Question 1

John Maylor is a self-employed plumber of John's John Service, his sole proprietorship. In the current year, John's John Service had revenue of $120,000 and $40,000 of business expenses.
John also received $2,000 of interest income from corporate bonds.
What is John's adjusted gross income, assuming he had no other income or expenses? (ignore any deduction for self-employment tax.)

Accepted Answer

The answer of John Maylor is a self-employed plumber of...

Question 2

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?

Accepted Answer

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

Question 3

Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, Ed and Jane realized the following items of income and expense:
  They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2020 standard deduction amount for MFJ taxpayers is $24,800.
What is the couple's gross income?

Accepted Answer

The answer of Jane and Ed Rochester are married with...

Question 4

For filing status purposes, the taxpayer's marital status is determined at what point during the year?

Accepted Answer

The taxpayer's marital status is determined as of the last day of the calendar year (December 31st) for tax purposes.

Question 5

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?

Accepted Answer

Since Jake did not have any children and did not remarry, he cannot file as a qualifying widower or head of household. Therefore, the most favorable filing status for him in Year 2 is Single.

Question 6

Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, Ed and Jane realized the following items of income and expense:
  They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the couple's taxable income?

Accepted Answer

The answer of Jane and Ed Rochester are married with...

Question 7

Mason and his wife, Madison, have been married for five years. Jaxon, who is 18 years old and unrelated to Mason and Madison, has been living with Mason and Madison for the last two years. In May of Year 1, Mason and Madison divorced. Mason and Jaxon stayed in the home and Madison moved out. During Year 2, Mason provided all of Jaxon's support, and Jaxon lived in the home for all of Year 2. Jaxon did not earn any income during Year 2. What is Mason's most favorable filing status for Year 2?

Accepted Answer

The answer of Mason and his wife, Madison, have been...

Question 8

Miguel, a widower whose wife died in Year 1, maintains a household for himself and his daughter, who qualifies as his dependent. Miguel did not remarry. What is the most favorable filing status that Miguel qualifies for in Year 3?

Accepted Answer

Miguel qualifies for the qualifying widower filing status, which allows him to use the married filing jointly tax rates for two years following his wife's death as long as he maintains a household for his dependent child. This filing status may be more advantageous than filing as a single or head of household.

Question 9

For purposes ofdetermining filing status, which of the following is not a requirement for a married taxpayer to be treated as unmarried at the end of the year?

Accepted Answer

For a married taxpayer to be considered unmarried for tax purposes, the spouse must not live in the taxpayer's home during the last six months of the year, not the entire year.

Question 10

Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, Ed and Jane realized the following items of income and expense:
  They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2020 standard deduction amount for MFJ taxpayers is $24,800.
What is the couple's adjusted gross income?

Accepted Answer

The answer of Jane and Ed Rochester are married with...

Question 11

Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, Ed and Jane realized the following items of income and expense:
  They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2020 standard deduction amount for MFJ taxpayers is $24,800.
What is the couple's tax due or tax refund? (Use the tax rate schedules, not tax tables.)

Accepted Answer

The answer of Jane and Ed Rochester are married with...

Question 12

Jasmine and her husband, Arty, have been married for 25 years. In May of this year, the couple divorced. During the year, Jasmine provided all the support for herself and her 22-year-old child, Dexter, who lived in the same home as Jasmine for the entire year. Dexter is employed full time, earning $29,000 this year. What is Jasmine's most favorable filing status for the year?

Accepted Answer

The answer of Jasmine and her husband, Arty, have been...

Question 13

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?

Accepted Answer

The most advantageous filing status available to Jan is head of household. To qualify for the head of household status, Jan must meet the following requirements:
1) She is unmarried or considered unmarried on the last day of the year,
2) She paid more than half of the cost of keeping up her home for the year, and
3) A qualifying person lived with her in the home for more than half of the year.

Jan meets all of these requirements. Her mother is her dependent and she provides more than half of the cost of her mother's support. Therefore, she can file as head of household, which will give her a lower tax rate and a higher standard deduction than if she filed as single.

Question 14

Tom Suzuki's tax liability for the year is $2,450. He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits. What are Tom's taxes due or tax refund for the year?

Accepted Answer

The answer of Tom Suzuki's tax liability for the year...

Question 15

The Tanakas filed jointly in 2020. Their AGI is $120,000. They reported $10,000 of qualified business income and $26,000 of itemized deductions. They also have two dependent qualifying children. The 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the total amount of from AGI deductions they are allowed to claim on their 2020 tax return?

Accepted Answer

The answer of The Tanakas filed jointly in 2020. Their...

Question 16

The Dashwoods have calculated their taxable income to be $88,000 for 2020, which includes $2,000 of long-term capital gains. Using the appropriate tax rate schedules, calculate the Dashwoods' income tax liability assuming they are married and file a joint return.

Accepted Answer

The answer of The Dashwoods have calculated their taxable income...

Question 17

In April of Year 1, Martin left his wife, Marianne. The couple has two children under the age of 15. While the couple was apart, they were not legally divorced. Marianne remained in the home and paid all the costs of maintaining the home for the remainder of the year. Assuming the couple does not file jointly, which of the following statements regarding filing status is true?

Accepted Answer

Marianne may qualify to file as head of household if she meets the requirements, including maintaining the home for the children.

Question 18

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?

Accepted Answer

Marianne can file as head of household because she is considered unmarried for tax purposes and provided more than half of the cost of maintaining a household for her qualifying child. The other options are not applicable since Marianne was not legally divorced and did not qualify as a qualifying widow. Filing as married filing separately would not provide any benefits since Marianne would not be able to claim certain tax benefits such as the Earned Income Credit.

Question 19

In Year 1, Harold Weston's wife died. Since her death, he has maintained a household for their son, Frank (age 3), his qualifying child. Which is the most advantageous filing status available to Harold in Year 4?

Accepted Answer

In Year 4, Harold can file as "Head of Household" because he has maintained a household for his qualifying child, Frank, for more than two years after his wife's death. The "Qualifying Widower" status is only available for the two years following the year of the spouse's death.

Question 20

The Inouyes filed jointly in 2020. Their AGI is $78,000. They reported $3,000 of qualified business income and $22,000 of itemized deductions. They have two children, one of whom qualifies as their dependent as a qualifying child. The 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the total amount of from AGI deductions they are allowed to claim on their 2020 tax return?

Accepted Answer

The answer of The Inouyes filed jointly in 2020. Their...

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

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?

For filing status purposes, the taxpayer's marital status is determined at what point during the year?

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?

Miguel, a widower whose wife died in Year 1, maintains a household for himself and his daughter, who qualifies as his dependent. Miguel did not remarry. What is the most favorable filing status that Miguel qualifies for in Year 3?

For purposes ofdetermining filing status, which of the following is not a requirement for a married taxpayer to be treated as unmarried at the end of the year?

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?

Tom Suzuki's tax liability for the year is $2,450. He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits. What are Tom's taxes due or tax refund for the year?

The Dashwoods have calculated their taxable income to be $88,000 for 2020, which includes $2,000 of long-term capital gains. Using the appropriate tax rate schedules, calculate the Dashwoods' income tax liability assuming they are married and file a joint return.

In Year 1, Harold Weston's wife died. Since her death, he has maintained a household for their son, Frank (age 3) , his qualifying child. Which is the most advantageous filing status available to Harold in Year 4?