Individual Income Tax Overview and Exemptions and Filing Status
Chapter 04
Individual Income Tax Overview, Exemptions, and Filing Status
1. |
The income tax base for an individual tax return is:
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2. |
Which of the following series of inequalities is generally most accurate?
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3. |
Which of the following statements regarding realized income is true?
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4. |
Which of the following statements regarding exclusions and/or deferrals is false?
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5. |
Sally received $50,000 of compensation from her employer and she received $400 of interest from a corporate bond. What is the amount of Sally's gross income from these items?
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6. |
Lebron received $50,000 of compensation from his employer and he received $400 of interest from a municipal bond. What is the amount of Lebron's gross income from these items?
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7. |
Joanna received $60,000 compensation from her employer, the value of her stock in ABC company appreciated by $5,000 during the year (but she did not sell any of the stock), she received $30,000 of life insurance proceeds from the death of her husband. What is the amount of Joanna's gross income from these items?
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8. |
Which of the following statements regarding tax deductions is false?
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9. |
Which of the following statements regarding for AGI tax deductions is true?
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10. |
All of the following are for AGI deductions except:
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11. |
Which of the following is NOT a from AGI deduction?
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12. |
Which of the following is not an itemized deduction?
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13. |
Which of the following shows the correct relationship among standard deduction amounts for the respective filing statuses?
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14. |
Which of the following statements regarding exemptions is correct?
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15. |
Which of the following types of income are not considered ordinary income?
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16. |
All of the following represents a type or character of income except:
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17. |
Which of the following statements is true?
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18. |
Which of the following statements regarding tax credits is true?
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19. |
Jamison's gross tax liability is $7,000. Jamison had $2,000 of available credits and he had $4,000 of taxes withheld by his employer. What is Jamison's taxes due (or taxes refunded) with his tax return?
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20. |
Madison's gross tax liability is $9,000. Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer. What is Madison's taxes due (or taxes refunded) with her tax return?
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21. |
Which of the following statements regarding personal and dependency exemptions is false?
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22. |
Which of the following statements regarding personal and dependency exemptions is true?
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23. |
All of the following are tests for determining qualifying child status except the _____.
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24. |
Which of the following relationships does NOT pass the relationship test for a qualifying child?
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25. |
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?
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26. |
Charlotte is the Lucas family's 22-year-old daughter. She is a full-time student at an out-of-state university but plans to return home when the school year ends. During the year, Charlotte earned $4,000 of income working part-time. Her support totaled $30,000 for the year. Of this amount, Charlotte paid $7,000 with her own funds, her parents paid $14,000, and Charlotte's grandparents paid $9,000. Which of the following statements most accurately describes whether Charlotte's parents can claim a dependency exemption for Charlotte?
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27. |
In year 1, the Bennetts' 25-year-old daughter, Jane, is a full-time student at an out-of-state university but she plans to return home after the school year ends. In previous years, Jane has never worked and her parents have always been able to claim her as a dependent. In year 1, a kind neighbor offers to pay for all of Jane's educational and living expenses. Which of the following statements is most accurate regarding whether Jane's parents would be allowed to claim an exemption for Jane in year 1 assuming the neighbor pays for all of Jane's support?
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28. |
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?
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29. |
Char and Russ Dasrup have one daughter, Siera, who is 16 years old. In November of last year, the Dasrup's took in Siera's 16 year old friend, Angela, who has lived with them ever since. The Dasrup's have not legally adopted Angela but Siera often refers to Angela as "her sister." The Dasrup's provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrup's residence. Which of the following statements is true regarding the dependency exemptions (and the reason for the exemptions) Char and Russ may claim for the current year for these girls?
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30. |
In order to be a qualifying relative of another, an individual's gross income must be less than _______.
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31. |
Catherine de Bourgh has one child, Anne, who is 18 years old at the end of the year. Anne lived at home for seven months during the year before leaving home to attend State University for the rest of the year. During the year, Anne earned $6,000 while working part time. Catherine provided 80 percent of Anne's support and Anne provided the rest. Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?
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32. |
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?
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33. |
William and Charlotte Collins divorced in November of year 1. William moved out and Charlotte remained in their house with their 10-month-old daughter Autumn. Diana, Charlotte's mother, lived in the home and acted as Autumn's nanny for all of year 1. William provided 70% of Autumn's support, Diana provided 20%, and Charlotte provided 10%. When the time came to file their tax returns for year 1, William, Charlotte, and Diana each wanted to claim Autumn as a dependent. Their respective AGIs for year 1 were $50,000, $35,000, and $52,000. Who has priority to claim Autumn as a dependent?
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34. |
All of the following are tests for determining qualifying relative status except _____.
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35. |
Which of the following statements regarding the difference between the requirements for a qualifying child and the requirements for a qualifying relative is false?
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36. |
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?
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37. |
Michael, Diane, Karen, and Kenny provide support for their mother Janet who is 75 years old. Janet lives by herself in an apartment in Los Angeles. Janet's gross income for the year is $3,000. Janet provides 10% of her own support, Michael provides 40% of Janet's support, Diane provides 8% of Janet's support, Karen provides 10% of Janet's support, and Kenny provides the remaining 32% of Janet's support. Under a multiple support agreement, who may claim a dependency exemption for Janet as a qualifying relative?
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38. |
Filing status determines all of the following except ___________
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39. |
Which of the following is not a filing status?
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40. |
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?
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41. |
In June of year 1, Edgar's wife Cathy died and Edgar did not remarry during the year. What is his filing status for year 1 (assuming they did not have any dependents)?
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42. |
In June of year 1, Eric's wife Savannah died. Eric did not remarry during year 1, year 2, or year 3. Eric maintains the household for his dependent daughter Catherine in year 1, year 2, and year 3. Which is the most advantageous filing status for Eric in year 2?
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43. |
Which of the following statements about a qualifying person for head of household filing status is true?
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44. |
In June of year 1, Jake's wife Darla died. The couple did not have any children and Jake did not remarry in year 1 or year 2. Which is the most favorable filing status for Jake in year 2?
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45. |
Jan is unmarried and has no children, but she provides all of the financial support for her mother, who lives in an apartment across town. Jan's mother qualifies as Jan's dependent. Which is the most advantageous filing status available to Jan?
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46. |
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?
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47. |
In April of year 1, Martin left his wife Marianne. While the couple was apart, they were not legally divorced. Marianne found herself having to financially provide for the couple's only child (who qualifies as Marianne's dependent) and to pay all the costs of maintaining the household. When Marianne filed her tax return for year 1, she filed a return separate from Martin. What is Marianne's most favorable filing status for year 1?
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48. |
In April of year 1, Martin left his wife Marianne. The couple has two children under the age of 15. While the couple was apart, they were not legally divorced. Marianne remained in the home and paid all the costs of maintaining the home for the remainder of the year. Assuming the couple does not file jointly, which of the following statements regarding filing status is true?
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49. |
Which of the following is not a requirement for a married taxpayer to be treated as unmarried at the end of the year for filing status purposes?
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50. |
For filing status purposes, the taxpayer's marital status is determined at what point during the year?
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51. |
In year 1, Harold Weston's wife died. Since her death, he has maintained a household for their son Frank (age 3), his qualifying child. Which is the most advantageous filing status available to Harold in year 4?
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52. |
Mason and his wife Madison have been married for five years. Jaxon, who is 18 years old and unrelated to Mason and Madison, has been living with Mason and Madison for the last two years. In May of year 1, Mason and Madison divorced. Mason and Jaxon stayed in the home and Madison moved out. During year 2, Mason provided all of Jaxon's support and Jaxon lived in the home for all of year 2. Jaxon did not earn any income during year 2. What is Mason's most favorable filing status for year 2?
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53. |
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?
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54. |
Jasmine and her husband Arty have been married for 25 years. In May of this year, the couple divorced. During the year, Jasmine provided all the support for herself and her 22-year-old child Dexter who lived in the same home as Jasmine for the entire year. Dexter is employed full-time, earning $29,000 this year. What is the Jasmine's most favorable filing status for the year?
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Chapter 04 Individual Income Tax Overview, Exemptions, and Filing Status Answer Key
1. |
The income tax base for an individual tax return is:
Taxable income, which is adjusted gross income minus from AGI deductions, is the income tax base for an individual tax return. |
2. |
Which of the following series of inequalities is generally most accurate?
Gross income less for AGI deductions equals adjusted gross income. Adjusted gross income less from AGI deductions equals taxable income. |
3. |
Which of the following statements regarding realized income is true?
Realized income requires a transaction with a second party in which there is a change in property rights between parties. |
4. |
Which of the following statements regarding exclusions and/or deferrals is false?
An exclusion is realized income that is permanently excluded from taxation. If the income is not realized, it would not be included in gross income to begin with so it need not be excluded from income. |
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5. |
Sally received $50,000 of compensation from her employer and she received $400 of interest from a corporate bond. What is the amount of Sally's gross income from these items?
