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Exam 3: Computing the Tax

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Question 21

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Which,if any,of the following is a deduction for AGI?

A) State and local sales taxes
B) Interest on home mortgage
C) Charitable contributions
D) Unreimbursed moving expenses of an employee
E) None of these

F) C) and E)
G) C) and D)

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Question 22

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Match the statements that relate to each other.Note: Choice l.may be used more than once. a.Available to a 70-year-old father claimed as a dependent by his son.b.Equal to tax liability divided by taxable income.c.The highest income tax rate applicable to a taxpayer.d.Not eligible for the standard deduction.e.No one qualified taxpayer meets the support test.f.Taxpayer's ex-husband does not qualify.g.A dependent child (age 18) who has only unearned income.h.Highest applicable rate is 39.6%.i.Applicable rate could be as low as 0%.j.Maximum rate is 28%.k.Income from foreign sources is not subject to tax.l.No correct match provided. -Relationship test (for dependency exemption purposes)

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Question 23

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Emily,whose husband died in December 2014,maintains a household in which her dependent mother lives.Which (if any) of the following is her filing status for the tax year 2015? (Note: Emily is the executor of her husband's estate. )

Which,if any,of the following is a deduction for AGI?

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return,Sarah cannot claim them as dependents.

Which of the following characteristics correctly describes the procedure for the phaseout of exemptions?

Adjusted gross income (AGI) appears at the bottom of page 1 and at the top of page 2 of Form 1040.

Under the income tax formula,a taxpayer must choose between deductions for AGI and the standard deduction.

When the kiddie tax applies,the child need not file an income tax return because the child's income will be reported on the parents' return.

Clara,age 68,claims head of household filing status.If she has itemized deductions of $10,500 for 2015,she should not claim the standard deduction.

The basic and additional standard deductions both are subject to an annual adjustment for inflation.

Match the statements that relate to each other.Note: Choice l.may be used more than once. a.Not available to 65-year old taxpayer who itemizes.b.Exception for U.S.citizenship or residency test (for dependency exemption purposes).c.Largest basic standard deduction available to a dependent who has no earned income.d.Considered for dependency exemption purposes.e.Qualifies for head of household filing status.f.A child (age 15) who is a dependent and has only earned income.g.Considered in applying gross income test (for dependency exemption purposes).h.Not considered in applying the gross income test (for dependency exemption purposes).i.Unmarried taxpayer who can use the same tax rates as married persons filing jointly.j.Exception to the support test (for dependency exemption purposes).k.A child (age 16) who is a dependent and has only unearned income of $4,500.l.No correct match provided. -Multiple support agreement

The filing status of a taxpayer (e.g. ,single,head of household) must be identified before the applicable standard deduction is determined.

Dan and Donna are husband and wife and file separate returns for the year.If Dan itemizes his deductions from AGI,Donna cannot claim the standard deduction.

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

In order to claim a dependency exemption for other than a qualifying child,a taxpayer must meet the support test.Generally,this is done by furnishing more than 50% of a dependent's support.What exceptions exist,if any,where the support furnished need not be more than 50%?

Match the statements that relate to each other.Note: Choice l.may be used more than once. a.Not available to 65-year old taxpayer who itemizes.b.Exception for U.S.citizenship or residency test (for dependency exemption purposes).c.Largest basic standard deduction available to a dependent who has no earned income.d.Considered for dependency exemption purposes.e.Qualifies for head of household filing status.f.A child (age 15) who is a dependent and has only earned income.g.Considered in applying gross income test (for dependency exemption purposes).h.Not considered in applying the gross income test (for dependency exemption purposes).i.Unmarried taxpayer who can use the same tax rates as married persons filing jointly.j.Exception to the support test (for dependency exemption purposes).k.A child (age 16) who is a dependent and has only unearned income of $4,500.l.No correct match provided. -Surviving spouse

An individual taxpayer uses a fiscal year of March 1 to February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

The additional standard deduction for age and blindness is greater for married taxpayers than for single taxpayers.