Deck 8: Taxation of Individuals

Question 1

Match each statement with the correct term below.
a.Unmarried without dependents.
b.Generally used when financial disagreement exists.
c.Unmarried and provides a household for a dependent.
d.Use the same tax rate schedule as married, filing jointly.
e.Determines which tax rate schedule and standard deduction amount is applicable.
Filing status

Answer 1

E

Question 2

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Kiddie tax

Answer 2

K

Question 3

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Self-employed salesman spends $1,000 on "directly related" entertainment of his customers.Amount: $500

Answer 3

B

Question 4

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Standard deduction

Question 5

Match each statement with the correct term below.
a.Unmarried without dependents.
b.Generally used when financial disagreement exists.
c.Unmarried and provides a household for a dependent.
d.Use the same tax rate schedule as married, filing jointly.
e.Determines which tax rate schedule and standard deduction amount is applicable.
Surviving spouse

Question 6

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Travel and lodging expense of $800 incurred by an employee on a business related trip (no reimbursement).Amount: $800

Question 7

Match each statement with the correct term below.
a.Unmarried without dependents.
b.Generally used when financial disagreement exists.
c.Unmarried and provides a household for a dependent.
d.Use the same tax rate schedule as married, filing jointly.
e.Determines which tax rate schedule and standard deduction amount is applicable.
Head of household

Question 8

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Investment interest

Question 9

Match each statement with the correct term below.
a.Unmarried without dependents.
b.Generally used when financial disagreement exists.
c.Unmarried and provides a household for a dependent.
d.Use the same tax rate schedule as married, filing jointly.
e.Determines which tax rate schedule and standard deduction amount is applicable.
Single

Question 10

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Self-employed sports agent pays $6,000 of self-employment tax.Amount: $3,000

Question 11

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Home equity loan interest

Question 12

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Points

Question 13

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Gross income test

Question 14

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Deductions for AGI

Question 15

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Deductions from AGI

Question 16

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Personal exemption amount

Question 17

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Personal interest

Question 18

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Qualified contribution of $6,500 to an IRA by a 52 year old married taxpayer who is covered by his employer's pension plan.Amount: $6,500

Question 19

Match each statement with the correct term below.
a.Unmarried without dependents.
b.Generally used when financial disagreement exists.
c.Unmarried and provides a household for a dependent.
d.Use the same tax rate schedule as married, filing jointly.
e.Determines which tax rate schedule and standard deduction amount is applicable.
Married,filing separately

Question 20

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Support test

Question 21

Carlos had $3,950 of state taxes withheld from his salary this year.If he deducts the full amount as an itemized deduction and receives a refund in the following year,he must file an amended return and reduce the deduction he received by the amount of the refund.

Question 22

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Federal quarterly estimate of $3,000 paid by a self-employed taxpayer.

Question 23

To qualify as a qualifying relative,an individual must meet three of five tests.These are the gross income test; the support test; the relationship or member of the household test; the citizen or residency test; and the joint return test.

Question 24

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Taxpayer's only passive activity is a rental activity that results in a loss of $8,000.Amount: $8,000,since AGI is less than $100,000

Question 25

In addition to the regular standard deduction taxpayers who are blind qualify for a second standard deduction of the same amount.

Question 26

Unreimbursed meals and entertainment paid by employees are subject to the 2-percent of adjusted gross income annual limitation on miscellaneous deductions

Question 27

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Moving expenses incurred on a job related move consisting of $2,500 for the moving van,$300 for lodging en route,$100 for mileage during the move,and $80 for meals.Amount: $2,900

Question 28

Any charitable contributions made in excess of the individual's limitation on charitable contributions can be carried forward seven years.

Question 29

Unreimbursed medical costs are deductible only to the extent that they exceed 3.0% of the taxpayer's adjusted gross income.

Question 30

To qualify for the child- and dependent-care credit,the taxpayer must have earned income and must incur qualified expenses for the care of qualified individuals.

Question 31

To recognize such basic personal living costs as food and clothing,each individual taxpayer is allowed a personal exemption of $3,900 in 2013.

Question 32

Philip has been working in Spain for the last three years.He and his wife Barbara adopted Juan who will not qualify as a dependent since he is not a U.S citizen.

Question 33

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Taxpayer contribution of $250 to the Democratic Party.

Question 34

Morris and Marianne have a $310,000 mortgage on their personal residence and a $90,000 mortgage on their mountain retreat.The interest on both of them qualifies as deductible qualified home mortgage interest.

Question 35

To qualify as a qualifying child,an individual must meet five tests.These are the age test; the non-support test; the principal residence test; relationship test; and the citizen or residency test.

Question 36

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Sale of stock results in a loss of $7,000.The only other capital transaction for the year results in a gain of $6,000.Amount: $7,000

Question 37

Eric,who is 18 years old,sells magazine subscriptions door-to-door for commissions.He earned $2,900 this year and he will have to pay tax on this income at his parent's tax rate.

Question 38

Match each statement with the correct term below.
a.Prepaid interest.
b.An amount that each taxpayer who is neither a qualifying child nor a qualifying relative, and who files a return, is allowed to deduct.
c.One test for a qualifying relative.
d.The minimum amount a taxpayer can deduct for personal expenditures.
e.A deduction in this category is always allowed. That is, there is no minimum allowable amount and generally no income limitation placed on these deductions.
f.Generally, these deductions are for specifically allowed personal expenditures.
g.An exception to this test is a custodial parent.
h.Interest paid on debt used to buy securities.
i.Interest paid on credit cards, personal loans, car loans, etc.
j.Interest paid on a mortgage secured by the taxpayer's residence. The proceeds of the loan can be used for any purpose and the interest is still deductible.
k.A tax designed to prevent the shifting of unearned income to children of the taxpayer.
Hobby expenses of $2,500.Hobby income is $2,000.Amount $2,000,subject to 2% of AGI

Question 39

To qualify as a head of household,an unmarried taxpayer must pay more than half of the cost of maintaining a home that is the principal residence for more than half the year of a qualified dependent or an unmarried child who qualifies as a dependent.

Question 40

Under the legislative grace concept,Congress allows certain personal expenses to be deducted when they exceed the standard deduction.

Question 41

Mary Lou is a 22-year old student at Wilson College.She earned $4,300 at a summer job,which is less than half of her support.
I)Mary Lou can claim a personal exemption for herself even if her parents claim her as a dependent.
II)Because Mary Lou is a full-time college student,and she provides less than half of her own support,her parents must claim her as a dependent on their return.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 42

Rosa is a single parent who maintains a home in Durham in which she and her 16-year-old daughter reside.She also provides most of the support for her son,Carmelo,age 25,who is a full-time student at Duke Law School,lives at home,and earns $3,500 as a part-time waiter at a local diner.How many personal and dependency exemptions can Rosa claim?

A)0
B)1
C)2
D)3

Question 43

To be a qualifying relative,an individual must meet certain tests.These tests include,
I)the citizen or residency test.
II)the non-support test.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 44

Larry and Louise are both 49 years of age and file a joint return.They provide all of the support for their son,Dylan,who is 20 years old and is at home until he gets called into the army.His income at part-time jobs is $3,900.Their daughter,Phyllis,is a 23-year-old full-time student at State University.She lived at school 9 months and provided two thirds of her own support with a summer job.How many personal and dependency exemptions can Larry and Louise claim on their income tax return?

A)1
B)2
C)3
D)4

Question 45

Ariel has two children,Christopher and Pat.Christopher is 25 years old and Pat is 22.Both are full time students at Southern College,have full tuition scholarships,and live at school during the year.Christopher graduated in June.Which test will prevent Ariel from claiming both Pat and Christopher as dependents?

A)Age test.
B)Gross income test.
C)Principal residence test.
D)Non-support test.
E)Full time student test.

Question 46

Which of the following individuals can be claimed as a dependent in the current year? (Assume any test not mentioned has been satisfied).
I)Carl and Diane are divorced.Carl has custody of their 6-year-old son.Diane pays Carl $500 per month in child support.Carl pays the other $400 per month it costs to support their son.The divorce decree does not stipulate who gets custody of the son.Carl claims his son as a dependent.
II)Lorraine is a 25-year-old college student.She lives with her parents,who also provide her with $500 monthly support.Lorraine earns $4,600 working part-time for other support.She may be claimed as a dependent of her parents.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 47

Sergio wants to know if he can claim his daughter,Sarah,as a dependent on his income tax return.Sarah lives at home with her parents all year.Sergio provides $11,500 for her support (i.e.,food,shelter,and transportation).Sarah,age 18,made $13,250 last year by acting and working as a cashier at a restaurant.Sarah saved $9,000 of her income and spent $4,250 on clothes and entertainment.Can Sergio claim his daughter,Sarah,as a dependent for income tax purposes?

