Question 1

An extension of time to file a return for an individual taxpayer for up to six months is automatic (i.e., no explanation is required so long as the proper form is filed before the due date).

Accepted Answer

An extension of time to file a return for an individual taxpayer for up to six months is automatic as long as the proper form is filed before the due date. No explanation is required.

Question 2

A taxpayer who does not file a tax return is protected by a seven-year statute of limitations (i.e., the IRS cannot assess a deficiency after seven years).

Accepted Answer

The taxpayer who does not file a tax return is not protected by a seven-year statute of limitations. In fact, there is no statute of limitations for unfiled tax returns, and the IRS can assess a deficiency at any time.

Question 3

In what situation is a married person generally required to file separately?

Accepted Answer

If either spouse is a nonresident alien, they are generally required to file separately.

Question 4

A taxpayer who files late and fails to get the proper extension must pay a penalty of 0.5 percent per month (up to a maximum of 25%), beginning with the due date of the tax return (usually April 15 for calendar year individuals) and ending with the date the return is filed.

Accepted Answer

The penalty for filing late without an extension is generally 5% of the unpaid taxes for each month or part of a month that a tax return is late, not 0.5%. The 0.5% per month penalty typically applies to unpaid taxes after the due date, not specifically for late filing without an extension.

Question 5

Which one of the following statements is true of returns filed by married persons filing jointly?

Accepted Answer

When married couples file a joint return, they are both jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise from the joint return, even if they later divorce. However, once the due date for the return has passed, they cannot switch to filing separate returns for that year. Choices A, B, and D do not accurately describe the tax implications and options for married persons filing jointly.

Question 6

A taxpayer whose estimated tax due after withholding is less than $1,000 need not make estimated payments even if the other requirements are met.

Accepted Answer

According to IRS regulations, taxpayers whose estimated tax due after withholding is less than $1,000 are not required to make estimated payments.

Question 7

A taxpayer filing as a head of household whose taxable income in 2012 is $60,000 owes Federal income tax of $15,000 (25% × $60,000).

Accepted Answer

This statement is incorrect. A head of household with taxable income of $60,000 in 2012 would owe less than $15,000 in Federal income tax, as the tax brackets for a head of household at that time ranged from 10% to 33%.

Question 8

F and B were divorced in 1996, their divorce decree gave custody of their child to B, and under a separate written agreement, B surrendered the dependency exemption to F for the current year.F paid child support of $800 in the current year.B provided the other support of $2,000 for their only child.What is B's filing status and her number of exemptions?

Accepted Answer

B qualifies as head of household because she has custody of the child and paid more than half the cost of maintaining the home. She can claim one exemption for herself. The dependency exemption for the child was surrendered to F.

Question 9

D, whose parents are deceased, is supported by her grandparents and other relatives.Her support this year was provided as follows: $$\begin{array} { l r } 
\text { Interest income } & \$ 1,500 \
\text { Social security surv iv or's benefits } & 2,000 \
\text { Contributions by maternal grandparents } & 1,500 \
\text { Contributions by paternal grandparents } & 1,500 \
\text { Contributions by mother's brother } & 1,000 \
\text { Contributions by father's sister } & 600
\end{array}$$ Under a multiple support agreement, who may claim a dependency exemption for D?

Accepted Answer

Under a multiple support agreement, any contributor who provides more than 10% of the total support can claim the exemption if no one person provides more than half. Here, either set of grandparents or the mother's brother can claim the exemption as they each contribute more than 10% of the total support.

Question 10

Which one of the following is not included in determining the amount of support given to a dependent?

Accepted Answer

Services performed by the parent for the dependent are not considered when calculating the financial support provided to a dependent.

Question 11

G and J are married and have three children: R, S, and C.R, age 19, was the star of the men's volleyball team at State University, where he was a full-time student in the current year.He received a scholarship valued at $8,000.G and J provide his other support of $5,000.S, who was a full-time high school student all year, worked part-time, earning $3,700.G and J spent $4,000 toward S's support.C was a high school freshman and had no income during the year.How many exemptions may G and J claim on their joint tax return?

Accepted Answer

G and J can claim five exemptions on their joint tax return: one for each of them and one for each of their three children. R, S, and C all qualify as dependents either because they are full-time students under the age of 24 (R and S) or because they are under the age of 19 (C), and G and J provide more than half of their support.

Question 12

Which one of the following items when spent is not included in support?

Accepted Answer

University scholarships for academic excellence are not considered support as they are intended for educational expenses and not general living expenses.

Question 13

A single taxpayer whose only income is from a sole proprietorship with gross income of $8,700 and net income of $3,800 is not required to file a tax return for 2012.

Accepted Answer

Any individual whose gross income exceeds the standard deductions plus personal exemption amount (in 2012, $9,750 for a single taxpayer) is required to file a tax return. In this case, the taxpayer's gross income is $8,700, which is below the threshold, but since their net income is $3,800, which is above the threshold, they are required to file a tax return.

Question 14

A taxpayer generally may amend his or her tax return for any missed deductions within three years of the original due date.

Accepted Answer

According to the IRS, taxpayers have three years from the original due date of the tax return to amend it and claim any missed deductions.

Question 15

Which of the following generally has the least favorable tax rates?

Accepted Answer

Generally, married couples filing separately have the least favorable tax rates. They have lower income thresholds for each tax bracket compared to those who are married filing jointly or head of household, and they also lose out on certain tax deductions and credits that are available to those who are married filing jointly.

Question 16

V is 11 years of age, her only income is interest from savings of $3,200, and she has no itemized deductions.V is claimed as a dependent by her parents.V's taxable income is $2,250 for 2012, $1,300 of which is taxed at her parents' marginal tax rate.

Accepted Answer

Since V is a dependent, her taxable income is only taxed at her parents' marginal tax rate. Therefore, $1,300 of her taxable income is taxed at her parents' rate and the remaining $950 is taxed at V's own tax rate.

Question 17

A parent whose 12-year-old child's only income is interest of $4,100 may elect to report the income on his own return and pay the tax with that return.

Accepted Answer

According to the IRS guidelines, a parent may elect to report a child's interest income of less than $10,500 on their own return using Form 8814. They are responsible for paying any taxes owed on this income.

Question 18

Which of the following is not true of the gross income test for the dependency exemption (i.e., in testing to determine if the individual is a qualifying relative)?

Accepted Answer

Gross income is not interpreted to mean "gross cash receipts." Instead, gross income includes all income that is not specifically excluded by law.

Question 19

L is single, 35 years of age, and owns her own home.She provides more than one-half the support for M, who is unrelated to L and lives legally in L's home for the entire year.M also is single, is a citizen of the United States, and has gross income of $2,800.What is L's filing status and her proper number of exemptions for the current calendar year?

Accepted Answer

The answer of L is single, 35 years of age,...

Question 20

V is 66 years of age and has good sight.V provided $8,000 of the support of his elderly mother, who lives in a rest home and whose only income is Social Security benefits of $6,200.What is V's filing status and how many exemptions may he claim?

Accepted Answer

The answer of V is 66 years of age and...

Quiz 4: Personal and Dependency Exemptions; Filing Status; Determination of Tax for an Individual; Filing Requirements