Question 1

In certain circumstances, a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

Accepted Answer

A married taxpayer can qualify for head of household status if she meets certain criteria, such as living apart from her spouse for at least six months of the year and providing more than half of the household expenses for a dependent child. However, this generally cannot be claimed if the taxpayer is still legally married and living with her spouse.

Question 2

If an unmarried taxpayer is eligible to claim another as a dependent, the taxpayer is automatically eligible for the head of household filing status.

Accepted Answer

Being eligible to claim another as a dependent is one of the requirements for the head of household filing status, but there are additional criteria that must be met, such as paying more than half the cost of keeping up a home for the year and the dependent being a qualifying child or relative.

Question 3

Bonnie and Ernie file a joint return. Bonnie works and receives income during the year but Ernie does not. If the couple files a joint tax return, Ernie is responsible for paying any taxes due if Bonnie is unable to pay the taxes.

Accepted Answer

When a couple files a joint return, they are both responsible for paying any taxes due, regardless of who earned the income. If one spouse cannot pay their portion of the taxes, the other spouse may be responsible for paying the full amount. This is known as joint and several liability.

Question 4

Eric and Josephine were married in Year 1. In Year 2, Eric dies. The couple did not have any children. Assuming Josephine does not remarry, she may file as a qualifying widow in Year 3.

Accepted Answer

Josephine cannot file as a qualifying widow in Year 3 because the status requires having a dependent child, which the couple did not have.

Question 5

If no one qualifies as the dependent of an unmarried taxpayer, the unmarried taxpayer may still be able to qualify for the head of household filing status.

Accepted Answer

To qualify for the head of household filing status, an unmarried taxpayer must pay more than half the cost of keeping up a home for the year and must have a qualifying person (such as a dependent child or parent) live with them for more than half the year, or in the case of a parent, the taxpayer can qualify if they pay more than half the cost of keeping up a home that was the main home for the parent for the entire year. Without a qualifying person, the taxpayer cannot claim the head of household status.

Question 6

Which of the following series of inequalities is generally most accurate?

Accepted Answer

Gross income is the total income before any deductions or adjustments. Adjusted gross income (AGI) is gross income minus specific deductions (but before standard or itemized deductions and personal exemptions). Taxable income is what remains after all deductions and exemptions are applied to the AGI, hence it's usually the smallest amount. Therefore, the series Gross income ≥ adjusted gross income ≥ taxable income is most accurate.

Question 7

It is generally more advantageous for liability protection purposes for a married couple to file separately than it is for them to file jointly.

Accepted Answer

The answer of It is generally more advantageous for liability...

Question 8

It is generally more advantageous from a tax perspective for a married couple to file separately than it is for them to file jointly.

Accepted Answer

It is generally more advantageous for a married couple to file jointly as it often results in a lower tax bill due to the higher standard deduction and other tax benefits. However, there are some situations where filing separately may be beneficial, such as when one spouse has a significant amount of medical expenses or when there are issues with filing jointly due to potential legal liabilities or complicated financial situations.

Question 9

Charles, who is single, pays all of the costs of maintaining a home for himself and Damarcus. Charles and Damarcus have no family relationship but Damarcus lives with Charles for the entire year. Damarcus qualifies as a qualifying relative of Charles. (Charles claims Damarcus as a dependent on his tax return.)Charles qualifies for head of household filing status.

Accepted Answer

The answer of Charles, who is single, pays all of...

Question 10

Which of the following statements regarding realized income is true?

Accepted Answer

Realized income requires some type of transaction or exchange with a second party. This means that income cannot be realized without some sort of action, such as selling stock or receiving payment for services rendered. Therefore, option B is the correct answer. Option A is incorrect because all income must be included in gross income unless there is a specific exclusion in the tax code. Option C is incorrect because realized income can be excluded from gross income if there is an exclusion in the tax code that applies. Option D is incorrect because option B is true.

Question 11

Which of the following statements regarding exclusions and/or deferrals is false?

Accepted Answer

Exclusions refer to types of income that are not subject to taxation at all, meaning the taxpayer does not include this income on their tax return. For an income item to qualify as an exclusion, it must be specifically outlined in the tax code as not taxable. The statement that an income item need not be realized in order to qualify as an exclusion item is false because, generally, for any income to be considered for tax purposes, including exclusions, it must be realized.

Question 12

Jennifer and Stephan are married at year-end and they file separate tax returns. If Jennifer itemizes deductions on her return, Stephan must also itemize deductions on his return even if his itemized deductions don't exceed his standard deduction.

Accepted Answer

This is true according to the IRS rules. If one spouse itemizes deductions on their separate return, then the other spouse must also itemize deductions, even if their itemized deductions don't exceed their standard deduction. This is known as the "married filing separately" tax status.

Question 13

A taxpayer may not qualify for the head of household filing status if she does not have any dependent children.

Accepted Answer

A taxpayer can qualify for the head of household filing status if they maintain a home for a qualifying person, which can include a dependent child, but can also include other relatives such as parents or siblings, as long as they meet certain IRS criteria.

Question 14

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year, the taxpayer will qualify for head of household filing status.

Accepted Answer

To qualify for head of household filing status, the taxpayer must provide more than half the support for a qualifying person, who can be a child, parent, or relative who lived with the taxpayer for more than half the year. However, a cousin does not meet the IRS definition of a qualifying relative for the head of household status unless they are a "qualifying child" or another specific exception applies.

Question 15

A taxpayer may qualify for the head of household filing status if she has no dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father.

Accepted Answer

This is true. The IRS allows a taxpayer to claim head of household if they provide more than half of the cost of maintaining a household for a qualifying dependent, which can include a parent.

Question 16

Taxpayers who file as qualifying widows/widowers use a different tax rate schedule than taxpayers who are married filing jointly for tax purposes.

Accepted Answer

Qualifying widows/widowers use the same tax rate schedule as taxpayers who are married filing jointly.

Question 17

Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond. What is the amount of Sally's gross income from these items?

Accepted Answer

Gross income includes all income earned or received during the year, including compensation from an employer and interest from investments. Therefore, Sally's gross income is the total of these two amounts, which is $60,000 + $500 = $60,500. Choice D is the correct answer.

Question 18

The income tax base for an individual tax return is:

Accepted Answer

The income tax base for an individual tax return is the Adjusted Gross Income (AGI) minus from AGI deductions. This is because AGI represents an individual's total income minus certain deductions, and the taxable income is calculated based on the AGI.

Question 19

Jeremy and Annie are married. During the year Jeremy dies. When Annie files her tax return for the year in which her husband dies, she may file under the married filing jointly filing status even if she does not remarry.

Accepted Answer

According to the IRS, if your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status.

Question 20

Lebron received $50,000 of compensation from his employer and he received $400 of interest from a municipal bond. What is the amount of Lebron's gross income from these items?

Accepted Answer

Municipal bond interest is generally exempt from federal income tax, so only the $50,000 of compensation is included in Lebron's gross income.

Quiz 4: Individual Income Tax Overview, Dependents, and Filing Status