A)Yes.
B)No, Sarah fails the relationship test.
C)No, Sarah fails the gross income test.
D)No, Sarah fails the student test.
E)No, Sarah fails the support test.

Question 48

During the current year,his three children,Simon,Alvin,and Theodore and his life-long friend,Arlo,with whom he lives,provide Durbin's support.Durbin's support distribution follows:
$\begin{array} { l l } \text { Simon } & 20 \% \\ \text { Theodore } & 55 \% \\ \text { Arlo } & 10 \% \\ \text { Alvin } & 15 \% \end{array}$
If the children file a multiple support agreement, which of the following are eligible to claim Durban as a dependent?

A) Only Theodore.
B) Only Theodore or Arlo.
C) Only Arlo.
D) Theodore, Simon, or Alvin.
E) Theodore, Simon, Arlo, or Alvin

Question 49

Brandon is retired and lives with his son,Charles.Charles and his sister and brother,Heloise and Barney,provide Brandon's total support:
$$\begin{array} { l r } \text { Charles } & \$ 7,000 \\\text { Heloise } & 4,000 \\\text { Barney } & 2,000 \\\text { Social Security } & 7,500\end{array}$$
If the children file a multiple support agreement,which of the children are eligible to claim Bramdon as a dependent?

A)None.
B)Only Charles.
C)Only Heloise.
D)Only Charles and Heloise.
E)Charles, Heloise, or Barney.

Question 50

Will and Brenda of New York City are both age 66 and always file a joint tax return.During the current year they provide all the support for their son who is 20,has no income,and is a part-time college student.Their daughter,age 22 and a full-time student at Columbia University,has $4,800 of income.What is the total number of personal and dependency exemptions Will and Brenda can claim?

A)1
B)2
C)3
D)4

Question 51

Lillian and Michael were divorced last year.Michael has custody of their two children.Lillian pays $8,600 in child support payments during the current year.The total cost of supporting the children is $12,500.Michael and Lillian do not have any special agreement about dependency exemptions.How many total exemptions may Michael claim for the current year?

A)0
B)1
C)2
D)3
E)4

Question 52

To be a qualifying relative,an individual must meet certain tests.These tests include,
I)the citizen or residency test.
II)the gross income test.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 53

Alan is a 23-year old student at Upper State College.He earned $4,000 at a summer job.
I)Because he earns over $3,700 his parents cannot claim him as a dependent on their return.
II)Alan cannot claim a personal exemption for himself if his parents can claim him as a dependent.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 54

Kevin wants to know if he can claim his brother,Richard,as a qualifying relative for income tax purposes.Richard is 18 and is a part-time student at City Community College.He lives with Kevin in his home for the entire tax year.Kevin provides the majority of Richard's support.During the year Richard has the following items of income:

$\begin{array}{llcc} \text { State of Oklahoma bond interest }& \$ 1,000\\ \text { Dividends on General Motors stock}& \$ 700\\ \text { Employee wages from part-time work }& \$ 2,900\\\end{array}$

Can Kevin claim his brother Richard as a dependent for income tax purposes?

A)Yes.
B)No, Richard fails the relationship test.
C)No, Richard fails the gross income test.
D)No, Richard fails the student test.
E)No, Richard fails the residency test.

Question 55

To be a qualifying relative,an individual must meet certain tests.These tests include,
I)the gross income test.
II)the age test.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 56

Simone and Fillmore were divorced last year.Fillmore has custody of their two children.Simone pays $9,600 in child support payments during the current year.The total cost of supporting the children is $12,500.Fillmore and Simone do not have any special agreement about dependency exemptions.How many total exemptions may Simone claim for the current year?

A)0
B)1
C)2
D)3
E)4

Question 57

The American Opportunity Scholarship Tax Credit provides for a 100% tax credit on the first $2,000 of qualifying expenses and a 50% tax credit for the next $2,000 of qualifying expenses paid during the year for each qualifying student.

Question 58

Art is supported entirely by his 3 children who provide for his support as follows:
$$\begin{array} { l l } \text { Allie } & 48 \% \\\text { Barney } & 42 \% \\\text { Carrie } & 10 \%\end{array}$$
If the children file a multiple support agreement,which of the children will be eligible to claim Kenneth as a dependent?

A)None.
B)Only Allie.
C)Only Barney.
D)Only Allie or Barney.
E)Either Allie, Barney, or Carrie.

Question 59

For purposes of the relationship test for dependents,which of the following does not qualify as a relative?

A)Mother.
B)Nephew.
C)Cousin.
D)Grandfather.
E)Stepbrother.

Question 60

Which of the following individuals can be claimed as a dependent in the current year? (Assume any test not mentioned has been satisfied).
I)Kelly's mother,Dana,lives with her for 10 of 12 months during the year.Kelly provides all the support for Dana during that time.The other two months were spent with Dana's other daughter,Alice.Dana's annual income consists of $12,750 in Social Security and $1,850 of savings account interest.Kelly may claim Dana as a dependent.
II)Bart is a 22-year-old college student.His tuition of $7,000 is paid by a scholarship he received for his good high school record.He lives with his parents,who also provide him with $450 monthly support.Bart earns $1,950 mowing lawns in the neighborhood for other support.He may be claimed as a dependent of his parents.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 61

Norton's spouse died in 2013.Norton has one child,age 7,living at home.Norton provides all of the support for the child.The child lives with Norton during 2013,2014,2015,and 2016 Norton's most advantageous filing status is

A)Married filing jointly in 2013, single in 2014, 2015, 2016.
B)Head of household for all four years.
C)Head of household in 2013, surviving spouse in 2014, 2015, 2016.
D)Married filing jointly in 2013, surviving spouse in 2014 and 2015, head of household in 2016.

Question 62

Which of the following qualify for the medical expense deduction?
I)Insulin.
II)Medicare insurance premiums.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 63

Carlos incurs the following medical expenses during the current tax year:
$\begin{array}{lr}\text { Surgeon's fees } & \$ 2,000 \\\text { Medical insurance premiums } & 600 \\\text { Hospital fees } & 800 \\\text { Prescription drugs } & 310 \\\text { Wheel chair } & 200\end{array}$
Carlos's adjusted gross income for the year is $32,000.He receives a $500 reimbursement from his insurance company.Determine the amount of his medical expense deduction for the current year.

A)$ - 0 -
B)$ 210
C)$2,360
D)$2,400
E)$2,610

Question 64

Marci is single and her adjusted gross income is $30,000.In addition,she pays the following expenses during the year:
$\begin{array}{lr}\text { Psychiatrist's fee } & \$ 800 \\\text { Hospital bill for medical services and room } & 1,800 \\\text { Transportation to/from hospital } & 100 \\\text { Prescription drugs } & 750 \\\text { Over-the-counter vitamins } & 200 \\\text { Chiropractor's fees } & 700\end{array}$
Marci pays $600 for medical insurance premiums and receives a reimbursement of $1,000 from the insurance company for her medical expenses.Compute her medical deduction.

A)$ - 0 -
B)$ 550
C)$ 750
D)$ 1,250
E)$ 1,450

Question 65

Irene is 47 years old,unmarried,and has no children.Irene's mother lives in a nursing home.
I)Irene can file as head of household because her mother lives in a nursing home.
II)Because Irene's mother is a lineal descendent,Irene automatically qualifies for head of household status.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 66

Paul,age 40 and single,has an 8-year-old son,Larry.Larry resides with his mother,Susan,in her home.Pursuant to the terms of their divorce,Paul properly claims Larry as a dependent on his income tax return.Paul pays child support payments to his ex-wife for support of his child.Susan does not claim Larry as her dependent but she does bear the economic burden of supporting the household in which they reside.What is the maximum amount of the 2013 standard deduction that Susan qualifies for?

A)$ 6,100
B)$ 8,950
C)$ 9,600
D)$12,200
E)Susan does not qualify to claim a standard deduction.

Question 67

Samantha incurs the following medical expenses for the current year:

$\begin{array} {l r } \text {Face-lift for cosmetic purposes } &\$ 800 \\\text { Dentist fees } &500 \\\text {Doctors' fees for Samantha's daughter } &400\end{array}$

How much may Samantha include as qualified medical expenses on her current tax return before any limitation?

A)$ 400
B)$ 500
C)$ 900
D)$1,300
E)$1,700

Question 68

Bruce,65,supports his mother who lives with him.What is the maximum amount of the 2013 standard deduction that Bruce qualifies for?

A)$ 7,400
B)$ 8,700
C)$ 9,950
D)$10,200
E)$10,450

Question 69

Georgia is unmarried and maintains a home in which she and her unmarried daughter Karla age 34,live.Karla is an engineer and earns $52,000 annually.Karla had some severe financial difficulties two years ago and Georgia has been helping her out ever since.Georgia's spouse died in 2012.What is Georgia's filing status for 2013?

A)Head of household
B)Surviving spouse
C)Married, filing jointly
D)Single
E)Married, filing separately

Question 70

Michael,age 42 and single,has a 13-year-old son,Tony.Tony resides with his mother,Jennifer,in her home.Pursuant to the terms of their divorce,Michael properly claims Tony as a dependent on his income tax return.Michael pays child support payments to his ex-wife for support of his child.Jennifer does not claim Tony as her dependent but she does bear the economic burden of supporting the household in which they reside.What is the maximum amount of the 2013 standard deduction that Michael qualifies for?

A)$ 6,100
B)$12,200
C)$ 8,950
D)$ 5,000

Question 71

Randy is a single individual who receives a salary of $30,000.During 2013,he has $7,000 withheld for payment of his federal income taxes and $2,500 for his state income taxes.In 2013,he receives a $400 refund after filing his 2013 federal tax return and a $50 refund after filing his state tax return.
I)Randy is allowed a deduction for the $2,500 of state taxes withheld from his salary on his 2013 federal tax return.
II)If Randy has total itemized deductions of $6,250 on his 2012 federal tax return,he must include the $50 state tax refund in his 2013 gross income.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 72

Lilly and her husband Ben have a serious argument.In fact,Lilly moved out in August,left town,and has not been heard from since.Ben supports their two children after the split up and maintains their household.What is Ben's filing status for the current year?

A)Single.
B)Head of household.
C)Surviving spouse.
D)Married, filing separately.

Question 73

Cory is a 32 years old,unmarried,and has no children.Cory's father lives in a nursing home.
I)Because Cory's father does not live in the same household,Cory cannot file as a head of household.
II)If his father's taxable income is less than $3,900 and the other dependency tests are met,Cory will file as head of household.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 74

Tisha's husband died in 2010.She has not remarried and maintains a home for herself and her dependent son.What is Tisha's filing status for 2013?

A)Single.
B)Head of household.
C)Married, filing separately.
D)Surviving spouse.

Question 75

Frank's wife died in 2011.He has not remarried and maintains a home for himself and his dependent daughter.What is Frank's filing status for 2013?

A)Single.
B)Head of household.
C)Married, filing separately.
D)Surviving spouse.

Question 76

Julian and Judy divorced and Julian received custody of their child.Judy must pay child support of $24,000 annually.Therefore,Julian agreed in writing to allow Judy to claim the dependency exemption for the child.Julian maintains a home for himself and the child.For the current year,Julian's filing status and total exemptions claimed are

A)Single and one exemption.
B)Single and two exemptions.
C)Head of household and two exemptions.
D)Head of household and one exemption.

Question 77

In October of the current year,Brandy and her husband Ben split up and do not speak to each other.Neither individual will cooperate with the other on finalizing the divorce.Ben supports their two children after the split up and maintains their household.What is Ben's filing status for the current year?

A)Single.
B)Head of household.
C)Surviving spouse.
D)Married, filing separately.

Question 78

Which of the following will prevent a couple from filing as married filing joint in 2013?
I)One spouse dies on June 6,2013.
II)The couple is legally married,but is living apart throughout the year.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 79

Thomas has adjusted gross income of $228,000,total itemized deductions of $39,000 and claims 2 personal and 2 dependency exemptions.Which is his filing status?

A)Single.
B)Head of household.
C)Married filing a joint return.
D)Married filing separately.

Question 80

Which of the following qualify for the medical expense deduction?
I)Over-the-counter cough medicine.
II)Chiropractic treatments.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.