Deck 2: Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Question 1

The exemption amount is subject to annual adjustment for inflation.

Answer 1

True

Question 2

To qualify for head of household status,a taxpayer must maintain a household that is the principal place of abode of a qualifying person for more than half the year.

Answer 2

True

Question 3

If a taxpayer's spouse dies during the tax year,the taxpayer must file as a qualifying widow(er).

Answer 3

False

Question 4

A taxpayer can be claimed as a dependent on another return and still he or she can claim a personal exemption on his or her tax return.

Question 5

The federal individual income tax returns are the 1040ES,1040A and 1040.

Question 6

A married taxpayer filing separately must show the name,address,and social security number of the spouse on the tax return.

Question 7

Even if the total of the itemized deductions is lower than the standard deduction,a taxpayer should choose to itemize on his or her tax return.

Question 8

The standard deduction in 2017 for a married couple,under 65 and not blind,is $12,700.

Question 9

The amount of tax liability for a taxpayer depends on many factors,including the filing status of the taxpayer.

Question 10

The tax code defines adjusted gross income (AGI)as gross income minus a list of permitted deductions.

Question 11

A qualifying child does not have to meet the support test in order to be claimed as a dependent.

Question 12

The tax tables stop at taxable income of $115,000.

Question 13

A married couple in the process of obtaining a divorce cannot file a joint tax return.

Question 14

The personal exemption for 2017 is $4,050.

Question 15

A qualifying relative must be related to the taxpayer (as listed by the IRS),or be a member of the taxpayer's household for the entire year.

Question 16

A taxpayer who either is 65 or older or blind can claim an additional standard deduction.

Question 17

A married couple can file a joint return only if both have earned income.

Question 18

In 2017,the additional standard deduction for a single taxpayer,who is 65 or older and not blind,is $1,200.

Question 19

To be claimed as a dependent,a person must be a qualifying child or a qualifying relative.

Question 20

A taxpayer can qualify for head of household even though his or her parents are living in a separate household from that of the taxpayer (assume all other requirements are met).

Question 21

When a taxpayer's AGI exceeds certain levels,certain tax benefits are reduced or eliminated.

Question 22

The amount of the standard deduction increases for people who are age 62 and have retired.

Question 23

If the taxpayer still owes tax after April 15,the IRS assesses interest based on the remaining amount owed.

Question 24

The accuracy-related penalty applies when negligence or any substantial understatement occurs.

Question 25

Personal exemptions are for the taxpayer and spouse.

Question 26

Marital status of a taxpayer is determined on the last day of the tax year.

Question 27

The IRS can impose a 75% penalty on any portion of understatement of tax that is attributable to negligence.

Question 28

A taxpayer may request an automatic seven-month extension of time to file his or her tax return.

Question 29

An extension to file a tax return is an extension of time to file and an extension of time to pay.

Question 30

A couple who is legally married on the last day of the tax year cannot file married filing separately.

Question 31

Most taxpayers make payments to the IRS through income tax withholdings and quarterly estimated tax payments.

Question 32

A taxpayer who has income that is not subject to withholding is never required to make estimated payments during the year.

Question 33

Even though the taxpayer is claimed as a dependent on another tax return,he or she can still receive an exemption amount for himself or herself when filing his or her tax return.

Question 34

Taxable income (TI)is computed after subtracting from adjusted gross income (AGI),the standard deduction or itemized deductions and personal and dependency exemptions.

Question 35

If a married couple files separate returns and one of them itemizes,the other spouse must also itemize.

Question 36

In a multiple support agreement,the taxpayer who will receive the exemption must file all the Forms 2120 with his or her tax return.

Question 37

The taxpayer's brother must live with the taxpayer for the entire year to meet the relationship or member of household test under qualifying relatives.

Question 38

A taxpayer must be married to claim Head of Household status.

Question 39

Many deductions and credits are determined with reference to adjusted gross income (AGI).

Question 40

The maximum penalty for failure to file a tax return that is not due to fraud is 25%.

Question 41

The taxpayer's spouse died at the beginning of 2016.He has no qualifying child.Which status should the taxpayer select when filing his tax return for 2017?

A)Single.
B)Married Filing Separately.
C)Married Filing Jointly.
D)Qualifying Widow(er).

Question 42

For a qualifying relative to be claimed as a dependent,this person must either be related to the taxpayer,or be a member of the taxpayer's household for the entire year.Select the relative who must be part of the taxpayer's household for the entire year.

A)Mother.
B)Sister.
C)Cousin.
D)Son-in-law.

Question 43

For tax purposes,marital status is determined as of the ________ day of the year.

A)first
B)third
C)last
D)None of these

Question 44

A legally divorced taxpayer maintains a household for himself and maintains a separate household that is the principal place of abode of his dependent widowed mother.What filing status should he use when filing his tax return?

A)Married Filing Separately.
B)Single.
C)Qualifying widow(er).
D)Head of Household.

Question 45

Mirtha is 21 years of age and a full-time student living by herself.She had wages of $25,000 for 2017 and provided more than half of her own support.Can Mirtha claim the exemption for herself on her tax return?

A)Mirtha's parents can claim the exemption.
B)Both,Mirtha and her parents can claim the exemption.
C)Yes,Mirtha can claim the exemption.
D)No one can claim the exemption for Mirtha.

Question 46

To be a qualifying relative,the taxpayer must meet three general tests and four specific tests.Which one is not part of the four specific tests?

A)Relationship test or member of household test.
B)Age test.
C)Support test.
D)Gross income test.

Question 47

A 36-year-old taxpayer with a dependent child and claiming head of household status has received $29,000 in alimony payments and earned wages of $44,000.Which is the simplest form this person can file?

A)1040A.
B)1040EZ.
C)1040.
D)1040ES.

Question 48

The basic standard deduction in 2017 for a taxpayer,under 65 and not blind,filing married filing jointly is:

A)$12,400.
B)$12,600.
C)$12,700.
D)$9,350.

Question 49

A single taxpayer is 43 years old and has wages only of $16,000.Which is the simplest form this person can file?

A)1040A.
B)1040EZ.
C)1040.
D)1040ES.

Question 50

Elisa is 21 years of age and a full-time student living with her parents.She had wages of $680 ($75 of income tax withholding)for 2017.Can Elisa claim her exemption on her return even though her parents will claim her as a dependent on their tax return?

A)Elisa and her parents can both claim the exemption.
B)No one can claim the exemption for Elisa.
C)Yes,Elisa can claim the exemption.
D)No,Elisa cannot claim the exemption.

Question 51

Robert,Fred and Lucas are supporting their mother who lives in a separate apartment.Their contributions towards her support are 10%,40% and 50%,respectively.In a multiple support agreement,who would be entitled to claim the mother as a dependent?

A)Robert.
B)Fred or Lucas.
C)Robert,Fred or Lucas.
D)None of these.

Question 52

To be a qualifying child,the taxpayer must meet three general tests and five specific tests.Which one is not part of the five specific tests?

A)Gross income test.
B)Relationship test.
C)Residency test.
D)Special test for qualifying child of more than one taxpayer.

Question 53

To be a qualifying child,the taxpayer must meet three general tests and five specific tests.What are the three general tests?

A)Relationship test,residency test and gross income test.
B)Support test,age test and relationship test.
C)Dependent taxpayer test,relationship test and citizen or resident test.
D)Dependent taxpayer test,joint return test and citizen or resident test.

Question 54

The basic standard deduction in 2017 for a taxpayer,67 and not blind,filing head of household is:

A)$9,300.
B)$10,900.
C)$10,850.
D)$9,350.

Question 55

What was the amount of the personal exemption for 2017?

A)$3,900.
B)$4,000.
C)$4,100.
D)$4,050.

Question 56

A taxpayer can deduct a(an)________ amount from AGI for each dependent.

A)Deduction
B)Exemption
C)Itemized
D)Adjustment

Question 57

A taxpayer is married with a qualifying child (dependent),but she has been living separate from her spouse for the last five months of the year.However,she paid for more than half of the cost of keeping up the household.Her spouse does not want to file jointly.What filing status must she use when filing her tax return? She wants to obtain the maximum legal benefit.

A)Single.
B)Married Filing Separately.
C)Qualifying Widow(er).
D)Head of Household.

Question 58

Which of the following items would not be considered as support for a dependency exemption?

A)medical insurance premiums.
B)food.
C)clothing.
D)life insurance premiums.

Question 59

The taxpayer must provide over ________ of the qualifying relative's support to be able to claim a dependency exemption.

A)49%
B)50%
C)51%
D)75%

Question 60

The basic standard deduction in 2017 for a single taxpayer,under 65 and not blind,is:

A)$6,350.
B)$4,050.
C)$9,300.
D)$6,300.

Question 61

Criminal penalties only apply to:

A)Careless disregard for tax authority.
B)Willful failure to file a return.
C)Tax evasion.
D)Willful failure to file a return and tax evasion.

Question 62

A 37- year-old taxpayer with a dependent child and claiming head of household status has received $21,000 in child support payments and earned wages of $46,000.Which is the simplest form this person can file?

