Question 1

Filing status determines all of the following except ________.
A)the applicable standard deduction amount
B)the appropriate tax rate schedule or tax table
C)the top-stated marginal rate in the tax rate schedule
D)the AGI threshold for reductions in certain tax benefits

Accepted Answer

Filing status determines the applicable standard deduction amount, the appropriate tax rate schedule or tax table, and the AGI threshold for reductions in certain tax benefits. However, the top-stated marginal rate in the tax rate schedule is the same for all filing statuses.

Question 2

William and Charlotte Collins divorced in November of Year 1.William moved out and Charlotte remained in their house with their 10-month-old daughter, Autumn.Diana, Charlotte's mother, lived in the home and acted as Autumn's nanny for all of Year 1.William provided 70 percent of Autumn's support, Diana provided 20 percent, and Charlotte provided 10 percent.When the time came to file their tax returns for Year 1, William, Charlotte, and Diana each wanted to claim Autumn as a dependent.Their respective AGIs for Year 1 were $50,000, $35,000, and $52,000.Who has priority to claim Autumn as a dependent?
A)William.
B)Charlotte.
C)Diana.
D)They must negotiate amongst themselves.

Accepted Answer

The answer of William and Charlotte Collins divorced in November...

Question 3

Sheri and Jake Woodhouse have one daughter, Emma, who is 16 years old.They also have taken in Emma's friend, Harriet, who has lived with them since February of the current year and is also 16 years of age.The Woodhouses have not legally adopted Harriet but Emma often refers to Harriet as her "sister." The Woodhouses provide all of the support for both girls, and both girls live at the Woodhouse residence.Which of the following statements is true regarding whom Sheri and Jake may claim as dependents for the current year?
A)They may claim Emma as a dependent qualifying child but may not claim Harriet as a dependent.
B)They may claim Emma as a dependent qualifying child and they may claim Harriet as a dependent qualifying child.
C)They may claim Emma as a dependent qualifying child and they may claim Harriet as a dependent qualifying relative.
D)None of these statements are true.

Accepted Answer

The answer of Sheri and Jake Woodhouse have one daughter,...

Question 4

In June of Year 1, Edgar's wife, Cathy, died, and Edgar did not remarry during the year.What is his filing status for Year 1 (assuming they did not have any dependents)?
A)Married filing jointly.
B)Single.
C)Qualifying widower.
D)Head of household.

Accepted Answer

In the year of a spouse's death, the surviving spouse can still file as Married Filing Jointly if they do not remarry within that year.

Question 5

Catherine de Bourgh has one child, Anne, who is 18 years old at the end of the year.Anne lived at home for seven months during the year before leaving home to attend State University for the remaining five months of the year.During the year, Anne earned $6,000 while working part time.Catherine provided 80 percent of Anne's support and Anne provided the rest.Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?
A)Anne is a qualifying child of Catherine.
B)Anne is not a qualifying child of Catherine because she fails the gross income test.
C)Anne is not a qualifying child of Catherine because she fails the residence test.
D)Anne is not a qualifying child of Catherine because she fails the support test.

Accepted Answer

Anne meets all the requirements to be a qualifying child of Catherine for the current year. She is Catherine's daughter, is under the age of 19, and lived with Catherine for more than half of the year. The gross income test does not apply to qualifying children, and even if it did, Anne's earned income of $6,000 is below the threshold. Additionally, while Catherine provided 80 percent of Anne's support, this is still enough to meet the support test for a qualifying child.

Question 6

Katy has one child, Dustin, who is 18 years old at the end of the year.Dustin lived at home for three months during the year before leaving home to work full time in another city.During the year, Dustin earned $15,000.Katy provided more than half of Dustin's support for the year.Which of the following statements regarding whether Katy may claim Dustin as a dependent for the current year is accurate?
A)Dustin is a qualifying child of Katy.
B)Dustin fails the residence test for a qualifying child but he is considered a qualifying relative of Katy.
C)Dustin fails the support test for a qualifying relative.
D)Dustin fails the gross income test for a qualifying relative.

Accepted Answer

The answer of Katy has one child, Dustin, who is...

Question 7

In June of Year 1, Eric's wife, Savannah, died.Eric did not remarry during Year 1, Year 2, or Year 3.Eric maintains the household for his dependent daughter, Catherine, in Year 1, Year 2, and Year 3.Which is the most advantageous filing status for Eric in Year 2?
A)Head of household.
B)Qualifying widower.
C)Single.
D)Married filing separately.

Accepted Answer

Qualifying widower status would be the most advantageous filing status for Eric in Year 2 because he did not remarry and he maintained the household for his dependent daughter in both Year 1 and Year 2. This filing status allows him to use the same tax rates and standard deduction as married filing jointly, which may result in a lower tax liability compared to filing as single or head of household.

Question 8

Lydia and John Wickham filed jointly in Year 1.They divorced in Year 2.Late in Year 2, the IRS discovered that the Wickhams underpaid their Year 1 taxes by $2,000.Both Lydia and John worked in Year 1 and received equal income but John had $2,000 less tax withheld than Lydia did.Who is legally liable for the tax underpayment?
A)Lydia.
B)John.
C)Both Lydia and John.
D)Neither Lydia nor John.

