Question 1

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year, the taxpayer will qualify for head of household filing status.

Accepted Answer

To qualify for head of household filing status, the taxpayer must provide more than half the support for a qualifying person, who can be a child, parent, or relative who lived with the taxpayer for more than half the year. However, a cousin does not meet the IRS definition of a qualifying relative for the head of household status unless they are a "qualifying child" or another specific exception applies.

Question 2

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.

Accepted Answer

According to the IRS, a widow or widower can file a joint return for the year of their spouse's death if they did not remarry during that year. This is known as the "surviving spouse" filing status.

Question 3

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?
A)$0.
B)$400.
C)$50,000.
D)$50,400.

Accepted Answer

Municipal bond interest is generally exempt from federal income tax, so only the $50,000 of compensation is included in Lebron's gross income.

Question 4

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.

Accepted Answer

This is because both spouses must use the same method of deduction (either standard or itemized) in order to avoid confusion and potential issues with overlapping deductions.

Question 5

A taxpayer is not permitted to use the head of household filing status if she does not have any dependent children.

Accepted Answer

The head of household filing status is not limited to taxpayers with dependent children; it can also apply to taxpayers who support other qualifying relatives, such as parents or siblings, as long as they meet specific IRS criteria.

Question 6

Taxpayers who file as qualifying widows/widowers use a different tax rate schedule than taxpayers who are married filing jointly for tax purposes.

Accepted Answer

Qualifying widows/widowers use the same tax rate schedule as taxpayers who are married filing jointly.

Question 7

In certain circumstances, a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

Accepted Answer

A married taxpayer may qualify for head of household status if they meet certain criteria, such as living apart from their spouse for more than half the year or having a dependent child who lives with them for more than half the year.

Question 8

Sally received $78,900 of compensation from her employer and she received $543 of interest from a corporate bond. What is the amount of Sally's gross income from these items?
A)$0.
B)$543.
C)$78,900.
D)$79,443.

Accepted Answer

Gross income is the total income earned by an individual, which includes compensation from an employer, interest earned on investments, and any other sources of income. Therefore, the amount of Sally's gross income from her compensation and interest would be $78,900 + $543 = $79,443. Option D is the correct answer.

Question 9

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

Accepted Answer

Filing jointly means that both spouses are jointly and severally liable for any debts or liabilities incurred by either spouse. Filing separately means that each spouse is only liable for their own debts and liabilities.

Question 10

Kelsey and Austin file a joint return. Kelsey works and receives income during the year but Austin does not. If the couple files a joint tax return, Austin is responsible for paying any taxes due if Kelsey is unable to pay the taxes.

Accepted Answer

When a couple files a joint tax return, both individuals are jointly and severally liable for the tax and any interest or penalty due on the joint return. This means that each spouse is legally responsible for the entire tax due, even if only one spouse earned all the income.

Question 11

Charles, who is single, pays all of the costs of maintaining a home for himself and Damarcus. Charles and Damarcus have no family relationship but Damarcus lives with Charles for the entire year. Damarcus qualifies as a qualifying relative of Charles. (Charles claims Damarcus as a dependent on his tax return.)Charles qualifies for head of household filing status.

Accepted Answer

To qualify for head of household status, the dependent must be a qualifying child or a qualifying relative who is related to the taxpayer. Since Damarcus has no family relationship with Charles, Charles does not qualify for head of household status.

Question 12

If an unmarried taxpayer iseligible to claim another as a dependent, the taxpayer is automatically eligible for the head of household filing status.

Accepted Answer

Being eligible to claim another as a dependent is one of the requirements for the head of household filing status, but there are additional criteria that must be met, such as paying more than half the cost of keeping up a home for the year and the dependent being a qualifying child or relative.

Question 13

Lebron received $76,300 of compensation from his employer and he received $545 of interest from a municipal bond. What is the amount of Lebron's gross income from these items?
A)$0.
B)$545.
C)$76,300.
D)$76,845.

Accepted Answer

The answer of Lebron received $76,300 of compensation from his...

Question 14

Eric and Josephine were married in Year 1. In Year 2, Eric dies. The couple did not have any children. Assuming Josephine does not remarry, she may file as a qualifying widow in Year 3.

