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

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Question 1

Multiple Choice

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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?

A) No matter the post separation residence(s) of the children, both spouses must file as married filing separately.
B) No matter the post separation residence(s) of the children, Martin must file as married filing separately but Marianne may qualify to file as head of household.
C) No matter the post separation residence(s) of the children, Marianne must file as married filing separately but Martin may qualify to file as head of household.
D) Depending on the post separation residence(s) of the children, both spouses may qualify to file as head of household.

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

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Question 2

Multiple Choice

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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?

A) Married filing joint
B) Surviving spouse
C) Qualifying widower
D) Head of household

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

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Question 3

Multiple Choice

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

By the end of year 1, Harold and Jamie Allred had been married for 30 years and have filed a joint return every year of their marriage. Their three sons, Jacob, Larry, and Andi, are ages 13, 16, and 23 respectively and all live at home and are fully supported by their parents. Andi is employed full time, earning $17,000 in year 1. How many exemptions are Harold and Jamie entitled to claim?

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.

All of the following are tests for determining qualifying relative status except ______.

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?

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

To be considered a qualifying child of a taxpayer, the individual must be the son or daughter of the taxpayer.

The character of income determines the rate at which the income is taxed.

Which of the following statements regarding tax credits is true?

Which of the following statements regarding realized income is true?

All of the following are for AGI deductions except:

In February of 2013, Lorna and Kirk were married. During 2014, Lorna received $40,000 of compensation from her employer and Kirk received $30,000 of compensation from his employer. The couple together reported $2,000 of itemized deductions. Lorna and Kirk filed separately in 2014. What is Lorna's taxable income and what is her tax liability (use the applicable tax rate schedule)?

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

Which of the following statements regarding exemptions is correct?

The Inouyes filed jointly in 2014. Their AGI is $78,000. They reported $16,000 of itemized deductions and they have two children, one of whom qualifies as their dependent. The 2014 standard deduction amount is $12,400 and each exemption is $3,950. What is the total amount of from AGI deductions they are allowed to claim on their 2014 tax return?

Which of the following types of income are not considered ordinary income?

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.

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?