Deck 1: The Individual Income Tax Return

Question 1

Joan,45 years old and unmarried,contributed $1,200 monthly in 2011 to the support of her parents' household.The parents lived in an apartment rented by Joan and their income for 2011 consisted of $800 in interest.What is Joan's filing status and how many exemptions should she claim on her 2011 tax return?

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

Answer 1

D

Question 2

Married taxpayers filing separate returns:

A)Must have lived apart for at least part of the year.
B)Must both itemize deductions if one spouse decides to do so.
C)Must each have income to allow both spouses to file separate returns.
D)Must not live in a community property state.
E)Can not claim head of household filing status.

Answer 2

B

Question 3

Eugenia and Victor are married.For 2011,Eugenia earned $35,000 and Victor 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.Eugenia's itemized deductions are $7,400 and Victor's are $5,400.Assuming Eugenia and Victor do not live in a community property state,what is Eugenia's taxable income?

A)$25,500
B)$23,900
C)$35,000
D)$27,600
E)None of the above

Answer 3

B

Question 4

For income tax purposes,

A)All reporting entities are taxable.
B)Corporations are reporting entities only.
C)Partnerships are taxable entities only.
D)S corporations are taxable entities only.
E)Both taxable and reporting entities must file tax returns to report their income.

Question 5

Alberta and Louis,ages 66 and 64 respectively,filed a joint return for 2011.They provided all of the support for their blind 19-year-old daughter,who had no gross income.They also provided the total support of Louis's father,who is a French citizen and life-long resident of France.How many exemptions may they claim on their 2011 tax return?

A)4
B)5
C)2
D)3
E)None of the above

Question 6

Persons who are neither directly nor indirectly related to the taxpayer:

A)Cannot qualify as dependents of the taxpayer.
B)Must live with the taxpayer at least half a year to qualify as dependents under the member-of-household test.
C)Must be supported 100 percent by the taxpayer to qualify as dependents.
D)May qualify as dependents if they reside with the taxpayer for the full year and if all other qualifying relative tests are met.
E)May qualify as dependents even though they file a joint tax return on which a small amount of tax is due.

Question 7

An exemption can be claimed for a taxpayer's child:

A)In the year of birth not in the year of death.
B)But the exemption must be prorated in the year of birth or death,based on the number of months the dependent was alive in those years.
C)Who works and pays more than half of his or her own support.
D)If the child is a premature baby kept in the hospital until after the end of the year.
E)Even though the taxpayer has not obtained a Social Security number for the child.

Question 8

Olive and Marvin file a joint income tax return for 2011.For 2011,they have adjusted gross income of $135,000 and itemized deductions of $37,000.What is the amount of itemized deductions that Olive and Marvin may deduct on their 2011 income tax return?

A)$11,600
B)$5,800
C)$19,000
D)$25,400
E)$37,000

Question 9

On the tax return of a dependent:

A)The standard deduction may not exceed $950
B)The deduction is not increased for old age and blindness.
C)The dependent can claim a personal exemption.
D)If the dependent has earned $1,800 in wages and $900 in interest,the standard deduction is $2,100.
E)If the dependent has $6,000 in wages and $300 of interest income,the standard deduction is $6,300.

Question 10

In determining whether a person is a dependent of a taxpayer:

A)A child cannot be considered a dependent after becoming 21 years old.
B)A dependent must be a United States citizen and living in the United States.
C)A child who provides more than one-half of his or her own support cannot be claimed as a dependent of someone else.
D)A child may not satisfy the requirements of dependency for more than one taxpayer.
E)A 20-year-old child who is not a student and earns $15,000 during the year may qualify as a dependent.

Question 11

Wilhelmina is a divorced taxpayer who provides a home for her dependent child,Eloise.What filing status should Wilhelmina indicate on her tax return?

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

Question 12

Heads of households:

A)Have the same tax rates as married taxpayers filing separately.
B)Cannot be married as of December 31 of the tax year.
C)Can only qualify if they have a dependent child living with them.
D)Can have half of the cost of keeping a home paid by the dependent and still be classified as head of household.
E)Can have dependent parents living in a separate residence,and still qualify as head of household.

Question 13

Which of the following taxpayers does not have to file a tax return for 2011?

A)A student,age 25,with unearned income of $1,400 who is claimed as a dependent by his parents
B)A qualifying widow (age 67)with a dependent child and income of $14,950
C)A single taxpayer who is under age 65,with income of $10,000
D)Married taxpayers (ages 45 and 50 years),filing jointly,with income of $20,000
E)All of the above taxpayers must file a return

Question 14

Which of the following statements is not correct with respect to the taxation of capital gains?

A)Long-term capital gains are taxed at a lower rate than ordinary income.
B)Long-term gains have preferential tax rates of zero percent and 15 percent.
C)In any year,only $3,000 of net capital losses can be deducted against ordinary income.
D)Short-term capital gains have preferential tax rates.
E)All of the above are correct statements.

Question 15

During 2011,Anton was entirely supported by his three daughters,Dolly,Carol,and Isabel who provided support for him in the following percentages: Which of the daughters may be allowed to claim her father as a dependent,assuming a multiple support agreement exists?

A)Carol or Isabel
B)Dolly,Carol,or Isabel
C)Dolly
D)Dolly or Carol
E)None of the above

Question 16

Martina,a single taxpayer,paid the full cost of maintaining her dependent father in a home for the aged for the entire year.What is the amount of Martina's standard deduction for 2011?

A)$8,500
B)$11,600
C)$0
D)$5,800
E)None of the above

Question 17

Deductions for adjusted gross income:

A)Exclude moving expenses because these are itemized deductions.
B)Exclude alimony because alimony is a personal expense.
C)Include charitable contributions.
D)Do not include student loan interest.
E)Include penalties on early withdrawals from savings.

Question 18

Which of the following is a true statement with respect to the gross income test for the dependency exemption?

A)The gross income test does not have to be met provided the dependent is the taxpayer's qualifying child.
B)The gross income test does not have to be met provided a dependent is a relative other than a child.
C)A qualifying relative must receive less than $5,000 of gross income.
D)The gross income test does not have to be met provided a qualifying relative is under the age of 19 at the end of the tax year.
E)All of the above statements are true.

Question 19

A widow or widower:

A)Can use joint return rates in the year after the spouse's death even though he or she is the only one remaining in the household.
B)Can file a joint return in the year of the spouse's death,but in the next year and thereafter must file as head of household if he or she has a dependent child.
C)May benefit from the joint return rates for 2 years after the death of a spouse if there is a dependent child.
D)After the initial period of joint return rates,can use head of household rates after the death of a spouse even if the children are no longer dependents.
E)May benefit from the joint return rates for 3 years after the death of a spouse if there is a dependent child.

Question 20

The tax formula for individuals contains the following:

A)Gross Income minus Adjusted Gross Income equals Taxable Income.
B)Gross Income minus Deductions and minus Exemptions is equal to the amount of Adjusted Gross Income.
C)Exemptions,Credits,and Deductions are subtracted from Adjusted Gross Income to calculate Taxable Income.
D)Adjusted Gross Income minus Deductions and minus Exemptions is equal to Taxable Income.
E)The amount of the Refund Due is the Gross Tax Liability added to Credits.