A)1040A.
B)1040.
C)1040ES.
D)1040EZ.

Question 63

Failure to make required estimated payments will subject the taxpayer to a potential underpayment penalty plus interest.However,if the difference between the tax shown on the return and the amount of tax withheld for wages is less than ________,the taxpayer will not be assessed a penalty.

A)$1,250
B)$500
C)$850
D)$1,000

Question 64

Which condition listed below is not required for a taxpayer to qualify as a qualifying widow(er)with dependent child?

A)The household was the principal place of abode for the entire year of both the taxpayer and his or her child.
B)Taxpayer must remarry before the end of the tax year in question.
C)Taxpayer paid more than half the cost of keeping up a household.
D)Taxpayer was eligible to file a joint return in the year the spouse died.

Question 65

A single taxpayer is 35 years old and has only wages of $16,000.Which is the simplest form this person can file?

A)1040A.
B)1040EZ.
C)1040ES.
D)1040.

Question 66

The IRS can impose a ________ penalty on any portion of understatement of tax that is attributable to fraud.

A)25%
B)75%
C)50%
D)5%

Question 67

What is the amount of the tax liability for a married couple filing jointly,having taxable income of $153,500? All answers should be rounded to the nearest dollar. Use the appropriate Tax Tables or Tax Rate Schedules.

A)$38,375.
B)$29,753.
C)$30,233.
D)$29,865.

Question 68

The failure to file penalty is ________ of the tax shown on the return for each month (or fraction of a month)the tax return is not filed,up to a maximum of 25%.

A)0)25%
B)0)5%
C)5)0%
D)5)5%

Question 69

What is the amount of the social security wage limitation for 2017?

A)$118,500.
B)$110,100.
C)$127,200.
D)$117,000.

Question 70

Luisa's parents can claim her as a dependent on their tax return.In 2017,her only source of income was a part-time job as a medical clerk where she earned $2,600 during the year.What is Luisa's standard deduction?

A)$2,600.
B)$4,050.
C)$1,050.
D)$2,950.

Question 71

Ed's parents can claim him as a dependent on their tax return.In 2017,his only source of income was $1,050 of interest income received from Global Bank.What is Ed's standard deduction?

A)$1,050.
B)$1,000.
C)$4,050.
D)$350.

Question 72

When a taxpayer can be claimed as a dependent on the tax return of another individual,the basic standard deduction for the taxpayer is limited to the greater of (a)________,or (b)the taxpayer's earned income plus $350,but not more than the amount of the basic standard deduction.

A)$1,000
B)$950
C)$1,050
D)$350

Question 73

What is the amount of the tax liability for a qualifying widow(er)with a dependent child and having taxable income of $121,600? All answers should be rounded to the nearest dollar.

A)$25,234.
B)$21,878.
C)$30,400.
D)$27,665.

Question 74

The early withdrawal penalty is a for AGI deduction.Which form can the taxpayer use to claim this benefit?

A)1040EZ.
B)1040A.
C)1040.
D)1040A or 1040.

Question 75

What is the amount of the tax liability for a head of household person having taxable income of $87,573? All answers should be rounded to the nearest dollar. Use the appropriate Tax Tables or Tax Rate Schedules.

A)$16,146.
B)$16,134.
C)$17,963.
D)$17,633.

Question 76

What is the amount of the tax liability for a single person having taxable income of $59,200? All answers should be rounded to the nearest dollar. Use the appropriate Tax Tables or Tax Rate Schedules.

A)$10,656.
B)$9,350.
C)$10,545.
D)$14,800.

Question 77

What is the amount of the tax liability for a qualifying widow(er)with a dependent child and having taxable income of $18,355? All answers should be rounded to the nearest dollar. Use the appropriate Tax Tables or Tax Rate Schedules.

A)$1,836.
B)$2,331.
C)$1,838.
D)$2,753.

Question 78

The interest charged by the IRS for the first three months of 2017 was:

A)3%.
B)5%.
C)4%.
D)6%.

Question 79

John forgot to file his tax return by April 15.He did not file an extension.John finally filed his tax return on June 30 and had a remaining tax liability of $1,500.What is John's failure to file penalty? Assume he made all his payments on time.

A)$375.
B)$225.
C)$233.
D)$300.

Question 80

The taxpayer's spouse died at the beginning of 2017.He has no qualifying child.Which status should the taxpayer select when filing his tax return?

A)Single.
B)Qualifying Widow(er).
C)Married Filing Separately.
D)Married Filing Jointly.