Deck 1: The Individual Income Tax Return

Question 1

Which of the following is not a goal of the tax law?

A)Encouraging certain social goals such as contributions to charity.
B)Encouraging certain economic goals such as a thriving business community.
C)Encouraging smaller families.
D)Raising revenue to operate the government.
E)None of the above are goals of the tax law.

Answer 1

C

Question 2

Which one of the following provisions was passed by Congress to meet a social goal of the tax law?

A)The deduction for job hunting expenses.
B)The charitable deduction.
C)The moving expense deduction for adjusted gross income.
D)The deduction for soil and water conservation costs available to farmers.
E)None of the above.

Answer 2

B

Question 3

Wesley owns and operates the Cheshire Chicken Ranch in Turpid, Nevada. The income from this ranch is $49,000. Wesley wishes to use the easiest possible tax form. He may file:

A)Form 1040EZ
B)Form 1040A
C)Form 1040
D)Form 1065
E)None of the above

Answer 3

C

Question 4

Mark each of the following as a taxable entity, a reporting entity, or both:
a.Individuals
b.Corporations
c.Partnerships

Question 5

Partnership income is reported on:

A)Form 1040PTR
B)Form 1120S
C)Form 1040X
D)Form 1065

Question 6

Mark a "Yes" to each of the following if it is an objective of the tax code. Otherwise mark with a "No."
a.To provide a car to each American.
b.To promote giving to charities.
c.To encourage taxpayers to send their children to college.
d.To raise money to operate the government.
e.To promote the use of solar energy.

Question 7

If an individual wishes to amend his individual tax return, he will make the amendment using what form?

A)Form 1040A
B)Form 1040X
C)Form 1120
D)Schedule K-1
E)None of the above

Question 8

A corporation is a reporting entity but not a tax-paying entity.

Question 9

Which of the following forms may be filed by individual taxpayers?

A)Form 1040
B)Form 1041
C)Form 1065
D)Form 1120
E)None of the above

Question 10

List if a form is used for an individual, a corporation, or a partnership tax return.
a.Form 1065
b.Schedule A, Itemized Deductions
c.Form 1040
d.Form 1120
e.Schedule B, Interest and Dividends

Question 11

Partnership capital gains and losses are allocated separately to each of the partners.

Question 12

Depending on the amounts of income and other tax information, some individuals may report their income on:

A)Form 1040A
B)Form 1065
C)Form 1120
D)Form 1041

Question 13

Which of the following is not a goal of the tax law?

A)​Ensuring that all persons pay the same amount of tax.
B)​Economic goals such as reduction in unemployment.
C)​Social goals such as lowering the cost of adoption.
D)​Raise adequate revenue to operate the government.

Question 14

Amended individual returns are filed on:

A)Form 1040X
B)Form 1120S
C)Form 1041
D)Form 1040Amend

Question 15

Partnerships:

A)Are not taxable entities.
B)Are taxed in the same manner as individuals.
C)File tax returns on Form 1120.
D)File tax returns on Form 1041.

Question 16

Which of the following is correct?

A)An individual is a reporting entity but not a taxable entity.
B)A partnership is a taxable entity and a reporting entity.
C)A corporation is a reporting entity but not a taxable entity.
D)A partnership is a reporting entity but not a taxable entity.

Question 17

List two general objectives of the tax code.

Question 18

Distinguish between reporting entities and taxable entities and give examples of each.

Question 19

Form 1040 allows a taxpayer to report which of the following items that are not allowed for taxpayers who file Form 1040A:

A)Salary income.
B)Joint return status.
C)Withholding on wages.
D)Self-employment income.

Question 20

The US federal tax law's sole purpose is to raise revenue.​

Question 21

Which of the following is not considered one of the five basic taxable or reporting entities?​

A)​Partnership
B)​Corporation
C)Portfolio
D)​Individual
E)​Trust

Question 22

Melissa is a 35-year-old single taxpayer with adjusted gross income of $49,600. She uses the standard deduction and has no dependents.
a.Calculate Melissa's 2015 taxable income.Please show your work.
b.When you calculate Melissa's tax liability, are you required to use the tax tables or the tax rate schedules, or does it matter?
c.What is Melissa's tax liability?

Question 23

Oscar and Mary have no dependents and file a joint income tax return for 2015. They have adjusted gross income of $140,000 and itemized deductions of $30,000. What is the amount of taxable income that Oscar and Mary must report on their 2015 income tax return?

A)$97,400
B)$98,800
C)$102,000
D)$110,000
E)$136,000

Question 24

Barry is age 45 and a single taxpayer. In 2015, he has gross income of $17,000 and itemized deductions of $6,500. If Barry claims one exemption on his 2015 income tax return, calculate the following amounts:
a.His personal exemption amount
b.Barry's taxable income

Question 25

Betty, age 39 and Steve, age 50, are married with two dependent children. They file a joint return for 2015. Their income from salaries totals $155,000; they receive $1,000 in taxable interest and $2,000 in royalties. Their deductions for adjusted gross income amount to $3,100; they have itemized deductions totaling $41,000. Calculate the following amounts:
a.Gross income
b.Adjusted gross income
c.Itemized deduction or standard deduction amount
d.Deduction for exemptions
e.Taxable income

Question 26

Hansel and Gretel are married taxpayers who file a joint income tax return for 2015. They have no dependents. On their 2015 income tax return, they have adjusted gross income of $62,000 and total itemized deductions of $4,000. What is their taxable income?

Question 27

Eugene and Velma are married. For 2015, Eugene earned $25,000 and Velma earned $30,000. They have decided to file separate returns and are each entitled to claim one personal exemption. They have no deductions for adjusted gross income. Eugene's itemized deductions are $11,200 and Velma's are $4,000. Assuming Eugene and Velma do not live in a community property state, what is Velma's taxable income?

A)$19,700
B)$20,400
C)$22,000
D)$26,000
E)None of the above

Question 28

Rod, age 50, and Ann, age 49, are married taxpayers who file a joint return for 2015. They have gross income of $150,700. Their deductions for adjusted gross income are $5,100 and they have itemized deductions of $12,000, consisting of $7,000 in state income taxes and $5,000 in mortgage interest expense. If they claim two personal exemptions and no dependency exemptions for 2015, calculate the following amounts:
​
a.Their adjusted gross income
b.The greater of the amount of their standard deduction or their itemized deductions
c.Their taxable income

Question 29

Married taxpayers may double their standard deduction amount by filing separate returns.

Question 30

Eugene and Velma are married. For 2015, Eugene earned $25,000 and Velma earned $30,000. They have decided to file separate returns and are each entitled to claim one personal exemption. They have no deductions for adjusted gross income. Eugene's itemized deductions are $11,200 and Velma's are $4,000. Assuming Eugene and Velma do not live in a community property state, what is Eugene's taxable income?

A)$9,800
B)$13,800
C)$14,700
D)$21,000
E)None of the above

Question 31

An individual is a head of household. What is her standard deduction?

A)$6,300
B)$9,250
C)$12,600
D)$14,800
E)None of the above

Question 32

In 2015, Len has a salary of $40,700 from his job. He also has interest income of $400. Len is single and has no dependents. During the year, Len sold stock held as an investment for a $10,000 loss. Calculate the following amounts for Len:
a.Adjusted gross income
b.Standard deduction
c.Exemption
d.Taxable income
e.Tax liability

Question 33

For taxpayers who do not itemize deductions, the standard deduction amount is subtracted from the taxpayer's adjusted gross income.

Question 34

Roger, age 39, and Lucy, age 37, are married taxpayers who file a joint income tax return for 2015. They have gross income of $26,100. Their deductions for adjusted gross income are $550 and they have itemized deductions of $5,400. If Roger and Lucy claim two personal exemptions and no dependency exemptions for 2015, calculate the following amounts:
a.Their adjusted gross income
b.The greater of the amount of their standard deduction or their itemized deductions
c.Their taxable income

Question 35

An item is not included in gross income unless the tax law specifies that the item is subject to taxation.

Question 36

Nathan is 24 years old and works as an accountant in a salmon cannery in Alaska. His total wages for 2015 were $32,000. Federal income tax of $4,500 was withheld from his wages. His only other income was $260 of interest and he had no deductible expenses.
​
Calculate the income tax due or income tax refund on Nathan's 2015 individual income tax return. Use the tax formula for individuals and show your work.

Question 37

Kenzie is a research scientist in Tallahassee, Florida. Her husband Gary stays home to take care of their two young children. Kenzie's total wages for 2015 were $60,500 from which $5,900 of federal income tax was withheld.
​
Calculate the income tax due or income tax refund on Kenzie and Gary's 2015 individual income tax return. Use the tax formula for individuals and show your work.

Question 38

What is the formula for computing taxable income, as summarized in the text?

