Question 1

Ellen, age 12, lives in the same household with her father, grandfather, and uncle. The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%). Disregarding tie-breaker rules, Ellen is a qualifying child as to:

Accepted Answer

Ellen is considered a qualifying child for all parties involved (her father, grandfather, and uncle) because she lives with all three and they collectively provide for her support. Her grandfather and uncle's contribution towards the cost of maintaining the household also counts towards Ellen's support.

Question 2

Arnold is married to Sybil, who abandoned him in 2013. He has not seen or communicated with her since April of that year. He maintains a household in which their son, Evans, lives. Evans is age 25 and earns over $6,000 each year. For tax year 2014, Arnold's filing status is:

Accepted Answer

Because Arnold is still treated as being married,his only option is married,filing separately (choice c. ).Arnold cannot file jointly without Sybil's consent (choice a. ).He is not an abandoned spouse since Evans is not a dependent child.Evans cannot be claimed as a qualifying child (age test)and is not a qualifying relative (gross income test).

Question 3

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

Accepted Answer

The usual test for determining if a taxpayer must file a return is based on the total of their gross income, not the personal exemption, basic standard deduction, and additional standard deductions. The correct test for filing requirements is based on income thresholds set by the IRS. Therefore, statement C is incorrect. All other statements are correct. Married taxpayers filing jointly can't use separate returns later, but those filing separately can switch to a joint return. Special filing requirements exist for dependents, and these depend on various factors such as their amount of income, type of income, and age.

Question 4

Evan and Eileen Carter are husband and wife and file a joint return for 2014. 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?

Accepted Answer

The Carters can claim a dependency exemption for Pamela because they provide more than half of her support and she is a full-time student under the age of 24. They can also claim a dependency exemption for Belinda because they provide all of her support and she is a relative who meets the dependent criteria. They cannot claim a dependency exemption for Peggy because she is not related to them and does not meet the criteria for a dependent. Therefore, the Carters may claim three dependency exemptions: one for Evan, one for Eileen, and one for either Pamela or Belinda.

Question 5

In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer?

Accepted Answer

The answer of In which, if any, of the following...

Question 6

Which of the following taxpayers may file as a head of household in 2014?
Ron provides all the support for his mother, Betty, who lives by herself in an apartment in Fort Lauderdale. Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent.
Tammy provides over one-half the support for her 18-year old brother, Dan. Dan earned $4,200 in 2014 working at a fast food restaurant and is saving his money to attend college in 2015. Dan lives in Tammy's home.
Joe's wife left him late in December of 2013. No legal action was taken and Joe has not heard from her in 2014. Joe supported his 6-year-old son, who lived with him throughout 2014.

Accepted Answer

Ron may file as a head of household.His mother is not required to live in his household in order for him to qualify as a head of household.
Tammy can claim Dan as a dependent because Dan is a qualifying child and is not subject to the gross income requirement.Joe can file as a head of household under the abandoned spouse rules.

Question 7

Emily, whose husband died in December 2013, maintains a household in which her dependent mother lives. Which (if any) of the following is her filing status for the tax year 2014? (Note: Emily is the executor of her husband's estate.)

Accepted Answer

Emily can file as head of household because she is unmarried, has a dependent (her mother), and paid more than half the cost of maintaining the household during the tax year. Filing as a surviving spouse would require her to have a dependent child, which she does not have. Filing as single or married filing separately would not provide the same tax benefits as filing as head of household. Filing jointly with her deceased husband is not possible for tax year 2014.

Question 8

The Hutters filed a joint return for 2014. They provide more than 50% of the support of Carla, Melvin, and Aaron. Carla (age 18) is a cousin and earns $2,800 from a part-time job. Melvin (age 25) is their son and is a full-time law student. He received from the university a $3,800 scholarship for tuition. Aaron is a brother who is a citizen of Israel but resides in France. Carla and Melvin live with the Hutters. How many personal and dependency exemptions can the Hutters claim on their Federal income tax return?

Accepted Answer

The Hutters can claim four exemptions: two personal exemptions for themselves and two dependency exemptions for Carla and Melvin. Carla qualifies as a dependent because she is a relative and earns less than the exemption amount. Melvin qualifies as a dependent because he is a full-time student under 24. Aaron does not qualify because he is not a U.S. resident.

Question 9

A qualifying child cannot include:

Accepted Answer

The answer of A qualifying child cannot include:
...

Question 10

Merle is a widow, age 80 and blind, who is claimed as a dependent by her son. During 2014, 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:

Accepted Answer

The answer of Merle is a widow, age 80 and...

Question 11

Nelda is married to Chad, who abandoned her in early June of 2014. She has not seen or communicated with him since then. She maintains a household in which she and her two dependent children live. Which of the following statements about Nelda's filing status in 2014 is correct?

Accepted Answer

Nelda can file as a head of household because she maintained a household for herself and her two dependent children for more than half of the year and her husband did not live with her for the last 6 months of the year. She cannot file as a surviving spouse because her husband did not pass away during the tax year. She also cannot file a joint return with Chad since they have been separated for the entire year. She cannot use the rates for single taxpayers because she has dependents.

Question 12

Kyle, whose wife died in December 2011, filed a joint tax return for 2011. He did not remarry, but has continued to maintain his home in which his two dependent children live. What is Kyle's filing status as to 2014?

Accepted Answer

Kyle's filing status for 2014 is "Head of household" because he did not remarry and maintained a home for his dependent children. The "Surviving spouse" status is only available for two years following the year of the spouse's death.

Question 13

Kyle and Liza are married and under 65 years of age. During 2014, 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 2013. 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, 2014, at age 90, has for many years qualified as their dependent. How many personal and dependency exemptions should Kyle and Liza claim?

Accepted Answer

Kyle and Liza can claim two personal exemptions for themselves. They can also claim one dependency exemption for their daughter, May, and one for Kyle's cousin, who they provide more than half of the support for. Finally, they can claim one dependency exemption for Liza's father, who passed away during the year but still qualified as their dependent for the portion of the year he was alive (since he was alive for more than half the year, they can claim the full year's exemption). This brings the total to four exemptions.

Question 14

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return. During 2014, she had interest income of $2,500 and $800 of earned income from baby sitting. Wilma's taxable income is:

Accepted Answer

The answer of Wilma, age 70 and single, is claimed...

Question 15

Which, if any, of the following is a correct statement relating to the kiddie tax?

Accepted Answer

The answer of Which, if any, of the following is...

Question 16

During 2014, Lisa (age 66) furnished more than 50% of the support of the following persons:
-Lisa's current husband who has no income and is not claimed by someone else as a dependent.
-Lisa's stepson (age 19) who lives with her and earns $6,000 as a dance instructor. He dropped
Out of school a year ago.
-Lisa's ex­husband who does not live with her. The divorce occurred two years ago.
-Lisa's former brother­in­law who does not live with her.
Presuming all other dependency tests are met, on a separate return how many personal and dependency exemptions may Lisa claim?

Accepted Answer

Lisa can claim a personal exemption for herself, and can claim dependency exemptions for her husband and stepson. She cannot claim a dependency exemption for her ex-husband or former brother-in-law. Therefore, she can claim a total of three exemptions.

Question 17

In which, if any, of the following situations will the kiddie tax not apply?

Accepted Answer

The kiddie tax does not apply if the child's unearned income is $2,000 or less, as it is below the threshold for the kiddie tax to be applicable.

Question 18

Which of the following characteristics correctly describes the procedure for the phaseout of exemptions?

Accepted Answer

A) The phaseout threshold amounts vary based on filing status.
B) The threshold amounts are indexed for inflation annually.
C) The phaseout is sometimes referred to as a "stealth tax."
D) The phaseout is only applicable if a taxpayer's AGI exceeds the threshold amount.

Question 19

Millie, age 80, is supported during the current year as follows:
$\begin{array}{ll}&\text { Percent of Support }\
\text { Weston (a son) } & 20 \% \
\text { Faith (a daughter) } & 35 \% \
\text { Jake (a cousin) } & 25 \% \
\text { Brayden (unrelated close family friend) } & 20 \%
\end{array}$
During the year, Millie lives in an assisted living facility. Under a multiple support agreement, indicate which parties can qualify to claim Millie as a dependent.

Accepted Answer

Under a multiple support agreement, only those who provide more than 10% of the support can claim the dependent, and they must collectively provide more than 50% of the support. Here, Weston and Faith together provide 55% of the support, so they can qualify to claim Millie as a dependent.

Question 20

Regarding the Tax Tables applicable to the Federal income tax, which of the following statements is correct?

Accepted Answer

Tax Tables are typically issued by the IRS after the Tax Rate Schedules. The Tax Tables provide taxpayers with an easy way to determine their tax liability based on their taxable income and filing status. However, taxpayers can also use the Tax Rate Schedules, which provide the exact tax rate and liability based on taxable income. The choice between the two methods is left up to the taxpayer. The Tax Tables can be used by both estates and trusts.

Quiz 3: Computing the Tax

Ellen, age 12, lives in the same household with her father, grandfather, and uncle. The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%) . Disregarding tie-breaker rules, Ellen is a qualifying child as to: