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Relative to for AGI deductions, from AGI deductions tend to relate to items that are more personal in nature.

A) True
B) False

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Tax credits reduce taxable income dollar for dollar.

A) True
B) False

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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 may claim a personal exemption for herself.
D) None of these statements is truE.Anna does not qualify as a qualifying child or relative of her grandparents because she provided more than half her own support.As it relates to the grandparents, the scholarship earned by Anna is treated as support provided by Anna (Anna provided $20,000 and the grandparents provided $14,000 of support) .However, because Anna is a full-time college student under age 24, she qualifies as her parents' qualifying child (the scholarship does not count in the support test with respect to the parents) .So, Anna may not claim a personal exemption for herself.

E) A) and B)
F) A) and C)

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The standard deduction amount varies by filing status.

A) True
B) False

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Which of the following shows the correct relationship among standard deduction amounts for the respective filing statuses?


A) Single > Head of Household > Married Filing Jointly
B) Married Filing Jointly > Married Filing Separately > Head of Household
C) Married Filing Jointly > Head of Household > Single
D) Head of Household > Married Filing Separately > Married Filing Jointly

E) B) and C)
F) C) and D)

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Which of the following statements regarding personal and dependency exemptions is false?


A) A married couple filing jointly may claim two personal exemptions.
B) To qualify as a dependent of another, an individual must be a resident of the United States.
C) An individual who qualifies as a dependent of another taxpayer may not claim a personal exemption.
D) An individual cannot qualify as a dependent of another as a qualifying relative taxpayer if the individual's gross income exceeds the exemption amount.

E) All of the above
F) C) and D)

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Miguel, a widower whose wife died in year 1, maintains a household for himself and his daughter who qualifies as his dependent. Miguel did not remarry. What is the most favorable filing status that Miguel qualifies for in year 3?


A) Single.
B) Qualifying widower.
C) Head household.
D) Married, filing separately.

E) B) and C)
F) All of the above

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


A) The relationship requirement is more broadly defined (more inclusive) for qualifying relatives than for qualifying children.
B) Qualifying children are subject to age restrictions while qualifying relatives are not.
C) The support test for qualifying relatives focuses on the support the potential dependent self-provides while the support test for qualifying children focuses on the support the taxpayer provides.
D) Qualifying relatives are subject to a gross income restriction while qualifying children are not.

E) None of the above
F) B) and D)

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In certain circumstances, a married taxpayer who files separately may qualify for the head of household filing status.

A) True
B) False

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Which of the following is not a filing status?


A) Head of household.
B) Unmarried.
C) Qualifying widow or widower.
D) Married filing jointly.

E) A) and B)
F) B) and C)

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To determine filing status, a taxpayer's marital status is determined on January 1 of each tax year in question.

A) True
B) False

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Lydia and John Wickham filed jointly in year 1. They divorced in year 2. In late 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?


A) Lydia.
B) John.
C) Both Lydia and John.
D) Neither Lydia nor John.

E) C) and D)
F) A) and D)

Correct Answer

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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 the dependency exemptions (and the reason for the exemptions) Sheri and Jake may claim for the current year for these girls?


A) One exemption for their daughter Emma as a qualifying child but no exemption for Harriet.
B) One exemption for Emma as a qualifying child and one exemption for Harriet as a qualifying child.
C) One exemption for Emma as a qualifying child and one exemption for Harriet as a qualifying relative.
D) None of these statements is truE.Emma passes all tests of a qualifying child.Harriet, however, must be tested as a qualifying relative because she does not meet the relationship test of a qualifying child.In order to be considered a qualifying relative, she would have had to live at the Woodhouse residence for the entire year, and not just 11 of 12 months.

E) A) and D)
F) A) and C)

Correct Answer

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Taxpayers are allowed to deduct more for each personal exemption they claim than for each dependency exemption they claim.

A) True
B) False

Correct Answer

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Jennifer and Stephan are married at year end and they file separate tax returns. If Jennifer itemizes deductions on her return, Stephan must also itemize deductions on his return even if his itemized deductions don't exceed his standard deduction.

A) True
B) False

Correct Answer

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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.

A) True
B) False

Correct Answer

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


A) Exclusions are favorable because taxpayers never pay tax on income that is excluded.
B) Interest income from municipal bonds is excluded from gross income.
C) Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year.
D) An income item need not be realized in order to qualify as an exclusion item.

E) A) and D)
F) A) and B)

Correct Answer

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A taxpayer may qualify for the head of household filing status if she has no dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father.

A) True
B) False

Correct Answer

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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 a dependency exemption for Ned in the current year?


A) If Ned moved into the Jackson's home in June and he lived there for the remainder of the year, he may qualify as the Jackson's qualifying relative.
B) Assume that Ned originally moved into the Jackson's home two years ago and he has lived there ever since.If this year Ned earned $3,000 at a part time job and he received $5,000 in municipal bond interest, he may qualify as the Jackson's dependent so long as the Jacksons provided more than half his support.
C) If Ned lived in the Jackson's home for the entire year, he will qualify as their dependent no matter who provided his support.
D) If Ned is over 19 or he is not a full-time student, he cannot qualify as the Jackson's dependent.

E) B) and C)
F) C) and D)

Correct Answer

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The Tanakas filed jointly in 2016. Their AGI is $120,000. They reported $10,000 of itemized deductions and they have two dependent children. The 2016 standard deduction amount is $12,600 and each exemption is $4,050. What is the total amount of from AGI deductions they are allowed to claim on their 2016 tax return?

Correct Answer

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$28,800, computed as follows:
From AGI d...

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