Deck 2: Determination of Tax

Question 1

Generally, in the case of a divorced couple, the parent who has physical custody of a child for the greater part of the year is entitled to the dependency exemption.

Answer 1

True

Question 2

Nonresident aliens are allowed a full standard deduction.

Answer 2

False

Question 3

Generally, itemized deductions are personal expenses specifically allowed by the tax law.

Answer 3

True

Question 4

Refundable tax credits are allowed to reduce or totally eliminate a taxpayer's tax liability but any credits in excess of the tax liability are lost.

Question 5

Although exclusions are usually not reported on an individual's income tax return, interest income on state and local government bonds must be reported on the tax return.

Question 6

The person claiming a dependency exemption under a multiple support declaration must provide more than 25% of the dependent's support.

Question 7

Taxpayers have the choice of claiming either the personal and dependency exemption or the standard deduction.

Question 8

For purposes of the dependency exemption, a qualifying child may not provide more than one-half of his or her own support during the year.

Question 9

A child credit is a partially refundable credit.

Question 10

An individual who is claimed as a dependent by another person is not entitled to a personal exemption on his or her own return.

Question 11

An individual may not qualify for the dependency exemption as a qualifying child but may still qualify as a dependent.

Question 12

Gross income is income from whatever source derived less exclusions.

Question 13

Nonrefundable tax credits are allowed to reduce or totally eliminate a taxpayer's tax liability but any credits in excess of the tax liability are lost.

Question 14

A qualifying child of the taxpayer must meet the gross income test.

Question 15

One requirement for claiming a dependent other than a qualifying child is that the taxpayer provides more than 50 percent of the dependent's support (assuming it is not a multiple support agreement situation).

Question 16

Generally, deductions for (not from)adjusted gross income are personal expenses specifically allowed by tax law.

Question 17

For purposes of the dependency exemption, a qualifying child must be under age 19, a full-time student under age 24, or a permanently and totally disabled child.

Question 18

When two or more people qualify to claim the same person as a dependent, a taxpayer who is entitled to the exemption through the qualified child rules has priority over a taxpayer who meets the requirements for other relatives.

Question 19

The standard deduction may not be claimed by one married taxpayer filing a separate return if the other spouse itemizes deductions.

Question 20

The standard deduction is the maximum amount of itemized deductions which may be claimed by a taxpayer, and is based on an individual's filing status, age, and vision.

Question 21

A widow or widower may file a joint tax return and claim an exemption for the deceased spouse in the year of the spouse's death as long as the surviving spouse does not remarry before the end of the year.

Question 22

A legally married same-sex couple can file a joint return.

Question 23

Generally, when a married couple files a joint return, each spouse is liable for one-half of the entire tax and any penalties incurred.

Question 24

Mia is a single taxpayer with projected AGI of $250,000 in 2014. She is considering selling a long-term investment before year-end. She expects to realize a gain of $25,000. If Mia sells the investment by December 31, her 2014 taxable income will increase by $25,000.

Question 25

A married couple need not live together to file a joint return.

Question 26

A building used in a business is sold after five years of use for a gain. The gain will be treated as a long-term capital gain.

Question 27

Kelly is age 23 and a full-time student with interest and dividend income of $2,600 in the current year. The total cost of her support for the year is $19,000. She is not subject to the kiddie tax.

Question 28

An unmarried taxpayer may file as head of household if he maintains a home for his qualifying child.

Question 29

The only business entity that pays income taxes is the C corporation.

Question 30

Tax returns from individual and corporate taxpayers are due on the 15th day of the third month following the close of the tax year.

Question 31

Charishma is a taxpayer with taxable income exceeding $500,000. She sells a stock for a $50,000 gain. She acquired the stock 13 months earlier. The gain will be taxed at the 20% rate.

Question 32

Taxable income for an individual is defined as

A)AGI reduced by itemized deductions.
B)AGI reduced by personal and dependency exemptions.
C)total income reduced by the standard deduction.
D)AGI reduced by deductions from AGI and personal and dependency exemptions.

