Question 1

Adjusted gross income equals total income less itemized deductions.

Accepted Answer

Adjusted gross income (AGI) equals total income minus specific deductions and adjustments, not necessarily just itemized deductions. Itemized deductions are only one category of deductions that can be included in calculating AGI.

Question 2

Bill and Afton are married and file a joint tax return. Bill is 67 and Afton is 66, and neither is legally blind. Their standard deduction for 2013 is $14,600.

Accepted Answer

The standard deduction for married filing jointly taxpayers who are both over 65 in 2013 is $14,600, according to IRS Publication 17.

Question 3

Harry and Sally were married on December 23, 2012. Their income for the entire year is reported on a joint return.

Accepted Answer

Since Harry and Sally were married on or before December 31, 2012, they are considered married for the entire tax year and can file a joint return reporting their income for the entire year.

Question 4

An individual's taxable income equals adjusted gross income less the exemption amount.

Accepted Answer

The answer of An individual's taxable income equals adjusted gross...

Question 5

An itemized deduction doesn't result in any tax savings in a year in which an individual taxpayer takes the standard deduction.

Accepted Answer

This is because the standard deduction is a fixed amount that reduces taxable income, while an itemized deduction is a deduction for certain expenses that exceed a certain percentage of adjusted gross income. If the total of itemized deductions is less than the standard deduction, it is more beneficial to take the standard deduction.

Question 6

An above-the-line deduction reduces both adjusted gross income and taxable income.

Accepted Answer

An above-the-line deduction, also known as an adjustment to income, reduces adjusted gross income (AGI) which in turn reduces taxable income. This is in contrast to a below-the-line deduction, which only reduces taxable income.

Question 7

The standard deduction for single individuals equals one-half of the standard deduction for married individuals filing jointly.

Accepted Answer

This statement is true according to the IRS tax code. The 2021 standard deduction for single individuals is $12,550 while the standard deduction for married individuals filing jointly is $25,100, which is double the single amount.

Question 8

A taxpayer who knowingly signs a joint return on which his spouse has failed to report her income is liable for any tax assessments made by the IRS on that income.

Accepted Answer

According to the "Innocent Spouse Relief" provision of the Internal Revenue Code, a taxpayer who unknowingly signs a joint return on which their spouse has failed to report income can seek relief from liability for any tax assessments related to that income. However, if the taxpayer knowingly signed the return, they are considered jointly and severally liable for any and all taxes owed on that return, including any unreported income by their spouse.

Question 9

For the taxable year in which a married person dies, the widow or widower can file a joint return with the deceased.

Accepted Answer

The widower or widow can file a joint return with the deceased spouse for the year of death if the widow(er) did not remarry during that year. This is to ensure that the surviving spouse benefits from the lower tax rates and other potential tax advantages associated with being married.

Question 10

In computing taxable income, an individual is allowed to deduct the lesser of itemized deductions or the standard deduction.

Accepted Answer

The answer of In computing taxable income, an individual is...

Question 11

A husband and wife are allowed only one exemption on a jointly filed return.

Accepted Answer

The answer of A husband and wife are allowed only...

Question 12

An individual's taxable income equals adjusted gross income less the greater of the standard deduction or itemized deductions and the exemption amount.

Accepted Answer

This is the correct formula for calculating an individual's taxable income.

Question 13

The majority of individual taxpayers take the standard deduction rather than itemizing.

Accepted Answer

According to IRS data, around 70% of individual taxpayers take the standard deduction instead of itemizing their deductions.

Question 14

Mrs. Paley died on July 14, 2012. Her husband has not remarried. The Paleys' two children, ages 34 and 36, are financially independent. Mr. Paley may file as a surviving spouse in 2013 and 2014.

Accepted Answer

Mr. Paley can only file as a surviving spouse if he has not remarried and has a dependent child. Since both of the Paleys' children are financially independent, Mr. Paley cannot file as a surviving spouse.

Question 15

In computing taxable income, an individual is allowed to deduct both the standard deduction and any itemized deduction for the year.

Accepted Answer

An individual can choose either the standard deduction or itemized deductions, but not both, to reduce their taxable income.

Question 16

Charlie is single and provides 100% of the financial support for his dependent mother, Angela, who lives with Charlie. Charlie's filing status is head of household.

Accepted Answer

To qualify for head of household filing status, the taxpayer must provide more than half of the financial support for a qualifying person, such as a dependent parent. Since Charlie provides 100% of the support for his mother, he meets this requirement and can file as head of household.

Question 17

Mr. Thomas is age 69, has perfect vision, and files as a single taxpayer. His standard deduction for 2013 is $7,600.

Accepted Answer

The standard deduction for a single filer who is age 65 or older in 2013 is $7,600, according to the IRS. Since Mr. Thomas is 69 years old, he would qualify for this higher deduction. Additionally, his vision has no impact on his standard deduction.

Question 18

Mr. Lenz died on May 4, 2012. His widow, Mrs. Lenz, maintains a home for her three children, ages 4, 6, and 11. Mrs. Lenz must file as a head of household in 2013.

Accepted Answer

The answer of Mr. Lenz died on May 4, 2012....

Question 19

An individual who files his own tax return but is claimed as a dependent on another individual's return is not allowed any standard deduction or personal exemption.

Accepted Answer

The answer of An individual who files his own tax...

Question 20

Mr. Andrews is age 58, legally blind, and files as a single taxpayer. His standard deduction for 2013 is $6,100.

Accepted Answer

In 2013, the standard deduction for a single taxpayer was $6,100, but legally blind individuals are eligible for an additional deduction, increasing the total standard deduction.

Quiz 14: The Individual Tax Formula