Question 39

Mary is age 33 and a single taxpayer with adjusted gross income for 2015 of $29,400. Mary maintains a home for three dependent children and has itemized deductions of $3,000. Calculate the following amounts for Mary's 2015 income tax return:
a.The number of exemptions claimed
b.Mary's standard or itemized deduction amount
c.Mary's taxable income

Question 40

Steven, age 35 and single, is a commodities broker. His salary for 2015 is $111,500 and he has taxable interest income of $40,000. He has no deductions for adjusted gross income. His itemized deductions are $31,000. Steven does not have any dependents.
a.What is the amount of his adjusted gross income?
b.What are his allowable itemized deductions?
c.What is his deduction for personal exemptions?
d.What is his taxable income?
e.What is his regular tax liability from the tax rate schedules?

Question 41

A single taxpayer, who is not a dependent on another's return, not blind and under age 65, with income of $8,750 must file a tax return.

Question 42

What is the difference between the standard deduction and itemized deductions?

Question 43

For each of the following situations, indicate whether the taxpayer(s) is(are) required to file a tax return for 2015. Explain your answer.
a.​
Debra, age 68, and Jerry, age 70, are married and file a joint return.They received $24,000 in interest income from a savings account.
b.Margie is a single taxpayer with wages in 2015 of $8,400 and interest income of $200.
c.​
Janie, age 30, and Scott, age 28, are married and file a joint tax return.They had $17,000 in earnings from wages.
d.​
Kim, age 20, is a single college student who is claimed as a dependent by her parents.She earned $2,000 from a part-time job and has $450 in interest income.
e.​
Stefanie, a 25-year-old single taxpayer, has wages of $1,500, from which $80 of federal income tax was withheld.

Question 44

If a taxpayer is due a refund, it will be mailed to the taxpayer regardless of whether he or she files a tax return.

Question 45

A taxpayer with self-employment income of $600 must file a tax return.

Question 46

Jeri is single and supports her 45 year-old son who has income of $350 from working in a pumpkin patch during October and lives in his own apartment.
a.Can she claim him as a dependent?
b.Can she claim head of household filing status? Why or why not?

Question 47

During 2015, Murray, who is 60 years old and unmarried, provided all of the support of his elderly mother. His mother was a resident of a home for the aged for the entire year and had no income. What is Murray's filing status for 2015, and how many exemptions should he claim on his tax return?

A)Head of household and 2 exemptions
B)Single and 2 exemptions
C)Head of household and 1 exemption
D)Single and 1 exemption
E)None of the above

Question 48

If your spouse dies during the tax year and you do not remarry, you must file as single for the year of death.

Question 49

George, age 67, and Linda, age 60, are married taxpayers with three dependent children. Their adjusted gross income for the 2015 tax year is $142,000. They have itemized deductions of $24,000. Determine the following for their joint tax return for 2015:
a.The number of exemptions
b.Exemption deduction amount
c.The greater of the amount of their standard deduction or their itemized deductions
d.Taxable income

Question 50

Which of the following taxpayers does not have to file a tax return for 2015?

A)A single taxpayer who is under age 65, with income of $10,500.
B)Married taxpayers (ages 45 and 50 years), filing jointly, with income of $21,000.
C)A student, age 22, with unearned income of $1,200 who is claimed as a dependent by her parents.
D)A qualifying widow (age 67) with a dependent child and income of $14,500.
E)All of the above.

Question 51

If an unmarried taxpayer paid more than half the cost of keeping a home which is the principal place of residence of a nephew, who is not her dependent, she may use the head of household filing status.

Question 52

John, 45 years old and unmarried, contributed $1,000 monthly in 2015 to the support of his parents' household. The parents lived alone and their income for 2015 consisted of $500 from dividends and interest. What is John's filing status and how many exemptions should he claim on his 2015 tax return?

A)Single and 1 exemption
B)Head of household and 1 exemption
C)Single and 3 exemptions
D)Head of household and 3 exemptions
E)None of the above

Question 53

Taxpayers who do not qualify for married, head of household, or qualifying widow or widower filing status must file as single.

Question 54

Taxpayers with self-employment income of $400 or more must file a tax return.

Question 55

In which of the following situations is the taxpayer not required to file a 2015 income tax return?

A)When an individual has a current year income tax refund and would like to obtain it.
B)When the taxpayer is a single 67-year-old with wages of $9,800.
C)When the taxpayer is a 35-year-old head of household with wages of $16,800.
D)When the taxpayer is a 79-year-old widow with wages of $16,500.
E)When the taxpayers are a married couple with both spouses under 65 years old with wages of $23,000.

