Question 1

Ellen, age 12, lives in the same household with her father, grandfather, and uncle.The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%).Disregarding tie-breaker rules, Ellen is a qualifying child as to:
A)Only her father.
B)Only her grandfather and uncle.
C)Only her uncle.
D)All parties involved (i.e., father, grandfather, and uncle).
E)None of the above.

Accepted Answer

Ellen qualifies as a qualifying child for all parties involved (i.e., her father, grandfather, and uncle) because she lives with each of them and the cost of maintaining the household is provided by both her grandfather and uncle.

Question 2

Merle is a widow, age 80 and blind, who is claimed as a dependent by her son.During 2012, she received $4,800 in Social Security benefits, $2,200 in bank interest, and $1,800 in cash dividends from stocks.Merle's taxable income is:
A)$4,000 - $950 - $2,900 = $150.
B)$4,000 - $2,900 = $1,100.
C)$4,000 - $950 - $1,450 = $1,600.
D)$8,800 - $950 - $2,900 = $4,950.
E)None of the above.

Accepted Answer

The answer of Merle is a widow, age 80 and...

Question 3

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:
A)Married persons who file joint returns cannot later (after the due date of the return) substitute separate returns.
B)Married persons who file separate returns can later (after the due date of the return) substitute a joint return.
C)The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions.
D)Special filing requirement rules exist for taxpayers who are claimed as dependents of another.
E)None of the above.

Accepted Answer

The usual test for determining if a taxpayer must file a return is based on the total of their gross income, not the personal exemption, basic standard deduction, and additional standard deductions. The correct test for filing requirements is based on income thresholds set by the IRS. Therefore, statement C is incorrect. All other statements are correct. Married taxpayers filing jointly can't use separate returns later, but those filing separately can switch to a joint return. Special filing requirements exist for dependents, and these depend on various factors such as their amount of income, type of income, and age.

Question 4

In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer?
A)A former spouse who lives with the taxpayer (divorce took place last year).
B)A stepmother who does not live with the taxpayer.
C)A married daughter who lives with the taxpayer.
D)A half brother who does not live with the taxpayer and is a citizen and resident of Costa Rica.
E)A cousin who lives with the taxpayer.

Accepted Answer

A half brother who does not live with the taxpayer and is a citizen and resident of Costa Rica cannot be claimed as a dependent of the taxpayer.

Question 5

Evan and Eileen Carter are husband and wife and file a joint return for 2012.Both are under 65 years of age.They provide more than half of the support of their daughter, Pamela (age 25), who is a full-time medical student.Pamela receives a $5,000 scholarship covering her tuition at college.They furnish all of the support of Belinda (Evan's grandmother), who is age 80 and lives in a nursing home.They also support Peggy (age 66), who is a friend of the family and lives with them.How many dependency exemptions may the Carters claim?
A)Two.
B)Three.
C)Four.
D)Five.
E)None of the above.

Accepted Answer

The Carters can claim three dependency exemptions: one for Pamela, as she is a full-time student under 24 and they provide more than half of her support; one for Belinda, as she is Evan's grandmother and they provide all her support; and one for Peggy, as she lives with them and they provide more than half of her support, assuming she meets the income requirement for a qualifying relative.

Question 6

Regarding the Tax Tables applicable to the Federal income tax, which of the following statements is correct?
A)For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules.
B)The Tax Tables will yield the same amount of tax as the Tax Rate Schedules.
C)Taxpayers can elect as to whether the use the Tax Tables or the Tax Rate Schedules.
D)The Tax Tables can be used by an estate but not by a trust.
E)No correct answer given.

Accepted Answer

The answer of Regarding the Tax Tables applicable to the...

Question 7

Emily, whose husband died in December 2011, maintains a household in which her dependent daughter lives.Which (if any) of the following is her filing status for the tax year 2012? (Note: Emily is the executor of her husband's estate.)
A)Single.
B)Married, filing separately.
C)Surviving spouse.
D)Head of household.
E)Married, filing jointly.

Accepted Answer

For the tax year following the year of her husband's death, Emily can file as a "Surviving Spouse" if she maintains a household for a dependent child.

Question 8

In which, if any, of the following situations will the kiddie tax not apply?
A)The child is married but does not file a joint return.
B)The child has unearned income of $1,900 or less.
C)The child has unearned income that exceeds more than half of his (or her) support.
D)The child is under age 24 and a full-time student.
E)None of the above.

Accepted Answer

The kiddie tax does not apply if the child's unearned income is $1,900 or less, as it is below the threshold for the tax to be applicable.