$50,000 compensation + $400 interest from a corporate bond (as opposed to interest from municipal bonds). |
6. |
Lebron received $50,000 of compensation from his employer and he received $400 of interest from a municipal bond. What is the amount of Lebron's gross income from these items?
$50,000 compensation. The interest income is excluded from gross income because it is interest from a municipal (tax exempt) bond. |
7. |
Joanna received $60,000 compensation from her employer, the value of her stock in ABC company appreciated by $5,000 during the year (but she did not sell any of the stock), she received $30,000 of life insurance proceeds from the death of her husband. What is the amount of Joanna's gross income from these items?
$60,000 compensation is included in gross income, the increase in the value of her stock is not realized income so it is not included in gross income, and the life insurance proceeds are excluded from gross income. |
8. |
Which of the following statements regarding tax deductions is false?
For AGI deductions tend to be associated with business activities and from AGI deductions tend to be associated with personal activities. |
9. |
Which of the following statements regarding for AGI tax deductions is true?
Taxpayers subtract for AGI deductions from gross income to determine adjusted gross income. |
10. |
All of the following are for AGI deductions except:
Charitable contributions are from AGI deductions. |
11. |
Which of the following is NOT a from AGI deduction?
From AGI deductions consist of the greater of the standard deduction or itemized deductions and personal and dependency exemptions. |
12. |
Which of the following is not an itemized deduction?
Alimony paid is a for AGI deduction. |
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13. |
Which of the following shows the correct relationship among standard deduction amounts for the respective filing statuses?
The standard deduction for single and MFS taxpayers is half that of MFJ taxpayers. |
14. |
Which of the following statements regarding exemptions is correct?
Exemptions are considered to be from AGI deductions. |
15. |
Which of the following types of income are not considered ordinary income?
Both net long-term capital gains and qualified dividend income are subject to preferential rates and are thus not considered to be ordinary income. |
16. |
All of the following represents a type or character of income except:
The types or characters of income include tax exempt, tax deferred, capital, ordinary, and qualified dividend. Normal income is not an income type or character. |
17. |
Which of the following statements is true?
Qualified dividends are taxed at a maximum rate of 15% or 20% (depending on the taxpayer's income) and are always taxed at a lower rate than the same amount of ordinary income would be. Income character determines the rate at which income is taxed and it does not depend on filing status. Finally, a taxpayer selling a capital asset at a gain recognizes capital gain not ordinary income. |
18. |
Which of the following statements regarding tax credits is true?
Credits reduce the taxes payable dollar for dollar and are therefore not sensitive to marginal tax rates. |
19. |
Jamison's gross tax liability is $7,000. Jamison had $2,000 of available credits and he had $4,000 of taxes withheld by his employer. What is Jamison's taxes due (or taxes refunded) with his tax return?
Gross tax liability minus credits minus payments equals taxes due ($7,000 - 2,000 - 4,000 = $1,000 taxes due). |
20. |
Madison's gross tax liability is $9,000. Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer. What is Madison's taxes due (or taxes refunded) with her tax return?
Gross tax liability minus credits minus payments equals tax refund ($9,000 - 3,000 - 8,000 = $2,000 tax refund). |
21. |
Which of the following statements regarding personal and dependency exemptions is false?
To qualify as a dependent of another, an individual must be a resident of the United States, Canada, or Mexico. Also, there is no gross income test for a qualifying child. |
22. |
Which of the following statements regarding personal and dependency exemptions is true?
The individual must be either a qualifying child or a qualifying relative of another to be a dependent of that person. |
23. |
All of the following are tests for determining qualifying child status except the _____.
Qualifying children must pass the relationship, age, support, and residence tests. There is no requirement relating to gross income. |
24. |
Which of the following relationships does NOT pass the relationship test for a qualifying child?
Stepsister's daughter, half-brother, and stepsister are all valid relationships for a qualifying child. |
25. |
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?
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. |
26. |
Charlotte is the Lucas family's 22-year-old daughter. She is a full-time student at an out-of-state university but plans to return home when the school year ends. During the year, Charlotte earned $4,000 of income working part-time. Her support totaled $30,000 for the year. Of this amount, Charlotte paid $7,000 with her own funds, her parents paid $14,000, and Charlotte's grandparents paid $9,000. Which of the following statements most accurately describes whether Charlotte's parents can claim a dependency exemption for Charlotte?
