Deck 2: Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

The personal exemption for 2015 is $4,000.

Question 5

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

Question 6

The standard deduction in 2015 for a married couple, under 65 and not blind, is $12,600.

Question 7

The exemption amount is subject to annual adjustment for inflation.

Question 8

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.

Question 9

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

Question 10

In 2015, the additional standard deduction for a single taxpayer, who is 65 or older and not blind, is $1,200.

Question 11

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

Question 12

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 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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 18

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 19

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 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

Personal exemptions are for the taxpayer and spouse.

Question 25

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

Question 26

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

Question 27

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 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

The IRS can impose a 75% penalty on any portion of understatement of tax that is attributable to negligence.
The penalty attributable to negligence is 20%.

Question 34

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

Question 35

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 36

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

Question 37

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 38

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

Question 39

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

Question 40

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

Question 41

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 42

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.The taxpayer's parents can live in a separate household.

Question 43

What was the amount of the personal exemption for 2015?

A) $3,900.
B) $4,000.
C) $3,975.
D)$3,950.

Question 44

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 45

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 46

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 47

Elisa is 21 years of age and a full-time student living with her parents. She had wages of $680 ($70 of income tax withholding) for 2015. 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 48

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.The taxpayer must have lived apart from her spouse for at least the last six months of the year to qualify for the Head of Household status.

Question 49

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

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

Question 50

Mirtha is 21 years of age and a full-time student living by herself. She had wages of $23,000 for 2015. 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 51

The basic standard deduction in 2015 for a taxpayer, 67 and not blind, filing head of household is:

A) $10,800.
B) $7,850.
C) $1,550.
D)$9,250.

Question 52

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 53

The taxpayer's spouse died at the beginning of 2014. He has no qualifying child. Which status should the taxpayer select when filing his tax return for 2015?

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

Question 54

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 55

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 56

Luisa's parents can claim her as a dependent on their tax return. In 2015, her only source of income was a part-time job as a medical clerk where she earned $2,500 during the year. What is Luisa's standard deduction?

A) $2,500.
B) $3,950.
C) $1,000.
D)$2,850.

Question 57

The basic standard deduction in 2015 for a taxpayer, under 65 and not blind, filing married filing jointly is:

A) $12,400.
B) $12,200.
C) $12,600.
D)$9,250.

Question 58

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 59

The basic standard deduction in 2015 for a single taxpayer, under 65 and not blind, is:

A) $6,200.
B) $3,950.
C) $9,250.
D)$6,300.

Question 60

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 61

The taxpayer's spouse died at the beginning of 2015. 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.

Question 62

What is the amount of the personal and dependency exemption for 2015?

A) $3,950.
B) $6,300.
C) $4,000.
D)$3,975.

Question 63

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.

A) $10,656.
B) $9,250.
C) $10,600.
D)$14,800.

Question 64

George is 21 years of age and a full-time student living with his parents. He had wages of $1,375 ($140 of income tax withholding) for 2015. Can George claim his exemption on his return even though his parents will claim him as a dependent on their tax return?

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

Question 65

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 66

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 67

What is the amount of the social security wage limitation for 2015?

A) $106,800.
B) $110,100.
C) $118,500.
D)$117,000.

Question 68

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 69

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 70

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 71

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

A) Citizen or resident test.
B) Dependent taxpayer test.
C) Support test.
D)Joint return test.

Question 72

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 73

Ed's parents can claim him as a dependent on their tax return. In 2015, 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) $4,000.
D)$350.

Question 74

What is the amount of the tax liability for a married couple having taxable income of $153,500? All answers should be rounded to the nearest dollar.

A) $38,375.
B) $30,032.
C) $30,233.
D)$29,963.

Question 75

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 76

Jane, Joseph and John are supporting their father who lives in a separate apartment. Their contribution towards his support is 10%, 35% and 55%, respectively. In a multiple support agreement, who would be entitled to claim the father as a dependent?

A) Jane.
B) Joseph or John.
C) Jane, Joseph or John.
D)None of these.

Question 77

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) $21,988.
C) $30,400.
D)$27,665.

Question 78

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.

A) $16,216.
B) $13,136.
C) $16,306.
D)$16,398

Question 79

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.

A) $1,836.
B) $2,331.
C) $2,149.
D)$1,838.

Question 80

The interest charged by the IRS for the first three months of 2015 was:

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