may not exceed the exemption amount.
B)Gross income is interpreted to mean "gross cash receipts."
C)A child of the taxpayer, under age 24, who is a full-time student at any time during five calendar months of the tax year is exempted from the test.
D)A child of the taxpayer under age 19 is exempted from the test.

Question 39

L is single, 35 years of age, and owns her own home.She provides more than one-half the support for M, who is unrelated to L and lives legally in L's home for the entire year.M also is single, is a citizen of the United States, and has gross income of $2,800.What is L's filing status and her proper number of exemptions for the current calendar year?

A)Single and one
B)Single and two
C)Head of household and two
D)Married filing separately and one

Question 40

V is 66 years of age and has good sight.V provided $8,000 of the support of his elderly mother, who lives in a rest home and whose only income is Social Security benefits of $6,200.What is V's filing status and how many exemptions may he claim?

A)Head of household and two
B)Head of household and one
C)Single and two
D)Single and one

Question 41

Tax indexation

A)Decreases (or eliminates) bracket creep
B)Results in unlegislated tax increases
C)Provides adjustments in standard deductions and tax brackets only
D)Provides adjustments tied to changes in the Index of Leading Economic Indicators

Question 42

Which statement concerning the statute of limitations is not true?

A)The statute of limitations never ends if the return is fraudulent.
B)If an individual (calendar year) taxpayer files a return for calendar year 2011 on March 15, 2012, the IRS normally may not assess an additional tax liability against the taxpayer after April 15, 2015 for reasons other than a false or fraudulent return, no return, or a substantial omission of income.
C)The statute of limitations period does not change regardless of the amount of income that is omitted or deduction improperly claimed.
D)The statute of limitations begins to run only if a return is filed.

Question 43

Chris, a single taxpayer, has investment income in addition to his salary.Use the information below to answer the following question concerning Chris' estimated tax payments during 20X1.Assume that all forms of income, withholding, and deductions occur at a constant rate throughout the year. Salary $\quad$$\quad \$ 39,000$
Federal income tax withheld $\quad$ $\$ 3,200$
Interest income $\quad$$\quad$ 14,150 If Chris pays quarterly installments of $300 on or before the due dates (his 20X0 tax liability was $7,200), and he pays the remaining tax liability on April 15, 20X2, calculate the penalty for underestimation of tax that Chris will owe to the nearest dollar.Assume a penalty interest rate of 10 percent, and installment due dates 365, 304,212, and 90 days prior to April 15.

A)$70
B)$175
C)$186
D)$280

Question 44

A penalty is assessed against individuals for failure to make adequate estimated tax payments.Which of the following is not true of that penalty?

A)The penalty is not assessed if the tax due is less than $1,000.
B)The penalty is not assessed if the total prepayments-withholding, estimated tax payments, and others-are at least 90 percent of the total tax due for the year.
C)The penalty is assessed from the due date of the installment until the tax is actually paid (if later).
D)The penalty is not assessed if the total prepayments-withholding, estimated tax payments, and others-equal or exceed the prior year's tax (unless taxable income exceeded $150,000).

Question 45

Information from the following table will be useful for answering this question.All figures are for 2012. Personal, dependency exemption: $3,800 (2012) $$\begin{array} { l r r } \text { Filing Status } & \text { Basic Standard Deduction } & \text { Additional Standard Deduction* } \\\text { Married, filing jointly } & \$ 1,900 & \$ 1,150 \\\text { Married, filing separately } & 5,900 & 1,150 \\\text { Head of household } & 8,700 & 1,450 \\\text { Single } & 5,950 & 1,450\end{array}$$ *Blind taxpayer, taxpayer 65 or older
Which of the following taxpayers must file a return for 2012?

A)A single taxpayer, age 67, has Social Security benefits of $9,000 and interest income of $10,950
B)A married couple, both under 65 years, have interest income of $18,200
C)A single taxpayer, age 65, has self-employment earnings of $2,700
D)A single teenager, claimed as a dependent by her parents, has part-time wages of $5,100

Question 46

Which of the following is not true of the due date for the individual tax return?

A)The due date is the fifteenth day of the fourth month following the taxable year.
B)An automatic extension of time to file the individual return will be granted upon request.
C)An extension of time to file also allows the taxpayer to pay his or her tax late with no penalty.Interest will be charged, however.
D)An extension beyond four months from the original due date will be granted if an adequate reason is given.

Question 47

Which statement below is not true of single filing status?

A)A single taxpayer may claim dependency exemptions.
B)Single filing status applies to anyone who does not qualify as married, surviving spouse, or head of household.
C)A person whose divorce becomes final on December 30, and does not re-marry the next day, will use single filing status for the calendar year if he/she is not head of household.
D)A married person may elect to use single filing status if filing separately.

Question 48

Which of the following taxpayers is not required to use the tax tables?

A)A single taxpayer with taxable income of $88,000.
B)A married couple with taxable income of $110,000.
C)A head of household with taxable income of $65,000.
D)No taxpayer is required to use the tax tables.

Question 49

W is a full-time student and is claimed as a dependent by his parents.During 2012, he had tax-exempt interest income of $1,500 and wages of $2,300.He also had records supporting itemized deductions of $75.How much is W's standard deduction?

A)$2,600
B)$950
C)$2,300
D)$5,700

Question 50

J paid her 2012 taxes by filing quarterly estimated tax payments of $2,000 each.She requested an automatic extension of the filing due date in March, 2013, and in July filed her completed return showing total 2012 tax liability of $9,500.If she paid $8,400 in 2012 taxes, enclosed no money with Form 4868 in March, and enclosed $1,500 with Form 1040 in July, what interest or penalty does she not owe?