Question 9

For the qualifying relative category (for dependency exemption purposes):
A)The dependent must be under age 19 or a full-time student under age 24.
B)The dependent need not reside with the taxpayer claiming the exemption.
C)The dependent must be related to the taxpayer claiming the exemption.
D)The dependent must be a citizen or resident of the U.S.
E)None of the above.

Accepted Answer

A qualifying relative can be any age, but must meet certain other requirements such as not having their own gross income exceeding a certain amount, and the taxpayer must provide more than half of their financial support. The dependent need not live with the taxpayer, but must have a certain relationship to the taxpayer (such as being a sibling, parent, grandparent, etc.) and must be a U.S. citizen or resident, or a resident of Canada or Mexico.

Question 10

Which, if any, of the following is a correct statement relating to the kiddie tax?
A)If the parents are divorced, the income of the noncustodial parent is used to determine the allocable parental tax.
B)The components for the application of the kiddie tax are not subject to adjustment for inflation.
C)If the kiddie tax applies, the parents must include the income of the child on their own income tax return.
D)The kiddie tax does not apply if both parents of the child are deceased.
E)None of the above.

Accepted Answer

The kiddie tax does not apply if both parents of the child are deceased, as the tax is designed to prevent parents from shifting income to their children to take advantage of lower tax rates.

Question 11

Nelda is married to Chad, who abandoned her in early June of 2012.She has not seen or communicated with him since then. She maintains a household in which she and her two dependent children live.Which of the following statements about Nelda's filing status in 2012 is correct?
A)Nelda can use the rates for single taxpayers.
B)Nelda can file a joint return with Chad.
C)Nelda can file as a surviving spouse.
D)Nelda can file as a head of household.
E)None of the above statements is appropriate.

Accepted Answer

Nelda can file as a head of household if she meets the following requirements: 
1) She is unmarried or considered unmarried on the last day of the year. 
2) She paid more than half the cost of keeping up a home for the year. 
3) A qualifying person (such as a dependent child) lived with her in the home for more than half the year. Since Nelda is not divorced yet, she cannot file as a single taxpayer. She cannot file a joint return with Chad since he abandoned them, and she cannot file as a surviving spouse since Chad is not deceased.

Question 12

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return.During 2012, she had interest income of $2,400 and $800 of earned income from baby sitting.Wilma's taxable income is:
A)$700.
B)$850.
C)$1,800.
D)$2,250.
E)None of the above.

Accepted Answer

The answer of Wilma, age 70 and single, is claimed...

Question 13

The Hutters filed a joint return for 2012.They provide more than 50% of the support of Carla, Melvin, and Aaron.Carla (age 18) is a cousin and earns $5,000 from a part-time job.Melvin (age 25) is their son and is a full-time law student.He received from the university a $3,800 scholarship for tuition.Aaron is a brother who is a citizen of Israel but resides in France.Carla and Melvin live with the Hutters.How many personal and dependency exemptions can the Hutters claim on their Federal income tax return?
A)Two.
B)Three.
C)Four.
D)Five.
E)None of the above.

Accepted Answer

The Hutters can claim one personal exemption for themselves, one for their son Melvin, and one dependency exemption for Carla. Aaron does not qualify as a dependent because he is a citizen of a foreign country and does not live with the Hutters. Therefore, the total number of exemptions they can claim is three.

Question 14

Kyle, whose wife died in December 2009, filed a joint tax return for 2009.He did not remarry, but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status as to 2012?
A)Head of household.
B)Surviving spouse.
C)Single.
D)Married filing separately.
E)None of the above.

Accepted Answer

Kyle qualifies as Head of Household because he is unmarried, maintains a home for his dependent children, and his wife passed away more than two years ago.

Question 15

Kyle and Liza are married and under 65 years of age.During 2012, they furnish more than half of the support of their 19-year old daughter, May, who lives with them.She graduated from high school in May 2011. May earns $15,000 from a part-time job, most of which she sets aside for future college expenses.Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them.Liza's father, who died on January 3, 2012, at age 90, has for many years qualified as their dependent.How many personal and dependency exemptions should Kyle and Liza claim?
A)Two.
B)Three.
C)Four.
D)Five.
E)None of the above.

Accepted Answer

Kyle and Liza can claim two personal exemptions for themselves. They can also claim a dependency exemption for their daughter May since they provided more than half of her support, and she was under 19 years old at the end of the year. They can also claim a dependency exemption for Kyle's cousin who lived with them and for whom they provided more than half of the support. Lastly, they can claim a dependency exemption for Liza's father, who passed away in the year, as long as he was a U.S. citizen or resident, and they provided more than half of his support for the year. So, in total, they can claim four exemptions.