Because Charlotte is a full-time student and under 24 years of age she passes the age test of a qualifying child. Her time spent away from school is counted as time at home for the residence test. Also, Charlotte did not provide more than half of her own support. There is no gross income test for qualifying children. |
27. |
In year 1, the Bennetts' 25-year-old daughter, Jane, is a full-time student at an out-of-state university but she plans to return home after the school year ends. In previous years, Jane has never worked and her parents have always been able to claim her as a dependent. In year 1, a kind neighbor offers to pay for all of Jane's educational and living expenses. Which of the following statements is most accurate regarding whether Jane's parents would be allowed to claim an exemption for Jane in year 1 assuming the neighbor pays for all of Jane's support?
After the age of 24, children can no longer be considered qualifying children even if they are full-time students and must be tested as qualifying relatives. The support test for qualifying relatives is different than for qualifying children. The parents must provide more than half of her support to claim a dependency exemption for her. |
28. |
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?
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. |
29. |
Char and Russ Dasrup have one daughter, Siera, who is 16 years old. In November of last year, the Dasrup's took in Siera's 16 year old friend, Angela, who has lived with them ever since. The Dasrup's have not legally adopted Angela but Siera often refers to Angela as "her sister." The Dasrup's provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrup's residence. Which of the following statements is true regarding the dependency exemptions (and the reason for the exemptions) Char and Russ may claim for the current year for these girls?
Siera passes all tests of a qualifying child. Angela, however, must be tested as a qualifying relative because she does not meet the relationship test of a qualifying child. Because Angela lived in the Dasrup's home for the entire year, Char and Russ may claim a dependency exemption for Angela as a qualifying relative. |
30. |
In order to be a qualifying relative of another, an individual's gross income must be less than _______.
Gross income must be less than the personal exemption amount. |
31. |
Catherine de Bourgh has one child, Anne, who is 18 years old at the end of the year. Anne lived at home for seven months during the year before leaving home to attend State University for the rest of the year. During the year, Anne earned $6,000 while working part time. Catherine provided 80 percent of Anne's support and Anne provided the rest. Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?
Anne meets the relationship, residency, support, and age tests for determining qualifying child status. There is no gross income test for a qualifying child. |
32. |
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?
Dustin fails the qualifying child residence test and he fails the qualifying relative gross income test so Katy may not claim Dustin as a dependent. |
33. |
William and Charlotte Collins divorced in November of year 1. William moved out and Charlotte remained in their house with their 10-month-old daughter Autumn. Diana, Charlotte's mother, lived in the home and acted as Autumn's nanny for all of year 1. William provided 70% of Autumn's support, Diana provided 20%, and Charlotte provided 10%. When the time came to file their tax returns for year 1, William, Charlotte, and Diana each wanted to claim Autumn as a dependent. Their respective AGIs for year 1 were $50,000, $35,000, and $52,000. Who has priority to claim Autumn as a dependent?
When a child is a qualifying child of multiple parties, parents have priority over grandparents. Because Charlotte lived with Autumn longer, she has preference over William. AGI is not used as a tiebreaker in this case because the issue was resolved after application of the first two rules. |
34. |
All of the following are tests for determining qualifying relative status except _____.
The residence test is a test for qualifying children not qualifying relatives. |
35. |
Which of the following statements regarding the difference between the requirements for a qualifying child and the requirements for a qualifying relative is false?
The support test for a qualifying child considers the amount of support the child provided for herself. The support test for a qualifying relative considers the amount of support the taxpayer provided for the prospective dependent. |
36. |
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?
Ned would be considered the Jackson's qualifying relative in this case. The municipal bond interest is excluded from gross income in determining whether the gross income test is passed. |
37. |
Michael, Diane, Karen, and Kenny provide support for their mother Janet who is 75 years old. Janet lives by herself in an apartment in Los Angeles. Janet's gross income for the year is $3,000. Janet provides 10% of her own support, Michael provides 40% of Janet's support, Diane provides 8% of Janet's support, Karen provides 10% of Janet's support, and Kenny provides the remaining 32% of Janet's support. Under a multiple support agreement, who may claim a dependency exemption for Janet as a qualifying relative?
Only Michael and Kenny are eligible because they are the only ones who contributed more than 10% of Janet's support. |
38. |
Filing status determines all of the following except ___________
The standard amount of each personal and dependency exemption does not vary by filing status. |
39. |
Which of the following is not a filing status?
Unmarried is not a filing status. The other filing statuses not presented here are single and married filing separately. |
40. |
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?
Because the couple filed a joint return both parties are responsible for paying the tax. |
41. |
In June of year 1, Edgar's wife Cathy died and Edgar did not remarry during the year. What is his filing status for year 1 (assuming they did not have any dependents)?