Accepted Answer

Josephine cannot file as a qualifying widow in Year 3 because the status requires having a dependent child, which the couple did not have.

Question 15

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.

Accepted Answer

Exclusions refer to types of income that are not subject to taxation at all, meaning the taxpayer does not include this income on their tax return. For an income item to qualify as an exclusion, it must be specifically outlined in the tax code as not taxable. The statement that an income item need not be realized in order to qualify as an exclusion item is false because, generally, for any income to be considered for tax purposes, including exclusions, it must be realized.

Question 16

Which of the following statements regarding realized income is true?
A)Taxpayers need not include realized income in gross income unless a specific provision of the tax code requires them to do so.
B)Realized income requires some type of transaction or exchange with a second party.
C)Once income is realized it cannot be excluded from gross income.
D)None of these statements are true.

Accepted Answer

Realized income requires some type of transaction or exchange with a second party. This is the definition of realized income as per the tax code. The other statements in the options are not entirely true. Taxpayers may need to include realized income in gross income even if there is no specific provision requiring them to do so, and some realized income may be excluded from gross income under certain circumstances.

Question 17

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 parent.

Accepted Answer

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 parent.

Question 18

Which of the following series of inequalities is generally most accurate?
A)Gross income ≥ adjusted gross income ≥ taxable income
B)Adjusted gross income ≥ gross income ≥ taxable income
C)Adjusted gross income ≥ taxable income ≥ gross income
D)Gross income ≥ taxable income ≥ adjusted gross income

Accepted Answer

Gross income is the total income before any deductions or adjustments. Adjusted gross income (AGI) is gross income minus specific deductions (but before standard or itemized deductions and personal exemptions). Taxable income is what remains after all deductions and exemptions are applied to the AGI, hence it's usually the smallest amount. Therefore, the series Gross income ≥ adjusted gross income ≥ taxable income is most accurate.

Question 19

If no one qualifies as the dependent of an unmarried taxpayer, the unmarried taxpayer may still be able to qualify for the head of household filing status.

Accepted Answer

To qualify for the head of household filing status, an unmarried taxpayer must pay more than half the cost of keeping up a home for the year and must have a qualifying person (such as a dependent child or parent) live with them for more than half the year, or in the case of a parent, the taxpayer can qualify if they pay more than half the cost of keeping up a home that was the main home for the parent for the entire year. Without a qualifying person, the taxpayer cannot claim the head of household status.

Question 20

Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond. What is the amount of Sally's gross income from these items?
A)$0.
B)$500.
C)$60,000.
D)$60,500.

Accepted Answer

Sally's gross income is the total amount of income she received before any deductions or taxes. Therefore, her gross income is the sum of her compensation and interest income which is $60,000 + $500 = $60,500. Therefore, choice (D) is correct.

Quiz 4: Individual Income Tax Overview, Dependents, and Filing Status

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year, the taxpayer will qualify for head of household filing status.

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.

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?

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 taxpayer is not permitted to use the head of household filing status if she does not have any dependent children.

Taxpayers who file as qualifying widows/widowers use a different tax rate schedule than taxpayers who are married filing jointly for tax purposes.

In certain circumstances, a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

Sally received $78,900 of compensation from her employer and she received $543 of interest from a corporate bond. What is the amount of Sally's gross income from these items?

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

Kelsey and Austin file a joint return. Kelsey works and receives income during the year but Austin does not. If the couple files a joint tax return, Austin is responsible for paying any taxes due if Kelsey is unable to pay the taxes.

If an unmarried taxpayer iseligible to claim another as a dependent, the taxpayer is automatically eligible for the head of household filing status.

Lebron received $76,300 of compensation from his employer and he received $545 of interest from a municipal bond. What is the amount of Lebron's gross income from these items?

Eric and Josephine were married in Year 1. In Year 2, Eric dies. The couple did not have any children. Assuming Josephine does not remarry, she may file as a qualifying widow in Year 3.

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

Which of the following statements regarding realized income is true?

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 parent.

Which of the following series of inequalities is generally most accurate?

If no one qualifies as the dependent of an unmarried taxpayer, the unmarried taxpayer may still be able to qualify for the head of household filing status.

Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond. What is the amount of Sally's gross income from these items?