Question 16

During 2012, Jen (age 66) furnished more than 50% of the support of the following persons:  Presuming all other dependency tests are met, on a separate return how many personal and dependency exemptions may Jen claim?
A)Two.
B)Three.
C)Four.
D)Five.
E)None of the above.

Accepted Answer

Based on the information provided, Jen can claim exemptions for the following persons:
- Herself
- Her spouse (assuming they are married and file jointly)
- Dependent 1
- Dependent 2

Therefore, Jen can claim a total of four personal and dependency exemptions on her separate return.

Question 17

Millie, age 80, is supported during the current year as follows:  During the year, Millie lives in an assisted living facility.Under a multiple support agreement, indicate which parties can qualify to claim Millie as a dependent.
A)Weston and Faith.
B)Faith.
C)Weston, Faith, Jake, and Brayden.
D)Faith, Jake, and Brayden.
E)None of the above.

Accepted Answer

The answer of Millie, age 80, is supported during the...

Question 18

Which of the following taxpayers may file as a head of household in 2012? Ron provides all the support for his mother, Betty, who lives by herself in an apartment in Fort Lauderdale.Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent.
Tammy provides over one-half the support for her 18-year old brother, Dan.Dan earned $4,200 in 2012 working at a fast food restaurant and is saving his money to attend college in 2013.Dan lives in Tammy's home.
Joe's wife left him late in December of 2011.No legal action was taken and Joe has not heard from her in 2012.Joe supported his 6-year-old son, who lived with him throughout 2012.
A)Ron only.
B)Tammy only.
C)Joe only.
D)Ron and Joe only.
E)Ron, Tammy, and Joe.

Accepted Answer

The answer of Which of the following taxpayers may file...

Question 19

A qualifying child cannot include:
A)A nonresident alien.
B)A married son who files a joint return.
C)A daughter who is away at college.
D)A brother who is 28 years of age and disabled.
E)A grandmother.

Accepted Answer

The answer of A qualifying child cannot include:
A)A nonresident alien.
B)A...

Question 20

Arnold is married to Sybil, who abandoned him in 2011.He has not seen or communicated with her since April of that year.He maintains a household in which their son, Evans, lives.Evans is age 25 and earns over $6,000 each year.For tax year 2012, Arnold's filing status is:
A)Married, filing jointly.
B)Head of household.
C)Married, filing separately.
D)Surviving spouse.
E)Single.

Accepted Answer

Arnold is still legally married to Sybil, so he cannot file as single or head of household. Since they are not living together, he cannot file jointly, leaving "Married, filing separately" as the correct status.

Quiz 3: Computing the Tax

Ellen, age 12, lives in the same household with her father, grandfather, and uncle.The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%) .Disregarding tie-breaker rules, Ellen is a qualifying child as to:

Merle is a widow, age 80 and blind, who is claimed as a dependent by her son.During 2012, she received $4,800 in Social Security benefits, $2,200 in bank interest, and $1,800 in cash dividends from stocks.Merle's taxable income is:

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer?

Regarding the Tax Tables applicable to the Federal income tax, which of the following statements is correct?

Emily, whose husband died in December 2011, maintains a household in which her dependent daughter lives.Which (if any) of the following is her filing status for the tax year 2012? (Note: Emily is the executor of her husband's estate.)

In which, if any, of the following situations will the kiddie tax not apply?

For the qualifying relative category (for dependency exemption purposes) :

Which, if any, of the following is a correct statement relating to the kiddie tax?

Nelda is married to Chad, who abandoned her in early June of 2012.She has not seen or communicated with him since then. She maintains a household in which she and her two dependent children live.Which of the following statements about Nelda's filing status in 2012 is correct?

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return.During 2012, she had interest income of $2,400 and $800 of earned income from baby sitting.Wilma's taxable income is:

Kyle, whose wife died in December 2009, filed a joint tax return for 2009.He did not remarry, but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status as to 2012?

During 2012, Jen (age 66) furnished more than 50% of the support of the following persons: Presuming all other dependency tests are met, on a separate return how many personal and dependency exemptions may Jen claim?

Millie, age 80, is supported during the current year as follows: During the year, Millie lives in an assisted living facility.Under a multiple support agreement, indicate which parties can qualify to claim Millie as a dependent.

A qualifying child cannot include:

Arnold is married to Sybil, who abandoned him in 2011.He has not seen or communicated with her since April of that year.He maintains a household in which their son, Evans, lives.Evans is age 25 and earns over $6,000 each year.For tax year 2012, Arnold's filing status is: