Deck 9: Individuals As the Taxpayer

Question 1

The additional standard deduction for age and blindness is greater for married taxpayers than for single taxpayers.

Answer 1

False

Question 2

A decrease in a taxpayer's AGI could increase the amount of medical expenses that can be deducted.

Answer 2

True

Question 3

In 2015,Ed is 66 and single.If he has itemized deductions of $7,400,he should not claim the standard deduction alternative.

Answer 3

False

Question 4

Adjusted gross income (AGI)appears at the bottom of page 1 and at the top of page 2 of Form 1040.

Question 5

Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

Question 6

After Ellie moves out of the apartment she had rented as her personal residence,she recovers her damage deposit of $1,000.The $1,000 is not income to Ellie.

Question 7

Claude's deductions from AGI exceed the standard deduction allowed for 2015.Under these circumstances,Claude cannot claim the standard deduction.

Question 8

Because they appear on page 1 of Form 1040,itemized deductions are also referred to as "page 1 deductions."

Question 9

All exclusions from gross income are reported on Form 1040.

Question 10

Lee,a citizen of Korea,is a resident of the U.S.Any rent income Lee receives from land he owns in Korea is not subject to the U.S.income tax.

Question 11

Under the income tax formula,a taxpayer must choose between deductions for AGI and the standard deduction.

Question 12

The filing status of a taxpayer (e.g. ,single,head of household)must be identified before the applicable standard deduction is determined.

Question 13

Many taxpayers who previously itemized will start claiming the standard deduction when they purchase a home.

Question 14

The basic and additional standard deductions both are subject to an annual adjustment for inflation.

Question 15

Howard,age 82,dies on January 2,2015.On Howard's final income tax return,the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.

Question 16

An "above the line" deduction refers to a deduction for AGI.

Question 17

As opposed to itemizing deductions from AGI,the majority of individual taxpayers choose the standard deduction.

Question 18

An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

Question 19

Under the Federal income tax formula for individuals,the determination of adjusted gross income (AGI)precedes that of taxable income (TI).

Question 20

Once they reach age 65,many taxpayers will switch from itemizing their deductions from AGI and start claiming the standard deduction.

Question 21

A dependent cannot claim a personal exemption on his or her own return.

Question 22

Jason and Peg are married and file a joint return.Both are over 65 years of age and Jason is blind.Their standard deduction for 2015 is $16,350 ($12,600 + $1,250 + $1,250 + $1,250).

Question 23

Katrina,age 16,is claimed as a dependent by her parents.During 2015,she earned $5,600 as a checker at a grocery store.Her standard deduction is $5,950 ($5,600 earned income + $350).

Question 24

Albert buys his mother a TV.For purposes of meeting the support test,Albert cannot include the cost of the TV.

Question 25

Clara,age 68,claims head of household filing status.If she has itemized deductions of $10,500 for 2015,she should not claim the standard deduction.

Question 26

Derek,age 46,is a surviving spouse.If he has itemized deductions of $12,900 for 2015,Derek should not claim the standard deduction.

Question 27

Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return,Monique cannot claim the standard deduction.

Question 28

Butch and Minerva are divorced in December of 2015.Since they were married for more than one-half of the year,they are considered as married for 2015.

Question 29

In 2015,Hal furnishes more than half of the support of his ex-wife and her father,both of whom live with him.The divorce occurred in 2014.Hal may claim the father-in-law and the ex-wife as dependents.

Question 30

If an individual does not spend funds that have been received from another source (e.g. ,interest on municipal bonds),the unexpended amounts are not considered for purposes of the support test.

Question 31

Using borrowed funds from a mortgage on her home,Leah provides 52% of her own support,while her sons furnished the rest.Leah can be claimed as a dependent under a multiple support agreement.

Question 32

Roy and Linda were divorced in 2014.The divorce decree awards custody of their children to Linda but is silent as to who is entitled to claim them as dependents.If Roy furnished more than half of their support,he can claim them as dependents in 2015.

Question 33

In determining whether the gross income test is met for dependency exemption purposes,only the taxable portion of a scholarship is considered.

Question 34

Dan and Donna are husband and wife and file separate returns for the year.If Dan itemizes his deductions from AGI,Donna cannot claim the standard deduction.

Question 35

Benjamin,age 16,is claimed as a dependent by his parents.During 2015,he earned $850 at a car wash.Benjamin's standard deduction is $1,400 ($1,050 + $350).

Question 36

Debby,age 18,is claimed as a dependent by her mother.During 2015,she earned $1,100 in interest income on a savings account.Debby's standard deduction is $1,450 ($1,100 + $350).

Question 37

After her divorce,Hope continues to support her ex-husband's sister,Cindy,who does not live with her.Hope can claim Cindy as a dependent.

Question 38

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $14,600 for 2015,they should not claim the standard deduction.

Question 39

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

Question 40

For the year a spouse dies,the surviving spouse is considered married for the entire year for income tax purposes.

Question 41

Married taxpayers who file a joint return cannot later (i.e. ,after the filing due date)switch to separate returns for that year.

Question 42

Katelyn is divorced and maintains a household in which she and her daughter,Crissa,live.Crissa,age 22,earns $11,000 during 2015 as a model.Katelyn does not qualify for head of household filing status.

Question 43

Currently,the top income tax rate in effect is not the highest it has ever been.

Question 44

Surviving spouse filing status begins in the year in which the deceased spouse died.

Question 45

A taxpayer who itemizes must use Form 1040,and cannot use Form 1040EZ or Form 1040A.

Question 46

In terms of income tax consequences,abandoned spouses are treated the same way as married persons filing separate returns.

Question 47

For tax purposes,married persons filing separate returns are treated the same as single taxpayers.

Question 48

Lucas,age 17 and single,earns $6,000 during 2015.Lucas's parents cannot claim him as a dependent if he does not live with them.

Question 49

Stealth taxes are directed at lower income taxpayers.

Question 50

Kim,a resident of Oregon,supports his parents who are residents of Canada but citizens of Korea.Kim can claim his parents as dependents.

Question 51

For dependents who have income,special filing requirements apply.

Question 52

Darren,age 20 and not disabled,earns $4,000 during 2015.Darren's parents cannot claim him as a dependent unless he is a full-time student.

Question 53

In terms of timing as to any one year,the Tax Tables are available before the Tax Rate Schedules.

Question 54

In January 2015,Jake's wife dies and he does not remarry.For tax year 2015,Jake may not be able to use the filing status available to married persons filing joint returns.

Question 55

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return,Sarah cannot claim them as dependents.

Question 56

In determining the filing requirement based on gross income received,both additional standard deductions (i.e. ,age and blindness)are taken into account.

Question 57

Married taxpayers who file separately cannot later (i.e. ,after the due date for filing)change to a joint return.

Question 58

Since an abandoned spouse is treated as not married and has one or more dependent children,he or she qualifies for the standard deduction available to head of household.

Question 59

Ed is divorced and maintains a home in which he and a dependent friend live.Ed does not qualify for head of household filing status.

Question 60

An individual taxpayer uses a fiscal year of March 1 to February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

Question 61

Which,if any,of the following statements relating to the standard deduction is correct?

A) If a taxpayer dies during the year,his (or her)standard deduction must be prorated.
B) If a taxpayer is claimed as a dependent of another,his (or her)additional standard deduction is allowed in full (i.e. ,no adjustment is necessary).
C) If spouses file separate returns,both spouses must claim the standard deduction (rather than itemize their deductions from AGI).
D) If a taxpayer is claimed as a dependent of another,no basic standard deduction is allowed.
E) None of these.

Question 62

A child who is married cannot be subject to the kiddie tax.

Question 63

Wilma,age 70 and single,is claimed as a dependent on her daughter's tax return.During 2015,she had interest income of $2,500 and $800 of earned income from babysitting.Wilma's taxable income is:

A) $700.
B) $900.
C) $1,750.
D) $2,250.
E) None of these.

Question 64

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

A) In arriving at AGI,a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
B) In arriving at taxable income,a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
C) If a taxpayer has deductions for AGI,the standard deduction is not available.
D) In arriving at taxable income,a taxpayer must elect between deductions for AGI and the standard deduction.
E) None of these.

Question 65

Regarding the tax formula and its relationship to Form 1040,which,if any,of the following statements is correct?

A) Most exclusions from gross income are reported on page 2 of Form 1040.
B) An "above the line deduction" refers to a deduction from AGI.
C) A "page 1 deduction" refers to a deduction for AGI.
D) The taxable income (TI)amount appears both at the bottom of page 1 and at the top of page 2 of Form 1040.
E) None of these.

Question 66

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

Question 67

Tony,age 15,is claimed as a dependent by his grandmother.During 2015,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800.Tony's taxable income is:

A) $1,800.
B) $1,800 - $800 - $1,050 = ($50).
C) $1,800 - $1,150 = $650.
D) $1,800 - $1,050 = $750.
E) None of these.

Question 68

Which of the following items,if any,is deductible?

A) Parking expenses incurred in connection with jury duty-taxpayer is a dentist.
B) Substantiated gambling losses (not in excess of gambling winnings)from state lottery.
C) Contributions to mayor's reelection campaign.
D) Speeding ticket incurred while on business.
E) Premiums paid on personal life insurance policy.

Question 69

Which,if any,of the statements regarding the standard deduction is correct?

A) Some taxpayers may qualify for two types of standard deductions.
B) Not available to taxpayers who choose to deduct their personal and dependency exemptions.
C) May be taken as a for AGI deduction.
D) The basic standard deduction is indexed for inflation but the additional standard deduction is not.
E) None of these.

Question 70

Kyle and Liza are married and under 65 years of age.During 2015,they furnish more than half of the support of their 19-year old daughter,May,who lives with them.She graduated from high school in May 2014.May earns $15,000 from a part-time job,most of which she sets aside for future college expenses.Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them.Liza's father,who died on January 3,2015,at age 90,has for many years qualified as their dependent.How many personal and dependency exemptions should Kyle and Liza claim?

A) Two
B) Three
C) Four
D) Five
E) None of these

Question 71

Which,if any,of the following is a deduction for AGI?

A) Contributions to a traditional Individual Retirement Account.
B) Child support payments.
C) Funeral expenses.
D) Loss on the sale of a personal residence.
E) Medical expenses.

Question 72

A child who has unearned income of $2,100 or less cannot be subject to the kiddie tax.

Question 73

Sylvia,age 17,is claimed by her parents as a dependent.During 2015,she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200.Sylvia's taxable income is:

A) $4,200 - $4,550 = $0.
B) $6,200 - $5,700 = $500.
C) $6,200 - $4,550 = $1,650.
D) $6,200 - $1,000 = $5,200.
E) None of these.

Question 74

When the kiddie tax applies,the child need not file an income tax return because the child's income will be reported on the parents' return.

Question 75

When the kiddie tax applies and the parents are divorced,the applicable parent (for determining the parental tax)is the one with the greater taxable income.

Question 76

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

A) In arriving at taxable income,a taxpayer must choose between the standard deduction and deductions from AGI.
B) In arriving at AGI,personal and dependency exemptions must be subtracted from gross income.
C) In arriving at taxable income,a taxpayer must choose between the standard deduction and claiming personal and dependency exemptions.
D) The formula does not apply if a taxpayer elects to claim the standard deduction.
E) None of these.

Question 77

Once a child reaches age 19,the kiddie tax no longer applies.

Question 78

Merle is a widow,age 80 and blind,who is claimed as a dependent by her son.During 2015,she received $4,800 in Social Security benefits,$2,500 in bank interest,and $1,800 in cash dividends from stocks.Merle's taxable income is:

A) $4,300 - $1,050 - $3,100 = $150.
B) $4,300 - $3,100 = $1,200.
C) $4,300 - $1,050 - $1,550 = $1,700.
D) $9,100 - $1,050 - $3,100 = $4,950.
E) None of these.

Question 79

Which,if any,of the following is a deduction for AGI?

A) State and local sales taxes
B) Interest on home mortgage
C) Charitable contributions
D) Unreimbursed moving expenses of an employee
E) None of these

Question 80

Evan and Eileen Carter are husband and wife and file a joint return for 2015.Both are under 65 years of age.They provide more than half of the support of their daughter,Pamela (age 25),who is a full-time medical student.Pamela receives a $5,000 scholarship covering her tuition at college.They furnish all of the support of Belinda (Evan's grandmother),who is age 80 and lives in a nursing home.They also support Peggy (age 66),who is a friend of the family and lives with them.How many dependency exemptions may the Carters claim?

A) Two
B) Three
C) Four
D) Five
E) None of these