Accepted Answer

Both Lydia and John are legally liable for the tax underpayment because they filed a joint tax return in Year 1. When they filed jointly, they assumed joint and several liability for any tax owed on the return. This means that the IRS can collect the entire amount owed from either spouse, regardless of who may have caused the underpayment. Therefore, both Lydia and John are responsible for paying the $2,000 tax underpayment.

Question 9

Char and Russ Dasrup have one daughter, Siera, who is 16 years old.In November of last year, the Dasrups took in Siera's 16-year-old friend Angela, who has lived with them ever since.The Dasrups have not legally adopted Angela but Siera often refers to Angela as her "sister." The Dasrups provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrups' residence.Which of the following statements is true regarding whom Char and Russ may claim as dependents for the current year?
A)They may claim Siera as a dependent qualifying child; they are not allowed to claim Angela as a dependent.
B)They may claim Siera as a dependent qualifying child and they may claim Angela as a dependent qualifying child.
C)They may claim Siera as a dependent qualifying child and they may claim Angela as a dependent qualifying relative.
D)None of these statements are true.

Accepted Answer

Char and Russ may claim Siera as a dependent qualifying child because she is their daughter and meets the age and residency requirements. They may also claim Angela as a dependent qualifying relative, as she lives with them and they provide all of her support, even though they have not legally adopted her. Angela meets the requirement of not earning any income during the year and does not meet the requirement of being a qualifying child (because there is already one qualifying child in the household, Siera). Therefore, she can be claimed as a qualifying relative.

Question 10

All of the following are tests for determining qualifying relative status except ________.
A)relationship test
B)gross income test
C)support test
D)residence test

Accepted Answer

The residence test is not a criterion for determining qualifying relative status. Instead, the IRS uses the relationship test, gross income test, and support test to determine if someone can be claimed as a qualifying relative.

Question 11

In April of Year 1, Martin left his wife, Marianne.While the couple was apart, they were not legally divorced.Marianne found herself having to financially provide for the couple's only child (who qualifies as Marianne's dependent)and to pay all the costs of maintaining the household.When Marianne filed her tax return for Year 1, she filed a return separate from Martin.What is Marianne's most favorable filing status for Year 1?
A)Married filing separately.
B)Single.
C)Head of household.
D)Qualifying widow.

Accepted Answer

Marianne can file as head of household because she qualifies as an unmarried individual due to the fact that Martin left and they were not legally divorced. She also provided more than 50% of the household expenses and had a dependent child. This filing status generally results in a lower tax liability compared to filing as married filing separately or single.

Question 12

Which of the following statements about a qualifying person for head of household filing status is true?
A)One individual (who is a qualifying person)may qualify more than one taxpayer for head of household filing status.
B)The taxpayer is required to live with a qualifying person for the entire year in order to qualify for head of household filing status.
C)A taxpayer's parent cannot be a qualifying person for purposes of determining head of household filing status.
D)A qualifying person must have a family relationship with the taxpayer in order for the qualifying person to qualify the taxpayer for head of household filing status.

Accepted Answer

A qualifying person must have a specific family relationship with the taxpayer, such as a child, sibling, parent, or another relative as defined by the IRS, to qualify the taxpayer for head of household filing status. This requirement ensures that the taxpayer is providing a home for a qualifying family member.

Question 13

Which of the following is not a filing status?
A)Head of household.
B)Unmarried.
C)Qualifying widow or widower.
D)Married filing jointly.

Accepted Answer

"Unmarried" is not a filing status, but rather a status indicating that an individual is not currently married. The correct filing statuses are head of household, qualifying widow or widower, married filing jointly, and married filing separately.

Question 14

Jan is unmarried and has no children, but she provides all of the financial support for her mother, who lives in an apartment across town.Jan's mother qualifies as Jan's dependent.Which is the most advantageous filing status available to Jan?
A)Single.
B)Head of household.
C)Qualifying individual.
D)Surviving single.

Accepted Answer

Jan can file as head of household, which offers a higher standard deduction and lower tax rates compared to filing as a single taxpayer. To qualify, Jan must have paid more than half the cost of keeping up a home for herself and her dependent mother for the tax year.

Question 15

Which of the following statements regarding the difference between the requirements for a qualifying child and the requirements for a qualifying relative is false?
A)The relationship requirement is more broadly defined (more inclusive)for qualifying relatives than for qualifying children.
B)Qualifying children are subject to age restrictions while qualifying relatives are not.
C)The support test for qualifying relatives focuses on the support the potential dependent self-provides while the support test for qualifying children focuses on the support the taxpayer provides.
D)Qualifying relatives are subject to a gross income restriction while qualifying children are not.

Accepted Answer

The support test for qualifying children actually requires that the child does not provide more than half of their own support, whereas for qualifying relatives, the taxpayer must provide more than half of the individual's support.

Question 16

Jane is unmarried and has no children, but provides more than half of her mother's financial support.Jane's mother lives in an apartment across town and has a part-time job earning $5,000 a year.Which is the most advantageous filing status available to Jane?
A)Single.
B)Head of household.
C)Qualifying individual.
D)Surviving single.

Accepted Answer

The answer of Jane is unmarried and has no children,...

Question 17

In order to be a qualifying relative of another, an individual's gross income must be less than ________.
A)the applicable standard deduction amount
B)a fixed amount specified for the particular tax year
C)one-half of the individual's support
D)None of the choices are correct.

Accepted Answer

For an individual to be considered a qualifying relative for tax purposes, their gross income must be less than a fixed amount specified by the IRS for that particular tax year.

Question 18

In June of Year 1, Jake's wife, Darla, died.The couple did not have any children and Jake did not remarry in Year 1 or Year 2.Which is the most favorable filing status for Jake in Year 2?
A)Married filing separately.
B)Single.
C)Head of household.
D)Qualifying widower.

Accepted Answer

The answer of In June of Year 1, Jake's wife,...

Question 19

Michael, Diane, Karen, and Kenny provide support for their mother, Janet, who is 75 years old.Janet lives by herself in an apartment in Los Angeles.Janet's gross income for the year is $3,000.Janet provides 10 percent of her own support, Michael provides 40 percent of Janet's support, Diane provides 8 percent of Janet's support, Karen provides 10 percent of Janet's support, and Kenny provides the remaining 32 percent of Janet's support.Under a multiple support agreement, who is eligible to claim Janet as a dependent as a qualifying relative?
A)Michael, Diane, Karen, and Kenny.
B)Michael, Karen, and Kenny.
C)Michael and Kenny.
D)Michael.

Accepted Answer

The answer of Michael, Diane, Karen, and Kenny provide support...

Question 20

Earl and Lawanda Jackson have been married for 15 years.They have no children.Ned, who is an old friend from high school, has been living with the Jacksons during the current year.Which of the following is a true statement regarding whether the Jacksons can claim Ned as a dependent for the current year?
A)If Ned moved into the Jackson's home in June and he lived there for the remainder of the year, he may qualify as the Jackson's qualifying relative.
B)Assume that Ned originally moved into the Jackson's home two years ago and he has lived there ever since.If this year Ned earned $3,000 at a part-time job and he received $5,000 in municipal bond interest, he may qualify as the Jackson's dependent so long as the Jacksons provided more than half his support.
C)If Ned lived in the Jackson's home for the entire year, he will qualify as their dependent no matter who provided his support.
D)If Ned is over 19 or he is not a full-time student, he cannot qualify as the Jackson's dependent.

Accepted Answer

To be claimed as a dependent, Ned must meet certain tests, including being a qualifying relative or qualifying child of the Jacksons. In this case, Ned cannot be a qualifying child as he is not related to the Jacksons and is over the age of 19. However, he may qualify as a qualifying relative if he meets the four tests: not a qualifying child, lived with the Jacksons for the entire year, his gross income is less than $4,300 (in 2020), and the Jacksons provided more than half of his support. From the given information, we know that Ned lived with the Jacksons for the entire year, and his total income from a part-time job and municipal bond interest is $8,000 (less than $4,300). Therefore, if the Jacksons provided more than $4,000 of Ned's support (half of $8,000), they may claim him as a dependent. Choice A is false because Ned must live with the Jacksons for the entire year to be a qualifying relative. Choice C is false because Ned still has to meet the other tests to be considered a dependent. Choice D is false because it is too broad and does not take into account the specific circumstances of Ned's situation.

Quiz 4: Individual Income Tax Overview, Dependents, and Filing Status

Filing status determines all of the following except ________.

In June of Year 1, Edgar's wife, Cathy, died, and Edgar did not remarry during the year.What is his filing status for Year 1 (assuming they did not have any dependents) ?

In June of Year 1, Eric's wife, Savannah, died.Eric did not remarry during Year 1, Year 2, or Year 3.Eric maintains the household for his dependent daughter, Catherine, in Year 1, Year 2, and Year 3.Which is the most advantageous filing status for Eric in Year 2?

All of the following are tests for determining qualifying relative status except ________.

Which of the following statements about a qualifying person for head of household filing status is true?

Which of the following is not a filing status?

Jan is unmarried and has no children, but she provides all of the financial support for her mother, who lives in an apartment across town.Jan's mother qualifies as Jan's dependent.Which is the most advantageous filing status available to Jan?

Which of the following statements regarding the difference between the requirements for a qualifying child and the requirements for a qualifying relative is false?

Jane is unmarried and has no children, but provides more than half of her mother's financial support.Jane's mother lives in an apartment across town and has a part-time job earning $5,000 a year.Which is the most advantageous filing status available to Jane?

In order to be a qualifying relative of another, an individual's gross income must be less than ________.

In June of Year 1, Jake's wife, Darla, died.The couple did not have any children and Jake did not remarry in Year 1 or Year 2.Which is the most favorable filing status for Jake in Year 2?