A)Failure-to-file penalty
B)Failure-to-pay penalty
C)Interest on balance due
D)Penalty on underpayment of estimated tax

Question 51

A taxpayer whose income consists of wages plus interest income under $400, is single with no dependents, and plans to claim the deduction for interest paid on his home mortgage may file

A)Form 1040 only.
B)Form 1040 or Form 1040A only.
C)Form 1040A or Form 1040EZ only.
D)Form 1040, Form 1040A, or Form 1040EZ.

Question 52

K owed $9,500 in taxes for 2012, paid as follows: estimated tax payments of $2,100 each quarter, $1,000 with her Form 4868 (request for automatic extension) in March, and the remaining $100 with her Form 1040 in July.K's 2011 total tax was $8,000.What interest or penalty does she owe?

A)Failure-to-pay penalty
B)Interest on balance due
C)Penalty on underpayment of estimated tax
D)None of the above

Question 53

A taxpayer filing as a head of household or as a surviving spouse must determine the costs of maintaining the home.What item below may not be included in these costs?

A)Clothing
B)Food consumed on the premises
C)Insurance
D)Repairs

Question 54

H and W are married and have a 15-year-old daughter who lives with them the entire taxable year.The couple's marginal tax rate for federal tax purposes is 35 percent.What amount will their daughter save them in taxes?

A)$1,330
B)$3,800
C)$0
D)$950
E)None of the above

Question 55

Compared with a single taxpayer who has the same taxable income, a taxpayer filing as head of household owes

A)A smaller amount of tax
B)The same amount of tax
C)A larger amount of tax
D)Either the same or a smaller amount of tax, depending on the amount of taxable income

Question 56

A 35 percent tax is assessed on income in excess of specified levels.Which of the following is not true of the 35 percent bracket?

A)The 35 percent bracket applies to unlimited amounts of income over the specified levels.
B)The level at which a head of household encounters the 35 percent bracket is the same as that for a single individual.
C)The fact that a taxpayer reaches the 35 percent bracket does not affect the amount of tax paid on the income in lower tax brackets.
D)The 35 percent bracket applies to all types or characters of income.

Question 57

A $2,000 non-refundable tax credit for two taxpayers with the same filing status results in

A)A $2,000 tax reduction
B)A tax reduction equal to $2,000 times the marginal tax bracket
C)A tax reduction equal to the lesser of $2,000 or the gross tax
D)No tax savings

Question 58

Information from the following table will be useful for answering this question.All figures are for 2012. $$\begin{array}{l}\text { Personal, dependency exemption: } \$ 3,700\\\begin{array} { l r r } \text { Filing Status } & \text { Basic Standard Deduction } & \text { Additional Standard Deduction* } \\\text { Married, filing jointly } & \$ 11,900 & \$ 1,150 \\\text { Married, filing separately } & 5,900 & 1,150 \\\text { Head of household } & 8,700 & 1,450 \\\text { Single } & 5,950 & 1,450\end{array}\end{array}$$ *Blind taxpayer, taxpayer 65 or older Which one of the following taxpayers is not required to file a tax return for 2012?

A)A blind 47-year-old single person whose only gross income is interest income of $9,350
B)A 66-year-old single taxpayer who is not claimed as a dependent and whose only gross income is interest of $10,550
C)A 26-year-old head of household with two children whose only gross income is wages of $22,400
D)A 35-year-old single taxpayer whose only income is gross rents of $10,500 and who has expenses directly attributable to the rents of $4,900

Question 59

Pat, age 12, received the following income in 2012: $$\begin{array} { l r } \text { Dividends } & \$ 2,900 \\\text { Interest } & 1,900 \\\text { Wages } & 500\end{array}$$ She deposited all her income in a savings account.Pat is a U.S.citizen and lives with her parents, who provide the full $13,000 annual cost of her support.Which statement is false?

A)Pat's parents may claim her as a dependent.
B)Pat has net unearned income of $2,900.
C)Pat has taxable income of $4,350.
D)Pat's standard deduction is $800.

Question 60

Fred, 19 years of age and single, is claimed as a dependent on his parents' return.He has decided not to go to college.The following information is derived from his tax return for 2012: $\begin{array}{lr}\text { Taxable interest and dividends } & \$ 3,600 \\\text { Salary from part-time job } & 2,500 \\\text { Itemized deductions } & 1,270\end{array}$ Which of the following is false?

A)Fred's taxable income is $3,300.
B)Fred will not itemize his deductions for the year.
C)$1,700 of the interest and dividends will be taxed at Fred's parents' marginal tax rate if it is higher than Fred's rate.
D)Fred's standard deduction is $2,800.

Question 61

Which of the following statements about the child tax credit is true?

A)The credit would not be available for an 18-year-old child who is a full-time student.
B)Taxpayers who have two qualifying children are allowed to claim only one credit.
C)A married couple with A.G.I, of $150,000 would be entitled to claim a credit for their only child who is 2 years old.
D)The credit is not refundable
E)More than one of the above is true

Question 62

Which of the following statement about the child tax credit is true?

A)The credit is available for a qualifying child or a qualifying relative.
B)The credit is available regardless of how much income the taxpayer has.
C)The amount of the credit is limited to $1,000 per return.
D)More than one of the above is true.
E)None of the above is true.