Question 33

Suri, age 8, is a dependent of her parents and has unearned income of $6,000. She must file her own tax return.

Question 34

A married couple in the top tax bracket has a new baby. Due to the birth of the baby their taxable income will be reduced in 2014 by $3,950.

Question 35

If a 13-year-old has earned income of $500 and unearned income of $2,500, all of the income can be reported on the parent's return.

Question 36

All of the following items are generally excluded from income except

A)child support payments.
B)interest on corporate bonds.
C)interest on state and local government bonds.
D)life insurance proceeds paid by reason of death.

Question 37

The requirement to file a tax return is based on the individual's adjusted gross income.

Question 38

A $10,000 gain earned on stock held 13 months is taxed in a more favorable manner than a $10,000 gain earned on stock held 11 months.

Question 39

For 2014, unearned income in excess of $2,000 of a child under age 18 is generally taxed at the parents' rate.

Question 40

A taxpayer is able to change his filing status from married filing jointly to married filing separately by filing amended return.

Question 41

Husband and wife, who live in a common law state, are eligible to file a joint return for 2014, but elect to file separately. They do not have dependents. Wife has adjusted gross income of $25,000 and has $2,200 of expenditures which qualify as itemized deductions. She is entitled to one exemption. Husband deducts itemized deductions of $11,200. What is the taxable income for the wife?

A)$14,850
B)$18,850
C)$8,650
D)$22,800

Question 42

Which of the following types of itemized deductions are included in the category of miscellaneous expenses that are deductible only if the aggregate amount of such expenses exceeds 2% of the taxpayer's adjusted gross income?

A)unreimbursed employee business expenses
B)charitable contributions
C)medical expenses
D)home mortgage interest expense

Question 43

All of the following items are deductions for adjusted gross income except

A)alimony paid.
B)trade or business expenses.
C)rent and royalty expenses.
D)state and local income taxes.

Question 44

Which of the following credits is considered a refundable credit?

A)child and dependent care credit
B)earned income credit
C)adoption expense credit
D)lifetime learning credit

Question 45

In 2014 the standard deduction for a married taxpayer filing a joint return and who is 67 years old with a spouse who is 65 years old is

A)$12,400.
B)$13,600.
C)$14,800.
D)$15,500.

Question 46

Cheryl is claimed as a dependent on her parents' tax return. She had a part-time job during 2014 and earned $4,900 during the year, in addition to $600 of interest income. What is her standard deduction?

A)$1,000
B)$4,900
C)$5,250
D)$6,120

Question 47

A married person who files a separate return can claim a personal exemption for his spouse if the spouse is not the dependent of another and has

A)gross income that is less than the personal exemption.
B)adjusted gross income that is less than the personal exemption.
C)no gross income.
D)no taxable income.

Question 48

Charlie is claimed as a dependent on his parents' tax return in 2014. He received $8,000 during the year from a part-time acting job, which was his only income. What is his standard deduction?

A)$1,000
B)$6,200
C)$8,000
D)$8,350

Question 49

On June 1, 2014, Ellen turned 65. Ellen has been a widow for five years and has no dependents. Her standard deduction is

A)$3,950.
B)$6,200.
C)$7,750.
D)$12,400.

Question 50

The regular standard deduction is available to which one of the following taxpayers?

A)married taxpayer filing a separate return where the other spouse itemizes
B)a person who has only unearned income and is a dependent of another
C)an individual filing a return for a period of less than 12 months because of a change in accounting period
D)an abandoned spouse

Question 51

Annisa, who is 28 and single, has adjusted gross income of $55,000 and itemized deductions of $5,000. In 2014, Annisa will have taxable income of

A)$44,850.
B)$46,050.
C)$51,050.
D)$43,800.

