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

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Question 21

True/False

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From AGI deductions are commonly referred to as deductions "below the line."

A) True
B) False

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Question 22

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Tax credits are generally more valuable than tax deductions because tax credits reduce a taxpayer's gross tax liability dollar for dollar while tax deductions do not.

A) True
B) False

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Question 23

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Which of the following relationships does NOT pass the relationship test for a qualifying child?

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

In 2020, Brittany, who is single, cares for her father, Raymond. Brittany pays the bills relating to Raymond's home. She also buys groceries and provides the rest of his support. Raymond has no gross income. Brittany received $45,000 of salary from her employer during the year. Brittany reports $3,000 of itemized deductions. What is Brittany's taxable income?

For filing status purposes, the taxpayer's marital status is determined at what point during the year?

From AGI deductions are generally more valuable to taxpayers than for AGI deductions.

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.

Katy has one child, Dustin, who is 18 years old at the end of the year. Dustin lived at home for three months during the year before leaving home to work full time in another city. During the year, Dustin earned $15,000. Katy provided more than half of Dustin's support for the year. Which of the following statements regarding whether Katy may claim Dustin as a dependent for the current year is accurate?

All of the following represent a type or character of income except:

Itemized deductions and the standard deduction are deductions from AGI but the deduction for qualified business income is a deduction for AGI.

Which of the following is not an itemized deduction?

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.

In addition to the individual income tax, individuals may be required to pay taxes imposed on tax bases other than individual taxable income.

Tom Suzuki's tax liability for the year is $2,450. He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits. What are Tom's taxes due or tax refund for the year?

When determining whether a child meets the qualifying child support test for the parents, scholarships earned by the child do not count as self-support provided by the child.

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

Taxpayers are allowed to deduct a specific amount for each of their dependents.

Hannah, who is single, received a qualified dividend of $1,000. Hannah's marginal ordinary income tax rate is 32 percent. What amount of tax must she pay on the $1,000 dividend?

A personal automobile is a capital asset.