Question 1

Jeremy and Annie are married.During the year Jeremy dies.When Annie files her tax return for the year in which her husband dies,she may file under the married filing jointly filing status even if she does not remarry.

Accepted Answer

According to the IRS, a surviving spouse may file a joint return for the year of their spouse's death if they did not remarry during that year. This allows the surviving spouse to take advantage of certain tax benefits that are not available to those filing under other statuses.

Question 2

Eric and Josephine were married in year 1.In year 2,Eric dies.The couple did not have any children.Assuming Josephine does not remarry,she may file as a qualifying widow in year 3.

Accepted Answer

A qualifying widow(er) status is available for two years following the year of the spouse's death if the widow(er) has a dependent child. Since Josephine does not have any children, she cannot file as a qualifying widow.

Question 3

It is generally more advantageous from a tax perspective for a married couple to file separately than it is for them to file jointly.

Accepted Answer

Generally, it is more advantageous for a married couple to file jointly as they can take advantage of various credits and deductions that are not available to those who file separately. However, each couple's tax situation is unique, and filing separately may be beneficial in certain circumstances.

Question 4

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year,the taxpayer will qualify for head of household filing status.

Accepted Answer

To qualify for head of household filing status, the taxpayer must provide more than half the support for a qualifying person, who can be a child, parent, or relative who lived with the taxpayer for more than half the year. However, a cousin does not meet the IRS definition of a qualifying relative for the head of household status unless they are a "qualifying child" or another specific exception applies.

Question 5

Which of the following series of inequalities is generally most accurate?

Accepted Answer

Gross income is the total income before any deductions or adjustments. Adjusted gross income (AGI) is gross income minus specific deductions (but before standard or itemized deductions and personal exemptions). Taxable income is what remains after all deductions and exemptions are applied to the AGI, hence it's usually the smallest amount. Therefore, the series Gross income ≥ adjusted gross income ≥ taxable income is most accurate.

Question 6

A taxpayer may qualify for the head of household filing status if she has no dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father.

Accepted Answer

This statement is true. According to IRS rules, a taxpayer may qualify for the head of household filing status if they meet certain conditions, including providing more than half of the cost of maintaining a separate household for a qualifying parent. Dependent children are not a requirement for this filing status.

Question 7

A taxpayer may not qualify for the head of household filing status if she does not have any dependent children.

Accepted Answer

A taxpayer can qualify for the head of household filing status if they maintain a home for a qualifying person, which can include a dependent child, but can also include other relatives such as parents or siblings, as long as they meet certain IRS criteria.

Question 8

If an unmarried taxpayer is eligible to claim another as a dependent,the taxpayer is automatically eligible for the head of household filing status.

Accepted Answer

Being eligible to claim another as a dependent is one of the requirements for the head of household filing status, but there are additional criteria that must be met, such as paying more than half the cost of keeping up a home for the year and the dependent being a qualifying child or relative.

Question 9

Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond.What is the amount of Sally's gross income from these items?

Accepted Answer

Sally's gross income is the total amount of income she received before any taxes or deductions are taken out. Therefore, her gross income is the sum of $60,000 and $500, which is $60,500. Therefore, option D is the correct answer.

Question 10

Taxpayers who file as qualifying widows/widowers are treated the same for tax purposes in all respects as taxpayers who are married filing jointly for tax purposes.

Accepted Answer

Qualifying widows/widowers are eligible to use the married filing jointly status and are treated the same as married couples for tax purposes. They may be able to take advantage of certain tax benefits that are not available to taxpayers using other filing statuses.

Question 11

In certain circumstances,a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

Accepted Answer

A married taxpayer who meets certain requirements, such as living apart from her spouse for the last six months of the year and providing more than half the cost of maintaining a home for a qualifying dependent, may qualify for the head of household filing status even if she does not file a joint tax return with her spouse.

Question 12

The income tax base for an individual tax return is:

Accepted Answer

The income tax base for an individual tax return is the adjusted gross income minus from AGI deductions. This is because not all income is subject to taxation and taxpayers are allowed to claim various deductions that lower their taxable income. Therefore, the income tax base is adjusted gross income (AGI) minus deductions that are allowed after calculating AGI.

Question 13

Which of the following statements regarding realized income is true?

Accepted Answer

Realized income requires some type of transaction or exchange with a second party. This means that the taxpayer has received an actual payment or benefit that is recognized as income for tax purposes. Options A and C are incorrect as they do not accurately describe the concept of realized income. Option D is incorrect as option B is true.

Question 14

If no one qualifies as the dependent of an unmarried taxpayer,the unmarried taxpayer may still be able to qualify for the head of household filing status.

Accepted Answer

To qualify for the head of household filing status, an unmarried taxpayer must pay more than half the cost of keeping up a home for the year and must have a qualifying person (such as a dependent child or parent) live with them for more than half the year, or in the case of a parent, the taxpayer can qualify if they pay more than half the cost of keeping up a home that was the main home for the parent for the entire year. Without a qualifying person, the taxpayer cannot claim the head of household status.

Question 15

Charles,who is single,pays all of the costs of maintaining a home for himself and Damarcus.Charles and Damarcus have no family relationship but Damarcus lives with Charles for the entire year.Damarcus qualifies as a qualifying relative for Charles (Charles claims Demarcus as a dependent on his tax return).Charles qualifies for head of household filing status.

Accepted Answer

To qualify for head of household status, the qualifying person must be a relative as defined by the IRS, which does not include unrelated individuals like Damarcus.

Question 16

Bonnie and Ernie file a joint return.Bonnie works and receives income during the year but Ernie does not.If the couple files a joint tax return,Ernie is responsible for paying any taxes due if Bonnie is unable to pay the taxes.

Accepted Answer

According to the IRS, both spouses are jointly and individually responsible for any tax, interest, and penalties due on a joint tax return. Therefore, if Bonnie is unable to pay the taxes, Ernie is also responsible for paying them.

Question 17

Jennifer and Stephan are married at year-end and they file separate tax returns.If Jennifer itemizes deductions on her return,Stephan must also itemize deductions on his return even if his itemized deductions don't exceed his standard deduction.

Accepted Answer

When a married couple files separate tax returns, their itemized deductions must be consistent. If one spouse itemizes deductions, the other spouse must also itemize deductions, even if their total itemized deductions are less than their standard deduction.

Question 18

Lebron received $50,000 of compensation from his employer and he received $400 of interest from a municipal bond.What is the amount of Lebron's gross income from these items?

Accepted Answer

Municipal bond interest is generally exempt from federal income tax, so only the $50,000 of compensation is included in Lebron's gross income.

Question 19

Which of the following statements regarding exclusions and/or deferrals is false?

Accepted Answer

Exclusions refer to types of income that are not subject to taxation at all, meaning the taxpayer does not include this income on their tax return. For an income item to qualify as an exclusion, it must be specifically outlined in the tax code as not taxable. The statement that an income item need not be realized in order to qualify as an exclusion item is false because, generally, for any income to be considered for tax purposes, including exclusions, it must be realized.

Question 20

It is generally more advantageous for liability protection purposes for a married couple to file separately than it is for them to file jointly.

Accepted Answer

The answer of It is generally more advantageous for liability...

Quiz 4: Individual Income Tax Overview dependents and Filing Status