Question 1

When separate income tax returns are filed by married taxpayers, one spouse cannot claim the other spouse as an exemption.

Accepted Answer

The answer of When separate income tax returns are filed...

Question 2

Using borrowed funds from a mortgage on her home, Leah provides 52% of her own support, while her sons furnished the rest. Leah can be claimed as a dependent under a multiple support agreement.

Accepted Answer

The answer of Using borrowed funds from a mortgage on...

Question 3

Dan and Donna are husband and wife and file separate returns for the year. If Dan itemizes his deductions from AGI, Donna cannot claim the standard deduction.

Accepted Answer

If one spouse itemizes, the other spouse must also itemize their deductions or forgo the deduction altogether. Therefore, Donna cannot claim the standard deduction if Dan itemizes his deductions.

Question 4

For the year a spouse dies, the surviving spouse is considered married for the entire year for income tax purposes.

Accepted Answer

According to the IRS, if a person's spouse died during the tax year, the surviving spouse is considered married for the entire year for tax purposes, and can file a joint return with their deceased spouse.

Question 5

Buddy and Hazel are ages 72 and 71 and file a joint return. If they have itemized deductions of $14,600 for 2017, they should not claim the standard deduction.

Accepted Answer

The answer of Buddy and Hazel are ages 72 and...

Question 6

A dependent cannot claim a personal exemption on his or her own return.

Accepted Answer

This is true. A dependent cannot claim a personal exemption on their own return because they can be claimed as a dependent on someone else's return, and that person can claim the exemption for them.

Question 7

Butch and Minerva are divorced in December of 2017. Since they were married for more than one-half of the year, they are considered as married for 2017.

Accepted Answer

The answer of Butch and Minerva are divorced in December...

Question 8

Benjamin, age 16, is claimed as a dependent by his parents. During 2017, he earned $850 at a car wash. Benjamin's standard deduction is $1,400 ($1,050 + $350).

Accepted Answer

The standard deduction for a dependent in 2017 is the greater of $1,050 or earned income plus $350, up to the standard deduction for a single filer, which was $6,350 in 2017. Therefore, Benjamin's standard deduction would be $1,200 ($850 + $350), not $1,400.

Question 9

After her divorce, Hope continues to support her ex-husband's sister, Cindy, who does not live with her. Hope can claim Cindy as a dependent.

Accepted Answer

The answer of After her divorce, Hope continues to support...

Question 10

Debby, age 18, is claimed as a dependent by her mother. During 2017, she earned $1,100 in interest income on a savings account. Debby's standard deduction is $1,450 ($1,100 + $350).

Accepted Answer

If Debby's mother claimed her as a dependent, Debby cannot claim her own personal exemption and her standard deduction is limited to the greater of $1,050 or her earned income plus $350, which in this case is $1,450. Therefore, her interest income of $1,100 would be fully taxable.

Question 11

Jason and Peg are married and file a joint return. Both are over 65 years of age and Jason is blind. Their standard deduction for 2017 is $16,450 ($12,700 + $1,250 + $1,250 + $1,250).

Accepted Answer

The standard deduction for 2017 for married couples filing jointly and both over 65 years of age is $12,700 plus an additional $1,250 each for being over 65 and an additional $1,250 for Jason being blind, for a total of $16,450.

Question 12

In 2017, Hal furnishes more than half of the support of his ex-wife and her father, both of whom live with him. The divorce occurred in 2016. Hal may claim the father-in-law and the ex-wife as dependents.

Accepted Answer

According to the IRS rules, if Hal furnished more than half of the support for his ex-wife and her father in 2017 and they lived with him for the full year, he may claim them as dependents. The fact that he was previously married to his ex-wife and divorced in 2016 does not affect his eligibility to claim them as dependents in 2017 as long as he meets the support and residency requirements.

Question 13

If an individual does not spend funds that have been received from another source (e.g., interest on municipal bonds), the unexpended amounts are not considered for purposes of the support test.

Accepted Answer

The statement is true. Unspent funds from another source are not considered for the support test.

Question 14

In determining whether the gross income test is met for dependency exemption purposes, only the taxable portion of a scholarship is considered.

Accepted Answer

Only the taxable portion of a scholarship is considered for determining whether the gross income test is met for dependency exemption purposes. Non-taxable portions of scholarships, such as amounts used for tuition and course-related expenses, are not included in Gross Income.

Question 15

Monique is a resident of the U.S. and a citizen of France. If she files a U.S. income tax return, Monique cannot claim the standard deduction.

Accepted Answer

The answer of Monique is a resident of the U.S....

Question 16

Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Accepted Answer

The cost of the TV can be considered part of the total support provided by Albert to his mother, as the support test includes all amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities.

Question 17

Roy and Linda were divorced in 2016. The divorce decree awards custody of their children to Linda but is silent as to who is entitled to claim them as dependents. If Roy furnished more than half of their support, he can claim them as dependents in 2017.

Accepted Answer

The divorce decree is silent as to who is entitled to claim the children as dependents, so the default rule is that the custodial parent (in this case, Linda) is entitled to claim them unless she releases the claim to the noncustodial parent (Roy). Therefore, even if Roy furnished more than half of their support, he cannot claim them as dependents in 2017 without a release from Linda.

Question 18

Katrina, age 16, is claimed as a dependent by her parents. During 2017, she earned $5,600 as a checker at a grocery store. Her standard deduction is $5,950 ($5,600 earned income + $350).

Accepted Answer

For a dependent, the standard deduction is the greater of $1,050 or the sum of their earned income plus $350, up to the standard deduction limit for a single filer. In 2017, this calculation would result in a standard deduction of $5,950 for Katrina.

Question 19

Derek, age 46, is a surviving spouse. If he has itemized deductions of $12,900 for 2017, Derek should not claim the standard deduction.

Accepted Answer

Derek's itemized deductions exceed the standard deduction for a surviving spouse, which is $12,700 for 2017. Therefore, he should itemize his deductions.

Question 20

Clara, age 68, claims head of household filing status. If she has itemized deductions of $10,500 for 2017, she should claim the standard deduction.

Accepted Answer

For 2017, the standard deduction for a head of household was $9,350. However, since Clara is 68, she is eligible for an additional standard deduction for being over 65, making her total standard deduction higher than her itemized deductions.

Quiz 3: Tax Formula and Tax Determination; an Overview of Property Transactions