Question 1

Nate and Nikki have two dependent children ages 12 and 15. Their modified AGI is $410,000. What is the amount of the child credit to which they are entitled?

Accepted Answer

The child tax credit is $2,000 per eligible child. Nate and Nikki have two eligible children, so they are entitled to a total credit of $4,000. However, the credit is phased out for taxpayers with modified AGIs above certain levels. For taxpayers with modified AGIs between $400,000 and $440,000, the credit is reduced by $50 for each $1,000 of modified AGI above $400,000. Nate and Nikki's modified AGI is $410,000, so their credit is reduced by $5,000 ($10,000 x $50). This leaves them with a credit of $3,500.

Question 2

Theo's wife moved overseas in April, and they have not been in touch, although they are still legally married. Theo pays all the costs of the household which includes his 12- year- old son. Because Theo is still married, his only option is to file his tax return as married filing separately.

Accepted Answer

The answer of Theo's wife moved overseas in April, and...

Question 3

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?

Accepted Answer

The answer of Juanita's mother lives with her. Juanita purchased...

Question 4

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

Accepted Answer

According to the IRS, an unmarried taxpayer may file as head of household if they meet certain criteria, including maintaining a home for a qualifying child.

Question 5

Ryan and Edith file a joint return showing $420,000 of AGI. They have three dependent children ages 7, 9, and 13. What is the amount of their child credit?

Accepted Answer

The answer of Ryan and Edith file a joint return...

Question 6

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

Accepted Answer

According to the IRS, a married couple may choose to file a joint income tax return even if they do not live together. However, both spouses must consent to filing jointly and both must sign the return.

Question 7

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

Accepted Answer

The value of services rendered by the taxpayer for the dependent is not considered as support for the dependent support test.

Question 8

Steve Greene, age 66, is divorced with no dependents. In 2018, Steve had income and expenses as follows:  Compute Steve's taxable income for 2018. Show all calculations.

Accepted Answer

The answer of Steve Greene, age 66, is divorced with...

Question 9

Eliza Smith's father, Victor, lives with Eliza who is a single taxpayer. During the year, Eliza purchased clothing f father costing $1,200 and provided him with a room that could have been rented for $6,000. In addition, Eliza spe
$4,000 for groceries she shared with her father. Eliza purchased a new computer for $900 which she placed in the room for both her father and her use.
What is the amount of support provided by Eliza to her father?

Accepted Answer

The answer of Eliza Smith's father, Victor, lives with Eliza...

Question 10

In 2018, Sam is single and rents an apartment for which he pays $800 per month, pays state income taxes of $2,00 makes charitable contributions of $1,000. Sam's adjusted gross income is $47,000.
Required: Compute his taxable income. Show all calculations.

Accepted Answer

The answer of In 2018, Sam is single and rents...

Question 11

Divya is age 22 and a full- time student with $8,000 of income from part- time and summer jobs and $2,600 of interest and dividend income. The total cost of her support for the year is $15,000. Divya is not subject to the kiddie tax.

Accepted Answer

Since Divya is age 22 and a full-time student, she is not subject to the kiddie tax, which applies to unearned income of dependent children under age 19 or full-time students under age 24. Therefore, her interest and dividend income of $2,600 is not subject to the higher tax rates and reporting requirements of the kiddie tax. However, her total income of $10,600 is less than the total cost of her support for the year of $15,000, so she is not able to support herself fully and may be claimed as a dependent by her parents or another eligible taxpayer.

Question 12

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.

Accepted Answer

The information given does not provide enough details to determine if Kelly is subject to the kiddie tax. The kiddie tax applies to dependent children under age 19 (or under age 24 for full-time students) whose earned income does not exceed half of their support and whose total income exceeds a certain threshold. Without knowing the amount of Kelly's earned income and the overall breakdown of her support, it cannot be determined if she is subject to the kiddie tax.

Question 13

Anna is supported entirely by her three sons John, James, and Joseph who provide for her support in the followi percentages: John: 10%, James: 40%, Joseph: 50%
Assuming a multiple support declaration exists, which of the brothers may claim his mother as a dependent?

Accepted Answer

To claim a dependent under a multiple support agreement, a person must provide more than 10% of the support. Both James and Joseph meet this requirement, as they provide 40% and 50% respectively.

Question 14

A widow or widower whose spouse passed away in the current year may file a joint tax return as long as the surviving spouse does not remarry before the end of the year.

Accepted Answer

A surviving spouse can file a joint tax return for the year their spouse died if they have not remarried by the end of that year.

Question 15

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?

Accepted Answer

The answer of Blaine Greer lives alone. His support comes...

Question 16

Sean and Martha are both over age 65 and Martha is considered blind by tax law standards. Their total income in 2018 from part- time jobs and interest income from a bank savings account is $80,000. Their itemized deductio
$25,000.
Required: Compute their taxable income.

Accepted Answer

The answer of Sean and Martha are both over age...

Question 17

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

Accepted Answer

The child tax credit is available for taxpayers with dependent children under the age of 17.

Question 18

Steven and Susie Tyler have three children ages 13, 15, and 19. The 19- year- old is in the military and not a dependent. Their modified AGI is $108,000. What is the amount of the child credit to which they are entitled?

Accepted Answer

The answer of Steven and Susie Tyler have three children...

Question 19

Paul and Hannah, who are married and file a joint return, are in the process of adopting a child who is born in December 2018. The child, a son, comes to live with them a week after his birth on December 12. The adoption is not finalized until February of 2019. What tax issues are present in this situation?

Accepted Answer

The answer of Paul and Hannah, who are married and...

Question 20

Amanda has two dependent children, ages 10 and 12. She earned $30,000 from her job, and her income tax before credits is $1,200. How much of her child credit is refundable?

Accepted Answer

The refundable portion of the Child Tax Credit is known as the Additional Child Tax Credit (ACTC). For 2023, up to $1,400 per qualifying child can be refundable. Amanda has two children, so the maximum refundable amount is $2,800. However, since her tax before credits is $1,200, only $1,200 can be used to offset her tax liability, and the remaining $1,400 is refundable.

Quiz 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals