Question 1

To qualify for the child- and dependent-care credit, the taxpayer must have earned income and must incur qualified expenses for the care of qualified individuals.

Accepted Answer

This statement is true. In order to qualify for the child- and dependent-care credit, the taxpayer must have earned income and incur expenses for the care of qualified individuals, such as a child under the age of 13 or a disabled dependent.

Question 2

Morris and Marianne have a $310,000 mortgage on their personal residence and a $90,000 mortgage on their mountain retreat. The interest on both of them qualifies as deductible qualified home mortgage interest.

Accepted Answer

Interest on both mortgages can qualify as deductible qualified home mortgage interest.

Question 3

Unreimbursed medical costs are deductible only to the extent that they exceed 3.0% of the taxpayer's adjusted gross income.

Accepted Answer

Unreimbursed medical costs are deductible only to the extent that they exceed 7.5% of the taxpayer's adjusted gross income, not 3.0%.

Question 4

Alan is a 23-year old student at Upper State College. He earned $4,400 at a summer job.
I.Because he earns over $4,150 he is not a dependent of his parents
II.His parents can claim a $500 family tax credit for Alan as a dependent.
​

Accepted Answer

The answer of Alan is a 23-year old student at...

Question 5

Philip has been working in Spain for the last three years. He and his wife Barbara adopted Juan who will not qualify as a dependent since he is not a U.S citizen.

Accepted Answer

A child does not need to be a U.S. citizen to be considered a dependent for tax purposes; they can be a U.S. national or a resident of the United States, Canada, or Mexico.

Question 6

To be a qualifying relative, an individual must meet certain tests. These tests include,
I.the citizen or residency test.
II.the gross income test.
​

Accepted Answer

To be a qualifying relative, an individual must meet both the citizen or residency test and the gross income test. Therefore, both statements are correct.

Question 7

Carlos had $3,950 of state taxes withheld from his salary this year. If he deducts the full amount as an itemized deduction and receives a refund in the following year, he must file an amended return and reduce the deduction he received by the amount of the refund.

Accepted Answer

The refund of state taxes that were deducted in a previous year is typically reported as income in the year it is received, rather than requiring an amended return for the previous year.

Question 8

Mary Lou is a 22-year old student at Wilson College. She earned $4,300 at a summer job, which is less than half of her support.
I.Mary Lou can claim a $500 family tax credit for herself even if her parents claim a $500 family tax credit as a dependent.
II.Because Mary Lou is a full-time college student, and she provides less than half of her own support, her parents can claim a $500 family tax credit because she is their dependent.
​

Accepted Answer

Statement II is correct because Mary Lou is a full-time college student and provides less than half of her own support, so she can be claimed as a dependent by her parents. However, Statement I is incorrect because Mary Lou cannot claim the $500 family tax credit for herself if her parents claim the same credit for her as a dependent. Only one $500 credit can be claimed per qualifying dependent.

Question 9

To qualify as a qualifying child, an individual must meet five tests. These are the age test; the non-support test; the principal residence test; relationship test; and the citizen or residency test.

Accepted Answer

These tests are outlined by the IRS to determine if someone qualifies as a dependent, specifically as a qualifying child. The five tests are the age test, non-support test, principal residence test, relationship test, and citizen or residency test.

Question 10

To qualify as a head of household, an unmarried taxpayer must pay more than half of the cost of maintaining a home that is the principal residence for more than half the year of a qualified dependent or an unmarried child who qualifies as a dependent.

Accepted Answer

This statement accurately defines the qualifications for head of household status according to IRS guidelines.

Question 11

To be a qualifying relative, an individual must meet certain tests. These tests include,
I.the gross income test.
II.the age test.
​

Accepted Answer

The gross income test is one of the requirements for an individual to be considered a qualifying relative for tax purposes, while there is no specific age test for this classification.

Question 12

Unreimbursed meals and entertainment paid by employees are deductible as an itemized deduction to the extent the amount exceeds 2-percent of adjusted gross income.

Accepted Answer

Unreimbursed meals and entertainment paid by employees are no longer deductible as of tax year 2018. Previously, they were deductible as an itemized deduction subject to a 2-percent AGI floor.

Question 13

Ariel has two children, Christopher and Pat. Christopher is 25 years old and Pat is 22. Christopher is a full time student at Southern College, has a full tuition scholarship, and lived at school during the year. Pat works full-time and lives at home. Which test will prevent both Pat and Christopher from being qualifying children of Ariel?

Accepted Answer

The age test will prevent both Pat and Christopher from being qualifying children of Ariel because the IRS stipulates that a qualifying child must be under the age of 19 at the end of the year, or under the age of 24 if a full-time student. Christopher, being 25, fails this test despite being a full-time student. Pat, at 22 and not a student, also fails the age test for qualifying children.

Question 14

Under the legislative grace concept, Congress allows certain personal expenses to be deducted when they exceed the standard deduction.

Accepted Answer

Under the legislative grace concept, Congress allows certain personal expenses to be deducted when they exceed the standard deduction.

Question 15

To qualify as a qualifying relative, an individual must meet three of five tests. These are the gross income test; the support test; the relationship or member of the household test; the citizen or residency test; and the joint return test.

Accepted Answer

To qualify as a qualifying relative, an individual must meet all of the following tests: the gross income test, the support test, the relationship or member of the household test, the citizen or residency test, and the joint return test.

Question 16

Eric, who is 18 years old, sells magazine subscriptions door-to-door for commissions. He earned $2,900 this year and he will have to pay tax on this income at his parent's tax rate.

Accepted Answer

Eric will most likely not have to pay tax at his parents' tax rate. As an 18-year-old, he is considered an adult and will likely have to file his own taxes and pay taxes at his own tax rate (based on his individual income).

Question 17

To recognize such basic personal living costs as food and clothing, each individual taxpayer is allowed a personal exemption of $4,150 in 2018.

Accepted Answer

The Tax Cuts and Jobs Act of 2017 suspended personal exemptions for tax years 2018 through 2025.

Question 18

The American Opportunity Scholarship Tax Credit provides for a 100% tax credit on the first $2,000 of qualifying expenses and a 50% tax credit for the next $2,000 of qualifying expenses paid during the year for each qualifying student.

Accepted Answer

The answer of The American Opportunity Scholarship Tax Credit provides...

Question 19

In addition to the regular standard deduction taxpayers who are blind qualify for a second standard deduction of the same amount.

Accepted Answer

Taxpayers who are blind qualify for an additional standard deduction, but it is not of the same amount as the regular standard deduction; it is a smaller, specified amount that is added to their standard deduction.

Question 20

Any charitable contributions made in excess of the individual's limitation on charitable contributions can be carried forward seven years.

Accepted Answer

The IRS allows individuals to carry forward any unused portion of their charitable contribution deduction for five years, not seven years.

Quiz 8: Taxation of Individuals

To qualify for the child- and dependent-care credit, the taxpayer must have earned income and must incur qualified expenses for the care of qualified individuals.

Morris and Marianne have a $310,000 mortgage on their personal residence and a $90,000 mortgage on their mountain retreat. The interest on both of them qualifies as deductible qualified home mortgage interest.

Unreimbursed medical costs are deductible only to the extent that they exceed 3.0% of the taxpayer's adjusted gross income.

Alan is a 23-year old student at Upper State College. He earned $4,400 at a summer job. I.Because he earns over $4,150 he is not a dependent of his parents II.His parents can claim a $500 family tax credit for Alan as a dependent. ​

Philip has been working in Spain for the last three years. He and his wife Barbara adopted Juan who will not qualify as a dependent since he is not a U.S citizen.

To be a qualifying relative, an individual must meet certain tests. These tests include, I.the citizen or residency test. II.the gross income test. ​

Carlos had $3,950 of state taxes withheld from his salary this year. If he deducts the full amount as an itemized deduction and receives a refund in the following year, he must file an amended return and reduce the deduction he received by the amount of the refund.

To qualify as a qualifying child, an individual must meet five tests. These are the age test; the non-support test; the principal residence test; relationship test; and the citizen or residency test.

To qualify as a head of household, an unmarried taxpayer must pay more than half of the cost of maintaining a home that is the principal residence for more than half the year of a qualified dependent or an unmarried child who qualifies as a dependent.

To be a qualifying relative, an individual must meet certain tests. These tests include, I.the gross income test. II.the age test. ​

Unreimbursed meals and entertainment paid by employees are deductible as an itemized deduction to the extent the amount exceeds 2-percent of adjusted gross income.

Under the legislative grace concept, Congress allows certain personal expenses to be deducted when they exceed the standard deduction.

To qualify as a qualifying relative, an individual must meet three of five tests. These are the gross income test; the support test; the relationship or member of the household test; the citizen or residency test; and the joint return test.

Eric, who is 18 years old, sells magazine subscriptions door-to-door for commissions. He earned $2,900 this year and he will have to pay tax on this income at his parent's tax rate.

To recognize such basic personal living costs as food and clothing, each individual taxpayer is allowed a personal exemption of $4,150 in 2018.

The American Opportunity Scholarship Tax Credit provides for a 100% tax credit on the first $2,000 of qualifying expenses and a 50% tax credit for the next $2,000 of qualifying expenses paid during the year for each qualifying student.

In addition to the regular standard deduction taxpayers who are blind qualify for a second standard deduction of the same amount.

Any charitable contributions made in excess of the individual's limitation on charitable contributions can be carried forward seven years.

Alan is a 23-year old student at Upper State College. He earned $4,400 at a summer job. I.Because he earns over $4,150 he is not a dependent of his parents II.His parents can claim a $500 family tax credit for Alan as a dependent.

To be a qualifying relative, an individual must meet certain tests. These tests include, I.the citizen or residency test. II.the gross income test.

To be a qualifying relative, an individual must meet certain tests. These tests include, I.the gross income test. II.the age test.