Deck 2: Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Question 1

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.

Answer 1

False

Question 2

A married couple in the process of obtaining a divorce cannot file a joint tax return.

Answer 2

False

Question 3

A married couple can file a joint return only if both have earned income.

Answer 3

False

Question 4

The exemption amount is subject to annual adjustment for inflation.

Question 5

The amount of tax liability for a taxpayer depends on many factors,including the filing status of the taxpayer.

Question 6

A taxpayer can qualify for head of household even though his or her parents are living in a separate household from that of the taxpayer (assume all other requirements are met).

Question 7

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

Question 8

The federal individual income tax returns are the 1040ES,1040A and 1040.

Question 9

A qualifying relative must be related to the taxpayer (as listed by the IRS),or be a member of the taxpayer's household for the entire year.

Question 10

The standard deduction in 2014 for a married couple,under 65 and not blind,is $12,400.

Question 11

To qualify for head of household status,a taxpayer must maintain a household that is the principal place of abode of a qualifying person for more than half the year.

Question 12

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

Question 13

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

Question 14

A taxpayer can be claimed as a dependent on another return and still he or she can claim a personal exemption on his or her tax return.

Question 15

In 2014,the additional standard deduction for a single taxpayer,who is 65 or older and not blind,is $1,200.

Question 16

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

Question 17

A taxpayer filing separately must show the name,address,and social security number of the spouse on the tax return.

Question 18

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

Question 19

A qualifying child does not have to meet the support test in order to be claimed as a dependent.

Question 20

The personal exemption for 2014 is $3,950.

Question 21

A taxpayer who has income that is not subject to withholding is never required to make estimated payments during the year.

Question 22

The taxpayer's brother must live with the taxpayer for the entire year to meet the relationship or member of household test under qualifying relatives.

Question 23

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

Question 24

If the taxpayer still owes tax after April 15,the IRS assesses interest based on the remaining amount owed.

Question 25

Even though the taxpayer is claimed as a dependent on another tax return,he or she can still receive an exemption amount for himself or herself when filing his or her tax return.

Question 26

Most taxpayers make payments to the IRS through income tax withholdings and quarterly estimated tax payments.

Question 27

Taxable income (TI)is computed after subtracting from adjusted gross income (AGI),the standard deduction or itemized deductions and personal and dependency exemptions.

Question 28

When a taxpayer's AGI exceeds certain levels,certain tax benefits are reduced or eliminated.

Question 29

If a married couple files separate returns and one of them itemizes,the other spouse must also itemize.

Question 30

Personal exemptions are for the taxpayer and spouse.

Question 31

The accuracy-related penalty applies when negligence or any substantial understatement occurs.

Question 32

The maximum penalty for failure to file a tax return that is not due to fraud is 25%.

Question 33

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

Question 34

A taxpayer may request an automatic seven-month extension of time to file his or her tax return.

Question 35

The IRS can impose a 75% penalty on any portion of understatement of tax that is attributable to negligence.

Question 36

A couple who is legally married on the last day of the tax year cannot file married filing separately.

Question 37

In a multiple support agreement,the taxpayer who will receive the exemption must file all the forms 2120 with his or her tax return.

Question 38

The amount of the standard deduction increases for people who are age 62 and have retired.

Question 39

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

Question 40

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

Question 41

Lisa is 21 years of age and a full-time student living with her parents.She had wages of $680 ($70 of income tax withholding)for 2014.Can Lisa claim her exemption on her return even though her parents will claim her as a dependent on their tax return?

A) Lisa and her parents can both claim the exemption.
B) No one can claim the exemption for Lisa.
C) Yes,Lisa can claim the exemption.
D) No,Lisa cannot claim the exemption.

Question 42

What was the amount of the personal exemption for 2014?

A) $3,900.
B) $3,950.
C) $3,975.
D) $3,800.

Question 43

The taxpayer's spouse died at the beginning of 2013.He has no qualifying child.Which status should the taxpayer select when filing his tax return for 2014?

A) Single.
B) Married Filing Separately.
C) Married Filing Jointly.
D) Qualifying Widow(er).

Question 44

The basic standard deduction in 2014 for a taxpayer,under 65 and not blind,filing married filing jointly is:

A) $12,000.
B) $12,200.
C) $12,400.
D) $9,100.

Question 45

A legally divorced taxpayer maintains a household for himself and maintains a separate household that is the principal place of abode of his dependent widowed mother.What filing status should he use when filing his tax return?

A) Married Filing Separately.
B) Single.
C) Qualifying widow(er).
D) Head of Household.

Question 46

Which of the following items would not be considered as support for a dependency exemption?

A) medical insurance premiums.
B) food.
C) clothing.
D) life insurance premiums.

Question 47

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

A) first
B) third
C) last
D) None of these

Question 48

The basic standard deduction in 2014 for a single taxpayer,under 65 and not blind,is:

A) $6,100.
B) $3,950.
C) $9,100.
D) $6,200.

Question 49

A 36-year-old taxpayer with a dependent child and claiming head of household status has received $29,000 in alimony payments and earned wages of $44,000.Which is the simplest form this person can file?

A) 1040.
B) 1040A.
C) 1040ES.
D) 1040EZ.

Question 50

To be a qualifying child,the taxpayer must meet three general tests and five specific tests.Which one is not part of the five specific tests?

A) Gross income test.
B) Relationship test.
C) Residency test.
D) Special test for qualifying child of more than one taxpayer.

Question 51

To be a qualifying relative,the taxpayer must meet three general tests and four specific tests.Which one is not part of the four specific tests?

A) Relationship test or member of household test.
B) Age test.
C) Support test.
D) Gross income test.

Question 52

A single taxpayer is 43 years old and has wages only of $16,000.Which is the simplest form this person can file?

A) 1040A.
B) 1040ES.
C) 1040.
D) 1040EZ.

Question 53

Mirtha is 21 years of age and a full-time student living by herself.She had wages of $23,000 for 2014.Can Mirtha claim the exemption for herself on her tax return?

A) Mirtha's parents can claim the exemption.
B) Both,Mirtha and her parents can claim the exemption.
C) Yes,Mirtha can claim the exemption.
D) No one can claim the exemption for Mirtha.

Question 54

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

A) 49%
B) 50%
C) 51%
D) 75%

Question 55

A taxpayer can deduct a(an)__________ amount from AGI for each dependent.

A) Deduction
B) Exemption
C) Itemized
D) Adjustment

Question 56

For a qualifying relative to be claimed as a dependent,this 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.

A) Mother.
B) Sister.
C) Cousin.
D) Son-in-law.

Question 57

Robert,Fred and Lucas are supporting their mother who lives in a separate apartment.Their contributions towards her support are 10%,40% and 50%,respectively.In a multiple support agreement,who would be entitled to claim the mother as a dependent?

A) Robert.
B) Fred or Lucas.
C) Robert,Fred or Lucas.
D) None of these.

Question 58

To be a qualifying child,the taxpayer must meet three general tests and five specific tests.What are the three general tests?

A) Relationship test,residency test and gross income test.
B) Support test,age test and relationship test.
C) Dependent taxpayer test,relationship test and citizen or resident test.
D) Dependent taxpayer test,joint return test and citizen or resident test.

Question 59

A taxpayer is married with a qualifying child (dependent),but she has been living separate from her spouse for the last five months of the year.However,she paid for more than half of the cost of keeping up the household.Her spouse does not want to file jointly.What filing status must she use when filing her tax return? She wants to obtain the maximum legal benefit.

A) Single.
B) Married Filing Separately.
C) Qualifying Widow(er).
D) Head of Household.

Question 60

The basic standard deduction in 2014 for a taxpayer,67 and not blind,filing head of household is:

A) $10,650.
B) $7,400.
C) $1,550.
D) $9,100.

Question 61

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%.

A) 0.25%
B) 0.5%
C) 5.0%
D) 5.5%

Question 62

The interest charged by the IRS for the first three months of 2014 was:

A) 3%.
B) 5%.
C) 4%.
D) 6%.

Question 63

Luisa's parents can claim her as a dependent on their tax return.In 2014,her only source of income was a part-time job as a medical clerk where she earned $2,500 during the year.What is Luisa's standard deduction?

A) $2,500.
B) $3,950.
C) $1,000.
D) $2,850.

Question 64

When a taxpayer can be claimed as a dependent on the tax return of another individual,the basic standard deduction for the taxpayer is limited to the greater of (a)______,or (b)the taxpayer's earned income plus $350,but not more than the amount of the basic standard deduction.

A) $950
B) $900
C) $1,000
D) $350

Question 65

John forgot to file his tax return by April 15.He did not file an extension.John finally filed his tax return on June 30 and had a remaining tax liability of $1,500.What is John's failure to file penalty? Assume he made all his payments on time.

A) $375.
B) $225.
C) $233.
D) $300.

Question 66

The IRS can impose a _______ penalty on any portion of understatement of tax that is attributable to fraud.

A) 25%
B) 75%
C) 50%
D) 5%

Question 67

What is the amount of the tax liability for a single person having taxable income of $59,200? All answers should be rounded to the nearest dollar.

A) $10,656.
B) $9,100.
C) $10,663.
D) $14,800.

Question 68

A single taxpayer is 35 years old and has only wages of $14,000.Which is the simplest form this person can file?

A) 1040A.
B) 1040ES.
C) 1040.
D) 1040EZ.

Question 69

The taxpayer's spouse died at the beginning of 2014.He has no qualifying child.Which status should the taxpayer select when filing his tax return?

A) Single.
B) Qualifying Widow(er).
C) Married Filing Separately.
D) Married Filing Jointly.

Question 70

Failure to make required estimated payments will subject the taxpayer to a potential underpayment penalty plus interest.However,if the difference between the tax shown on the return and the amount of tax withheld for wages is less than ______,the taxpayer will not be assessed a penalty.

A) $1,250
B) $500
C) $850
D) $1,000

Question 71

The early withdrawal penalty is a for AGI deduction.Which form can the taxpayer use to claim this benefit?

A) 1040EZ.
B) 1040A.
C) 1040.
D) 1040A or 1040.

Question 72

Which condition listed below is not required for a taxpayer to qualify as a qualifying widow(er)with dependent child?

A) The household was the principal place of abode for the entire year of both the taxpayer and his or her child.
B) Taxpayer must remarry before the end of the tax year in question.
C) Taxpayer paid more than half the cost of keeping up a household.
D) Taxpayer was eligible to file a joint return in the year the spouse died.

Question 73

A 37-year-old taxpayer with a dependent child and claiming head of household status has received $21,000 in child support payments and earned wages of $46,000.Which is the simplest form this person can file?

A) 1040A.
B) 1040.
C) 1040ES.
D) 1040EZ.

Question 74

What is the amount of the tax liability for a qualifying widow(er)with a dependent child and having taxable income of $121,600? All answers should be rounded to the nearest dollar.

A) $25,234.
B) $22,113.
C) $30,400.
D) $27,665.

Question 75

What is the amount of the tax liability for a qualifying widow(er)with a dependent child and having taxable income of $18,355? All answers should be rounded to the nearest dollar.

A) $1,836.
B) $2,331.
C) $2,149.
D) $1,849.

Question 76

What is the amount of the tax liability for a head of household person having taxable income of $87,573? All answers should be rounded to the nearest dollar.

A) $16,306.
B) $13,136.
C) $12,498.
D) $16,398.

Question 77

Ed's parents can claim him as a dependent on their tax return.In 2014,his only source of income was $1,050 of interest income received from Global Bank.What is Ed's standard deduction?

A) $1,000.
B) $1,050.
C) $3,900.
D) $350.

Question 78

What is the amount of the social security wage limitation for 2014?

A) $106,800.
B) $110,100.
C) $113,700.
D) $117,000.

Question 79

What is the amount of the tax liability for a married couple having taxable income of $153,500? All answers should be rounded to the nearest dollar.

A) $38,375.
B) $30,227.
C) $30,233.
D) $23,025.

Question 80

Criminal penalties only apply to:

A) Careless disregard for tax authority.
B) Willful failure to file a return.
C) Tax evasion.
D) Willful failure to file a return and tax evasion.