Question 56

Monica is a maid in a San Francisco hotel. Monica received $500 in unreported tips during 2015 and owes Social Security and Medicare taxes on these tips. Her total income for the year, including tips, is $4,500. Is Monica required to file an income tax return for 2015?
​
Why?

Question 57

Theodore, age 74, and Maureen, age 59, are married taxpayers with two dependents. Their adjusted gross income for the 2015 tax year is $43,600, and they have itemized deductions of $7,800. Determine the following for Theodore and Maureen's 2015 income tax return:
a.The number of exemptions
b.The greater of the amount of their standard deduction or their itemized deductions
c.Their taxable income

Question 58

A dependent child with earned income in excess of the available standard deduction amount must file a tax return.

Question 59

All of the following factors are important in determining whether an individual is required to file an income tax return, except:

A)The taxpayer's filing status.
B)The taxpayer's gross income.
C)The taxpayer's total itemized deductions.
D)The availability of the additional standard deduction for taxpayers who are elderly.
E)None of the above.

Question 60

The maximum official individual income tax rate for 2015 is 39.6 percent, not including the Medicare surtax on net investment income.

Question 61

Norman and Linda are married taxpayers with taxable income of $126,000 in 2015.
a.When you calculate their tax liability are you required to use the tax tables or the tax rate schedules, or does it matter?
b.What is their tax liability?

Question 62

An unmarried taxpayer who maintains a household for a dependent child and whose spouse died four years ago should file as:

A)Single
B)Head of household
C)Qualifying widow(er)
D)Married, filing separately
E)None of the above

Question 63

A taxpayer who is living alone and is legally separated from his or her spouse under a separate maintenance decree at year-end should file as single.

Question 64

John, age 25, is a full-time student at a state university. John lives with his unmarried sister, Ann, who provides over half of his support. His only income is $4,200 of wages from a part-time job at the college book store. What is Ann's filing status for 2015?

A)Single
B)Head of household
C)Married, filing separately
D)Qualifying widow(er)
E)None of the above

Question 65

The taxpayer's husband died last year. Her 13 year-old dependent daughter lives with her.

Question 66

Most states are community property states.

Question 67

A taxpayer who maintains a household with an unmarried child may qualify to file as head of household even if the child is not the taxpayer's dependent.

Question 68

The head of household tax rates are higher than the rates for a single taxpayer.

Question 69

If taxpayers are married and living together at the end of the year, they must file a joint tax return.

Question 70

Robert is a single taxpayer who has AGI of $145,000 in 2015; his taxable income is $122,000. What is his federal tax liability for 2015?

A)$12,600.00
B)$18,300.00
C)$27,231.25
D)$33,671.25
E)$34,160.00

Question 71

Alan, whose wife died in 2013, filed a joint tax return for 2013. He did not remarry and continues to maintain his home in which his four dependent children live. In the preparation of his tax return for 2015, Alan should file as:

A)Single
B)Qualifying widow(er)
C)Head of household
D)Married, filing separately
E)None of the above

Question 72

Curt and Linda were married on December 31, 2015. What are their options for filing status for their 2015 taxes?

Question 73

William is a divorced taxpayer who provides a home for his dependent child, Edward. What filing status should William indicate on his tax return?

A)Head of household
B)Married, filing separately
C)Single
D)Qualifying widow(er)
E)None of the above

Question 74

Madeline is single and supports her 85-year-old parents who live in a senior home paid for by Madeline and have no income. What is Madeline's filing status and why?

Question 75

Determine from the tax table or the tax rate schedule, whichever is appropriate, the amount of the income tax for each of the following taxpayers for 2015.

Question 76

List each alternative filing status available to unmarried individual taxpayers.

Question 77

Irma, widowed in 2014, pays all costs related to the home in which she and her unmarried son live. Her son does not qualify as her dependent. What is her filing status for 2015?

A)Single
B)Married, filing separate
C)Head of household
D)Qualifying widow(er)
E)None of the above

Question 78

A married person with a dependent child may choose to file as head of household if it reduces his or her tax liability.

Question 79

All taxpayers may use the tax rate schedule to determine their tax liability.

Question 80

During 2015, Howard maintained his home in which he and his 16 year-old son resided. The son qualifies as his dependent. Howard's wife died in 2014. What is his filing status for 2015?

A)Single
B)Head of household
C)Married, filing separately
D)Qualifying widow(er)
E)None of the above.