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Exam 4: Individual Income Tax Overview dependents and Filing Status

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Question 21

Multiple Choice

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Anna is a 21-year-old full-time college student (she plans on returning home at the end of the school year) .Her total support for the year was $34,000 (including $8,000 of tuition) .Anna covered $12,000 of her support costs out of her own pocket (from savings,she did not work) and she received an $8,000 scholarship that covered all of her tuition costs.Which of the following statements regarding who is allowed to claim Anna as an exemption is true?

A) Even if Anna's parents provided the remaining $14,000 of support for Anna ($34,000 minus $12,000 minus $8,000) ,they would not be able to claim her as a dependent.
B) Even if Anna's grandparents provided the remaining $14,000 of support for Anna ($34,000 minus $12,000 minus $8,000) they would not be able to claim her as a dependent.
C) Because she provided more than half her own support,Anna would not qualify as her parents' dependent.
D) None of these statements is true.

E) A) and C)
F) None of the above

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Question 22

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

A) True
B) False

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Question 23

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Which of the following is NOT a from AGI deduction?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially.In 2018,Ed and Jane realized the following items of income and expense: $\begin{array}{l}\begin{array} { l } \text { Item }\\\text { Ed's Salary } \\\text { Jarne's Salary } \\\text { Murncipal bend interest income } \\\text { Qualified business income } \\\text { Alimoryy paid (for AGI deduction) } \\\text { Real property tax (fron AGI deduction) } \\\text { Charitable contributions (from AGI) }\end{array}\begin{array} { r } \text { Amourt } \\35,000 \\70,000 \\400 \\1,000 \\( 7,000 ) \\( 10,000 ) \\( 15,000 )\end{array}\end{array}$ They also qualified for a $2,000 child tax credit.Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate).Finally,the 2018 standard deduction amount for MFJ taxpayers is $24,000. What is the couple's gross income?

Taxpayers who file as qualifying widows/widowers are treated the same for tax purposes in all respects as taxpayers who are married filing jointly for tax purposes.

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

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

Jane is unmarried and has no children,but provides more than half of her mother's financial support.Jane's mother lives in an apartment across town and has a part-time job earning $5,000 a year.Which is the most advantageous filing status available to Jane?

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

Lydia and John Wickham filed jointly in year 1.They divorced in year 2. Late in year 2,the IRS discovered that the Wickham's underpaid their year 1 taxes by $2,000.Both Lydia and John worked in year 1 and received equal income but John had $2,000 less tax withheld than did Lydia.Who is legally liable for the tax underpayment?

Beginning in 2018,taxpayers are allowed to deduct dependency exemptions but they are not allowed to deduct personal exemptions.

Inventory is a capital asset.

Which of the following statements regarding the difference between the requirements for a qualifying child and the requirements for a qualifying relative is false?

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

Tax credits reduce taxable income dollar for dollar.

Kabuo and Melinda got married on December 15,year 1.Kabuo's salary for the year was $54,000,and Melinda's was $62,000.In addition,Kabuo received $250 of interest income,($100 of which was from municipal bonds),and Melinda received $10,000 of alimony from a former spouse (pre 2018 divorce decree).If Kabuo and Melinda choose to file jointly,what is their year 1 gross income?

Sheri and Jake Woodhouse have one daughter,Emma,who is 16 years old.They also have taken in Emma's friend,Harriet,who has lived with them since February of the current year and is also 16 years of age.The Woodhouses have not legally adopted Harriet but Emma often refers to Harriet as "her sister." The Woodhouses provide all of the support for both girls,and both girls live at the Woodhouse residence.Which of the following statements is true regarding whom Sheri and Jake may claim as dependents for the current year?

Earl and Lawanda Jackson have been married for 15 years.They have no children.Ned,who is an old friend from high school,has been living with the Jacksons during the current year.Which of the following is a true statement regarding whether the Jacksons can claim Ned as a dependent for the current year?

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.

Taxpayers may prepay their tax liability through withholdings and through estimated tax payments.