If a spouse dies during the year and the surviving spouse does not remarry, for tax purposes the surviving spouse is still considered married to the deceased spouse at the end of the year. |
42. |
In June of year 1, Eric's wife Savannah died. Eric did not remarry during year 1, year 2, or year 3. Eric maintains the household for his dependent daughter Catherine in year 1, year 2, and year 3. Which is the most advantageous filing status for Eric in year 2?
Since he maintains a household for a dependent child and has not remarried as of the end of year 2, Eric can file as a qualifying widower for year 2. |
43. |
Which of the following statements about a qualifying person for head of household filing status is true?
A qualifying person must have a family relationship with the taxpayer in order to qualify the taxpayer for head of household filing status. An individual may qualify only one taxpayer for head of household filing status. A parent who does not live with the taxpayer may still be considered a qualifying person. |
44. |
In June of year 1, Jake's wife Darla died. The couple did not have any children and Jake did not remarry in year 1 or year 2. Which is the most favorable filing status for Jake in year 2?
Jake is not married and he does not maintain a household for a dependent in year 2 so his most favorable filing status is single. |
45. |
Jan is unmarried and has no children, but she provides all of the financial support for her mother, who lives in an apartment across town. Jan's mother qualifies as Jan's dependent. Which is the most advantageous filing status available to Jan?
Jan can claim head of household status if she maintains a separate residence for a parent who is also a dependent. |
46. |
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?
Jane's mother is not Jane's dependent because she fails the qualifying relative gross income test. Consequently, Jane may not file as a head of household. |
47. |
In April of year 1, Martin left his wife Marianne. While the couple was apart, they were not legally divorced. Marianne found herself having to financially provide for the couple's only child (who qualifies as Marianne's dependent) and to pay all the costs of maintaining the household. When Marianne filed her tax return for year 1, she filed a return separate from Martin. What is Marianne's most favorable filing status for year 1?
Although she has not lived with Martin for the last six months of the year, she is still legally married as of the end of the year. Because she provided more than half the costs of maintaining a household for her dependent child, and she filed separately from her husband, she can file using the head of household status under the abandoned spouse provision. |
48. |
In April of year 1, Martin left his wife Marianne. The couple has two children under the age of 15. While the couple was apart, they were not legally divorced. Marianne remained in the home and paid all the costs of maintaining the home for the remainder of the year. Assuming the couple does not file jointly, which of the following statements regarding filing status is true?
If one of the children stays with Marianne, Marianne may qualify to file as head of household. If the other child goes with Martin and Martin pays more than half the costs of maintaining the household for him and his child, Martin may qualify as head of household. |
49. |
Which of the following is not a requirement for a married taxpayer to be treated as unmarried at the end of the year for filing status purposes?
The spouse must not live in the taxpayer's home during the last six months of the year. |
50. |
For filing status purposes, the taxpayer's marital status is determined at what point during the year?
Marital status is established as of the end of the year. |
51. |
In year 1, Harold Weston's wife died. Since her death, he has maintained a household for their son Frank (age 3), his qualifying child. Which is the most advantageous filing status available to Harold in year 4?
The special treatment for widows and widowers who maintain a household for a dependent is only available for two years following the spouse's death. After that, the taxpayer is eligible for head of household filing status. |
52. |
Mason and his wife Madison have been married for five years. Jaxon, who is 18 years old and unrelated to Mason and Madison, has been living with Mason and Madison for the last two years. In May of year 1, Mason and Madison divorced. Mason and Jaxon stayed in the home and Madison moved out. During year 2, Mason provided all of Jaxon's support and Jaxon lived in the home for all of year 2. Jaxon did not earn any income during year 2. What is Mason's most favorable filing status for year 2?
While Jaxon qualifies as Mason's dependent for year 2 as a qualifying relative, Jaxon is not related to Mason through a qualified family relationship (he would not be considered a related party if he had not lived with Mason for the entire year). Consequently, Mason may not qualify for head of household status and he must file as a single taxpayer. |
53. |
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?
Miguel may file as a qualifying widower in years 2 and 3. |
54. |
Jasmine and her husband Arty have been married for 25 years. In May of this year, the couple divorced. During the year, Jasmine provided all the support for herself and her 22-year-old child Dexter who lived in the same home as Jasmine for the entire year. Dexter is employed full-time, earning $29,000 this year. What is the Jasmine's most favorable filing status for the year?
Dexter does not qualify as Jasmine's dependent due to his age and his income so Jasmine must file single for the year. |
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