Question 52

Anita, who is divorced, maintains a home in which she and her 16 year old daughter live. Anita provides the majority of the support for her daughter and for a son, age 23, who is enrolled part-time at the university and lives in the dorm. The son also works in the campus bookstore and earns spending money of $4,500. How many personal and dependency exemptions may Anita claim?

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

Question 53

All of the following items are deductions for (not from)adjusted gross income except

A)moving expenses.
B)unreimbursed employee business expenses.
C)qualifying contributions to individual retirement accounts.
D)one-half of self-employment taxes paid.

Question 54

Ben, age 67, and Karla, age 58, have two children who live with them and for whom they provide total support. Their daughter is 21 years old, blind, is not a full-time student and has no income. Her twin brother is 21 years old, has good sight, is a full-time student and has income of $4,500. Ben and Karla can claim how many personal and dependency exemptions on their tax return?

A)2
B)3
C)4
D)5

Question 55

Lewis, who is single, is claimed as a dependent on his parents' tax return. He received $2,000 during the year in dividends, which was his only income. What is his standard deduction?

A)$1,000
B)$2,000
C)$2,350
D)$6,200

Question 56

All of the following items are included in gross income except

A)alimony received.
B)rent income.
C)interest earned on a bank account.
D)child support payments received.

Question 57

A single taxpayer provided the following information for 2014: What is taxable income?

A)$57,050
B)$63,050
C)$63,000
D)$67,050

Question 58

Deborah, who is single, is claimed as a dependent on her parents' tax return. She had a part-time job during 2014 and earned $850 during the year, which was her only income. What is her standard deduction?

A)$850
B)$1,000
C)$1,200
D)$6,100

Question 59

In 2014 Brett and Lashana (both 50 years old)file a joint tax return claiming as a dependent their son who is blind. Their standard deduction is

A)$12,400.
B)$13,600.
C)$13,950.
D)$7,750.

Question 60

Sarah, who is single, maintains a home in which she, her 15-year old brother, and her 21-year-old niece live. Sarah provides the majority of the support for her brother, her niece, and her cousin, age 18, who is enrolled full-time at the university and lives in an apartment. While the niece and cousin have no income, her brother has a part-time job and earns $4,000 per year. How many personal and dependency exemptions may Sarah claim?

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

Question 61

David's father is retired and receives $14,000 per year in social security benefits. David's father saves $4,000 of the benefits and spends the remaining $10,000 for his support. How much support must David provide for his father to meet the dependent support requirement?

A)$10,000
B)$10,001
C)$14,000
D)$14,001

Question 62

Which of the following is not considered support for the dependent support test?

A)food
B)clothing
C)rental value of lodging
D)value of services rendered by the taxpayer for the dependent

Question 63

Juanita's mother lives with her. Juanita purchased clothing for her mother costing $1,000 and provided her with a room that Juanita estimates she could have rented for $4,000. Juanita spent $5,000 on groceries she shared with her mother. Juanita also paid $700 for her mother's health insurance coverage. How much of these costs is considered support?

A)$5,000
B)$7,500
C)$10,000
D)$10,700

Question 64

Blaine Greer lives alone. His support comes from the following sources: Assuming a multiple support declaration exists, which of the individuals may claim Blaine as a dependent?

A)Ken or Martha
B)Buddy, Ken, or Martha
C)Ken, Martha, or Natalie
D)None of them

Question 65

Amanda has two dependent children, ages 10 and 12. She earned $15,000 from her waitress job. How much of her child credit is refundable?

A)$1,200
B)$1,500
C)$1,800
D)$2,000

Question 66

In 2011, Leo's wife died. Leo has two small children, ages 2 and 4, living at home whom he supports entirely. Leo does not remarry and is not claimed as a dependent on another's return during any of this period. In 2012, 2013, and 2014, Leo's most advantageous filing status is, respectively

A)single for all three years.
B)head of household for all three years.
C)surviving spouse, surviving spouse, head of household.
D)surviving spouse, surviving spouse, single.

Question 67

Nate and Nikki have three dependent children ages 12, 15, and 17. Their modified AGI is $120,000. What is the amount of the child credit to which they are entitled?

A)$0
B)$500
C)$1,500
D)$2,000

Question 68

Ryan and Edith file a joint return showing $130,000 of AGI (with no exclusions under Secs. 911, 931, and 933). They have three dependent children ages 7, 9, and 13. What is the amount of their child credit?

A)$0
B)$1,000
C)$2,000
D)$3,000

Question 69

Anna is supported entirely by her three sons John, James, and Joseph who provide for her support in the following percentages: Assuming a multiple support declaration exists, which of the brothers may claim his mother as a dependent?

A)any of the sons
B)James or Joseph
C)Joseph only
D)None of them

Question 70

Julia provides more than 50 percent of the support for three individuals: Theresa, an unrelated child who lives with Julia all year long; Margaret, Julia's cousin, who lives in another city; and Emma, Julia's daughter who lives in her own home. Each of the potential dependents earned less than $3,950. How many dependency exemptions can Julia claim on her 2014 tax return?

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

Question 71

You may choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. Which of the following facts would prevent you from being considered married for filing purposes?

A)You were married for several years, but your divorce became final in December.
B)You are married but living apart until some problems can be solved.
C)Your spouse died during the year.
D)None of the above.

Question 72

Carter dies on January 1, 2013. A joint return election is made in 2013 and Marjorie properly qualifies as a surviving spouse for the two following years. Marjorie has one child that she claims as a dependent for this same period. The number of personal and dependency exemptions allowed Marjorie in 2013 and in 2014 is, respectively

A)1 and 1.
B)2 and 2.
C)3 and 2.
D)3 and 3.

Question 73

Amber supports four individuals: Erin, her stepdaughter, who lives with her; Amy, her cousin, who lives in another state; Britney, her friend, who lives legally in Amber's home all year long; and Charlie, her father, who lives in another state. Assume that the dependency requirements other than residence are all met. How many personal and dependency exemptions may Amber claim?

A)2
B)3
C)4
D)5

Question 74

Tom and Alice were married on December 31 of last year. What is their filing status for last year?

A)They file as single.
B)They file as married joint or married separate.
C)They file as single for half the year and married for the other half.
D)They file as single for 364 days and married for one day.

Question 75

Steven and Susie Tyler have three dependent children ages 13, 15, and 17. Their modified AGI is $108,000. What is the amount of the child credit to which they are entitled?

A)$0
B)$1,000
C)$2,000
D)$3,000

Question 76

John supports Kevin, his cousin, who lived with him throughout 2014. John also supports three other individuals who do not live with him: Assume that Donna, Melissa, Morris and Kevin each earn less than $3,950. How many personal and dependency exemptions may John claim?

A)2
B)3
C)4
D)5

Question 77

The child credit is for taxpayers with dependent children under the age of

A)14.
B)17.
C)19.
D)24.

Question 78

Paul and Sally file a joint return showing $87,000 of AGI (with no exclusions under Secs. 911, 931, and 933). They have three dependent children ages 6, 8, and 13. What is the amount of their child credit?

A)$0
B)$1,000
C)$2,000
D)$3,000

Question 79

Tony supports the following individuals during the current year: Miranda, his former mother-in-law who lives in her own home and has no gross income; his cousin, Jeff, age 23, who is a full-time student, earns $7,000 during the year, and lives with Tony all year long; and Matt, age 22, who is Tony's brother, is a full-time student living on campus and earns $8,000 during the year. How many dependency exemptions may Tony claim?

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

Question 80

When a spouse dies, the surviving spouse for the year of death

A)may file a married filing jointly return.
B)must file a tax return using the single filing status.
C)must file a tax return using the head of household filing status.
D)may file a married filing jointly return only if the death occurred in the last half of the year.