Question 1

The taxpayer's spouse died at the beginning of 2015. He has no qualifying child. Which status should the taxpayer select when filing his tax return?
A) Single.
B) Qualifying Widow(er).
C) Married Filing Separately.
D)Married Filing Jointly.

Accepted Answer

The answer of The taxpayer's spouse died at the beginning...

Question 2

What is the amount of the personal and dependency exemption for 2015?
A) $3,950.
B) $6,300.
C) $4,000.
D)$3,975.

Accepted Answer

The amount of the personal and dependency exemption for 2015 was $4,000. Option A, D and B are incorrect as they state $3,950, $3,975, and $6,300 respectively, none of which are the actual amount for 2015.

Question 3

What is the amount of the tax liability for a single person having taxable income of $59,200? All answers should be rounded to the nearest dollar.
A) $10,656.
B) $9,250.
C) $10,600.
D)$14,800.

Accepted Answer

The tax liability for a single person with taxable income of $59,200 can be calculated using the IRS tax brackets and the tax table. Based on the 2021 tax brackets, the first $9,950 is taxed at 10%, the next $30,525 ($40,475 - $9,950) is taxed at 12%, and the remaining $18,725 ($59,200 - $40,475) is taxed at 22%. Therefore, the tax liability would be (9,950 * 0.10) + (30,525 * 0.12) + (18,725 * 0.22) = $10,595. This amount should be rounded to the nearest dollar, which is $10,600. Therefore, the correct answer is C.

Question 4

George is 21 years of age and a full-time student living with his parents. He had wages of $1,375 ($140 of income tax withholding) for 2015. Can George claim his exemption on his return even though his parents will claim him as a dependent on their tax return?
A) No, George cannot claim the exemption.
B) George and his parents can both claim the exemption.
C) No one can claim the exemption for George.
D)Yes, George can claim the exemption.

Accepted Answer

As George's parents will claim him as a dependent on their tax return, he cannot claim the personal exemption for himself on his own tax return.

Question 5

Failure to make required estimated payments will subject the taxpayer to a potential underpayment penalty plus interest. However, if the difference between the tax shown on the return and the amount of tax withheld for wages is less than _______, the taxpayer will not be assessed a penalty.
A) $1,250
B) $500
C) $850
D)$1,000

Accepted Answer

The answer of Failure to make required estimated payments will...

Question 6

John forgot to file his tax return by April 15. He did not file an extension. John finally filed his tax return on June 30 and had a remaining tax liability of $1,500. What is John's failure to file penalty? Assume he made all his payments on time.
A) $375.
B) $225.
C) $233.
D)$300.

Accepted Answer

The failure to file penalty is 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25%. Since John filed 2.5 months late, his penalty would be 12.5% of the $1,500 unpaid tax, which is $187.50. However, since the minimum penalty for filing more than 60 days late is the lesser of $135 or 100% of the unpaid tax, John's penalty would be $135. Therefore, the total penalty is $135, which is closest to option B, $225, but not exactly equal to it.

Question 7

What is the amount of the social security wage limitation for 2015?
A) $106,800.
B) $110,100.
C) $118,500.
D)$117,000.

Accepted Answer

The Social Security wage base limit for 2015 was $118,500. This is the maximum amount of earnings subject to the Social Security tax for that year.

Question 8

The IRS can impose a _______ penalty on any portion of understatement of tax that is attributable to fraud.
A) 25%
B) 75%
C) 50%
D)5%

Accepted Answer

The IRS can impose a 75% penalty on any portion of understatement of tax that is attributable to fraud. This is a significant penalty designed to deter fraudulent reporting on tax returns.

Question 9

Which condition listed below is not required for a taxpayer to qualify as a qualifying widow(er) with dependent child?
A) The household was the principal place of abode for the entire year of both the taxpayer and his or her child.
B) Taxpayer must remarry before the end of the tax year in question.
C) Taxpayer paid more than half the cost of keeping up a household.
D)Taxpayer was eligible to file a joint return in the year the spouse died.

Accepted Answer

Qualifying widow(er) with dependent child status is available for two years following the year of the spouse's death, and the taxpayer must not have remarried before the end of that period. The other conditions listed (A, C, and D) are necessary for a taxpayer to qualify as a qualifying widow(er) with dependent child.

Question 10

The early withdrawal penalty is a for AGI deduction. Which form can the taxpayer use to claim this benefit?
A) 1040EZ.
B) 1040A.
C)1040.
D) 1040A or 1040.

Accepted Answer

The early withdrawal penalty is reported on Form 1040, as it allows for a broader range of deductions and credits compared to the more simplified forms 1040EZ and 1040A, which have been phased out and replaced by a redesigned Form 1040.

Question 11

To be a qualifying relative, the taxpayer must meet three general tests and four specific tests. Which one is not part of the three general tests?
A) Citizen or resident test.
B) Dependent taxpayer test.
C) Support test.
D)Joint return test.

Accepted Answer

The three general tests for determining if someone is a qualifying relative are the Dependent Taxpayer Test, the Joint Return Test, and the Citizen or Resident Test. The Support Test is one of the four specific tests, not one of the three general tests.

Question 12

Criminal penalties only apply to:
A) Careless disregard for tax authority.
B) Willful failure to file a return.
C) Tax evasion.
D)Willful failure to file a return and Tax evasion.

Accepted Answer

Criminal penalties apply only in cases of willful failure to file a return and tax evasion. Careless disregard for tax authority may result in civil penalties, but not criminal ones.

Question 13

Ed's parents can claim him as a dependent on their tax return. In 2015, his only source of income was $1,050 of interest income received from Global Bank. What is Ed's standard deduction?
A) $1,050.
B) $1,000.
C) $4,000.
D)$350.

Accepted Answer

For a dependent, the standard deduction is the greater of $1,050 or earned income plus $350, up to the standard deduction for a single taxpayer. Since Ed's only income is unearned interest income, his standard deduction is $1,050.

Question 14

What is the amount of the tax liability for a married couple having taxable income of $153,500? All answers should be rounded to the nearest dollar.
A) $38,375.
B) $30,032.
C) $30,233.
D)$29,963.

Accepted Answer

The answer of What is the amount of the tax...

Question 15

The failure to file penalty is ________ of the tax shown on the return for each month (or fraction of a month) the tax return is not filed, up to a maximum of 25%.
A) 0.25%
B) 0.5%
C) 5.0%
D)5.5%

Accepted Answer

The failure to file penalty is 5.0% of the tax shown on the return for each month (or fraction of a month) the tax return is not filed, up to a maximum of 25%.

Question 16

Jane, Joseph and John are supporting their father who lives in a separate apartment. Their contribution towards his support is 10%, 35% and 55%, respectively. In a multiple support agreement, who would be entitled to claim the father as a dependent?
A) Jane.
B) Joseph or John.
C) Jane, Joseph or John.
D)None of these.

Accepted Answer

In a multiple support agreement, the IRS allows the parties providing more than half of a person's support collectively to decide among themselves who claims the dependent. Since Joseph and John together contribute 90% towards their father's support, either of them could be entitled to claim the father as a dependent, assuming all other IRS requirements are met. Jane, contributing only 10%, does not meet the threshold to claim the dependency exemption.

Question 17

What is the amount of the tax liability for a qualifying widow(er) with a dependent child and having taxable income of $121,600? All answers should be rounded to the nearest dollar.
A) $25,234.
B) $21,988.
C) $30,400.
D)$27,665.

Accepted Answer

The answer of What is the amount of the tax...

Question 18

What is the amount of the tax liability for a head of household person having taxable income of $87,573? All answers should be rounded to the nearest dollar.
A) $16,216.
B) $13,136.
C) $16,306.
D)$16,398

Accepted Answer

The answer of What is the amount of the tax...

Question 19

What is the amount of the tax liability for a qualifying widow(er) with a dependent child and having taxable income of $18,355? All answers should be rounded to the nearest dollar.
A) $1,836.
B) $2,331.
C) $2,149.
D)$1,838.

Accepted Answer

The answer of What is the amount of the tax...

Question 20

The interest charged by the IRS for the first three months of 2015 was:
A) 3%.
B) 5%.
C) 4%.
D)6%.

Accepted Answer

The IRS interest rate for the first quarter of 2015 was 3% for overpayments and underpayments.

Quiz 2: Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

The taxpayer's spouse died at the beginning of 2015. He has no qualifying child. Which status should the taxpayer select when filing his tax return?

What is the amount of the personal and dependency exemption for 2015?

What is the amount of the tax liability for a single person having taxable income of $59,200? All answers should be rounded to the nearest dollar.

George is 21 years of age and a full-time student living with his parents. He had wages of $1,375 ($140 of income tax withholding) for 2015. Can George claim his exemption on his return even though his parents will claim him as a dependent on their tax return?

Failure to make required estimated payments will subject the taxpayer to a potential underpayment penalty plus interest. However, if the difference between the tax shown on the return and the amount of tax withheld for wages is less than _______, the taxpayer will not be assessed a penalty.

John forgot to file his tax return by April 15. He did not file an extension. John finally filed his tax return on June 30 and had a remaining tax liability of $1,500. What is John's failure to file penalty? Assume he made all his payments on time.

What is the amount of the social security wage limitation for 2015?

The IRS can impose a _______ penalty on any portion of understatement of tax that is attributable to fraud.

Which condition listed below is not required for a taxpayer to qualify as a qualifying widow(er) with dependent child?

The early withdrawal penalty is a for AGI deduction. Which form can the taxpayer use to claim this benefit?

To be a qualifying relative, the taxpayer must meet three general tests and four specific tests. Which one is not part of the three general tests?

Criminal penalties only apply to:

Ed's parents can claim him as a dependent on their tax return. In 2015, his only source of income was $1,050 of interest income received from Global Bank. What is Ed's standard deduction?

What is the amount of the tax liability for a married couple having taxable income of $153,500? All answers should be rounded to the nearest dollar.

The failure to file penalty is ________ of the tax shown on the return for each month (or fraction of a month) the tax return is not filed, up to a maximum of 25%.

Jane, Joseph and John are supporting their father who lives in a separate apartment. Their contribution towards his support is 10%, 35% and 55%, respectively. In a multiple support agreement, who would be entitled to claim the father as a dependent?

What is the amount of the tax liability for a qualifying widow(er) with a dependent child and having taxable income of $121,600? All answers should be rounded to the nearest dollar.

What is the amount of the tax liability for a head of household person having taxable income of $87,573? All answers should be rounded to the nearest dollar.

What is the amount of the tax liability for a qualifying widow(er) with a dependent child and having taxable income of $18,355? All answers should be rounded to the nearest dollar.

The interest charged by the IRS for the first three months of 2015 was: