Question 1

Elise,age 20,is a full-time college student with earned income from wages of $4,400 and interest income of $500.Elise's parents provide more than half of her support.Elise's 2016 taxable income is
A)$0.
B)$150.
C)$500.
D)$3,850.

Accepted Answer

The answer of Elise,age 20,is a full-time college student with...

Question 2

In 2013,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 2014,2015,and 2016,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.

Accepted Answer

In 2014 and 2015, Leo qualifies as a surviving spouse, allowing him to use the married filing jointly tax rates. In 2016, he qualifies as head of household since he has not remarried and supports his children.

Question 3

In order to qualify to file as surviving spouse,all of the following criteria must be met by the widow or widower except
A)he or she and the decedent must have shared the same household as of date of death.
B)he or she must be a U.S.citizen or resident.
C)he or she be qualified to file a joint return in the year of death.
D)he or she must have at least one dependent child living at home the entire year and pay over half of the expenses of the home.

Accepted Answer

A widow or widower does not need to have shared the same household with the decedent as of the date of death to qualify to file as a surviving spouse.

Question 4

Carter dies on January 1,2016.A joint return election is made in 2016 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 2016 and in 2017,respectively:
A)1 and 1.
B)2 and 2.
C)3 and 2.
D)3 and 3.

Accepted Answer

In 2016, Carter and Marjorie can file a joint return which will have a personal exemption of 2. Since Marjorie's child is also claimed as a dependent, she can claim an additional dependency exemption for a total of 3 exemptions. 
In 2017 and 2018, Marjorie can use the qualifying widow(er) filing status which allows her to use the joint return tax rates and rules for two years after her spouse's death. This means that she will have a personal exemption of 1 for each year, but since she still has a dependent child she can claim an additional dependency exemption for a total of 2 exemptions each year. Therefore, the total number of exemptions allowed to Marjorie in 2016 is 3 (2 personal, 1 dependency) and in 2017 is 2 (1 personal, 1 dependency).

Question 5

To qualify as an abandoned spouse,the taxpayer is not required to
A)be a U.S.citizen or resident.
B)live apart from the spouse for the last six months of the year.
C)pay more than half the cost of maintaining the home.
D)have a son or daughter in the home for the entire year.

Accepted Answer

The answer of To qualify as an abandoned spouse,the taxpayer...

Question 6

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.

Accepted Answer

Since Tom and Alice were married on December 31 of last year, they were considered married for the entire tax year. Therefore, their filing status options are either married filing jointly or married filing separately.

Question 7

Dave,age 59 and divorced,is the sole support of his mother age 83,who is a resident of a local nursing home for the entire year.Dave's mother had no income for the year.Dave's filing status and exemptions claimed are
A)head of household and one exemption.
B)single and one exemption.
C)head of household and two exemptions.
D)single and two exemptions.

Accepted Answer

Dave can file as head of household since he is the sole support of his mother who is a resident of a nursing home for the entire year. He can claim two exemptions - one for himself and one for his mother who had no income for the year.

Question 8

Michelle,age 20,is a full-time college student with earned income from wages of $5,200 and interest income of $700.Michelle's parents provide more than half of Michelle's support.Michelle's 2016 taxable income is
A)$0.
B)$700.
C)$350.
D)$4,850.

Accepted Answer

The answer of Michelle,age 20,is a full-time college student with...

Question 9

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.

Accepted Answer

The answer of You may choose married filing jointly as...

Question 10

Satish,age 11,is a dependent of his parents.His only source of income in 2016 is $3,000 of interest income on bonds given him by his grandparents.Satish's marginal rate is 10%,and his parent's marginal rate is 28%.Satish's tax is
A)$357.
B)$195.
C)$546.
D)$300.

Accepted Answer

Satish's interest income is subject to the "kiddie tax" rules. The first $1,050 is tax-free, the next $1,050 is taxed at Satish's rate of 10%, and the remaining $900 is taxed at his parent's rate of 28%. So, $1,050 * 0% + $1,050 * 10% + $900 * 28% = $0 + $105 + $252 = $357.

Question 11

The filing status in which the rates increase most rapidly is
A)single.
B)head of household.
C)married filing separately.
D)married filing jointly.

Accepted Answer

The filing status in which the rates increase most rapidly is married filing separately. This status has lower income thresholds for each tax bracket, causing the tax rate to increase more quickly.

Question 12

A married taxpayer may file as head of household under the abandoned spouse provisions if all of the following are met except
A)the taxpayer lived apart from his or her spouse for the last six months of the year.
B)the taxpayer is a U.S.citizen or resident.
C)the taxpayer pays over half of the cost of maintaining a household in which the taxpayer and a dependent son or daughter live for over half of the year.
D)the taxpayer must have been married for at least two years.

Accepted Answer

The correct statement should be "the taxpayer must have been married at least at the end of the year but not living with spouse for the last six months of the year." Therefore, choice D is incorrect as the requirement is not for at least two years of marriage.

Question 13

Frank,age 17,received $4,000 of dividends and $1,500 from a part-time job.Frank is a dependent of his parents who are in the 28% percent bracket.Frank's 2016 taxable income is
A)$0.
B)$4,000.
C)$4,450.
D)$3,650.

Accepted Answer

The answer of Frank,age 17,received $4,000 of dividends and $1,500...

Question 14

The oldest age at which the "Kiddie Tax" could apply to a dependent child is
A)17
B)18
C)20
D)23

Accepted Answer

The answer of The oldest age at which the "Kiddie...

Question 15

Which of the following dependent relatives does not have to live in the same household as the taxpayer who is claiming head of household filing status?
A)uncle
B)brother
C)father
D)nephew

Accepted Answer

The answer of Which of the following dependent relatives does...

Question 16

Edward,a widower whose wife died in 2013,maintains a household for himself and his 10-year-old daughter.Edward's most favorable filing status for 2016 is
A)single.
B)surviving spouse.
C)head of household.
D)married filing jointly.

Accepted Answer

Edward can qualify as a head of household if he provided more than half of the cost of keeping up his home for himself and his dependent child for more than half of the year. As a widower with a dependent child, he meets this requirement and can benefit from the lower tax rates and higher standard deduction available to heads of household.

Question 17

Liz and Bert divorce and Liz receives custody of their child.Bert is ordered by the court to pay child support of $10,000 per year,and Liz files the appropriate IRS form to allow Bert to claim the dependency exemption for the child.If Liz maintains the home in which she and her child live,her filing status and exemptions claimed will be
A)single and one exemption.
B)single and two exemptions.
C)head of household and one exemption.
D)head of household and two exemptions.

Accepted Answer

In order to qualify for head of household filing status, Liz must meet three requirements: she must be unmarried or considered unmarried on the last day of the year, she must have paid more than half the cost of maintaining a home for herself and her child, and her child must have lived with her for more than half the year. As Liz has custody of the child and maintains the home, she meets all these requirements and can file as head of household. Additionally, Liz can claim one exemption for herself as the custodial parent. However, since she has allowed Bert to claim the dependency exemption, she cannot claim another exemption for her child. Therefore, the correct answer is C) head of household and one exemption.

Question 18

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.

Accepted Answer

The answer of When a spouse dies,the surviving spouse for...

Question 19

Sally divorced her husband three years ago and has not remarried.Since the divorce she has maintained her home in which she and her now sixteen-year-old daughter reside.The daughter is a qualified child.Sally signed the dependency exemption over to her ex-spouse by filing the appropriate IRS form.What is Sally's filing status for the current year and how many exemptions may she claim?
A)single and one
B)surviving spouse and one
C)head of household and one
D)head of household and two

Accepted Answer

Sally can qualify for head of household filing status since she maintained a home for her and her qualified child. She can claim one exemption for herself as the custodial parent.

Question 20

In October 2016,Joy and Paul separated and have not lived with each other since,but they are still legally married.They do not file a joint return.Joy supports their children after the separation and pays the cost of maintaining their home.Joy's filing status in 2016 and 2017 is,respectively,
A)single for both years.
B)head of household and single.
C)married filing separately for both years.
D)married filing separately and head of household.

Accepted Answer

Since Joy and Paul are still legally married but not living with each other, they cannot file as single or head of household. They also cannot file a joint return as they are separated. Therefore, the best option for Joy is to file as "married filing separately" in both years and also qualify as "head of household" if she meets the necessary requirements for claiming the children as dependents and paying the cost of maintaining the home.

Quiz 2: Determination of Tax

Elise,age 20,is a full-time college student with earned income from wages of $4,400 and interest income of $500.Elise's parents provide more than half of her support.Elise's 2016 taxable income is

In 2013,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 2014,2015,and 2016,Leo's most advantageous filing status is,respectively

In order to qualify to file as surviving spouse,all of the following criteria must be met by the widow or widower except

To qualify as an abandoned spouse,the taxpayer is not required to

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

Dave,age 59 and divorced,is the sole support of his mother age 83,who is a resident of a local nursing home for the entire year.Dave's mother had no income for the year.Dave's filing status and exemptions claimed are

Michelle,age 20,is a full-time college student with earned income from wages of $5,200 and interest income of $700.Michelle's parents provide more than half of Michelle's support.Michelle's 2016 taxable income is

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?

Satish,age 11,is a dependent of his parents.His only source of income in 2016 is $3,000 of interest income on bonds given him by his grandparents.Satish's marginal rate is 10%,and his parent's marginal rate is 28%.Satish's tax is

The filing status in which the rates increase most rapidly is

A married taxpayer may file as head of household under the abandoned spouse provisions if all of the following are met except

Frank,age 17,received $4,000 of dividends and $1,500 from a part-time job.Frank is a dependent of his parents who are in the 28% percent bracket.Frank's 2016 taxable income is

The oldest age at which the "Kiddie Tax" could apply to a dependent child is

Which of the following dependent relatives does not have to live in the same household as the taxpayer who is claiming head of household filing status?

Edward,a widower whose wife died in 2013,maintains a household for himself and his 10-year-old daughter.Edward's most favorable filing status for 2016 is

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

In October 2016,Joy and Paul separated and have not lived with each other since,but they are still legally married.They do not file a joint return.Joy supports their children after the separation and pays the cost of maintaining their home.Joy's filing status in 2016 and 2017 is,respectively,