Exam 5: Deductions for Individuals and Tax Determination

John is a 36-year-old calendar-year taxpayer whose wife died in August of 2018. His eight year-old son lives with him. During 2018, he had salary income of $52,000, $600 of dividend income, and received $50,000 from the life insurance policy on his wife. He made a $2,000 contribution to his regular IRA and paid $9,800 for a hospital bill and $3,000 for a doctor bill for his deceased wife. He also paid $4,000 in mortgage interest, $800 in property taxes, $300 of credit card interest and $400 in job hunting expenses when he tried to find a better paying job in the same line of work in March. Determine John's income tax liability for 2018, before any allowable credits, if he itemizes his deductions. Should John consider using the standard deduction?

For a 21-year-old child to be considered a dependent in 2018:

The kiddie tax can only be imposed on

Carl, age 42, is married and has three children. In preparing to go to his accountant, he determines that he has $63,100 of salary income and $250 in dividends. He contributes $4,000 to a Roth IRA and has $6,800 of itemized deductions. His wife has no income. What is the taxable income on their 2018 joint return?

In 2018, which of the following is allowed as an addition to a nonitemizer's standard deduction?

Charles has gross income of $80,000 and is single but provides the sole support of his elderly parents, paying all their housing, food and clothing costs in 2018 What is his filing status and how much is his standard deduction?

Camila, age 60, is single and has adjusted gross income of $100,000. She paid (with after-tax dollars) the following medical expenses in 2018: She received only $2,000 in reimbursements from her insurance company for her medical expenses. How much can Camila deduct for medical expenses in 2018 if she has $30,000 of other itemized deductions?

What is included in investment income? What is the limit on the deduction for investment interest?

Samuel, a single individual, has adjusted gross income of $150,000 and the following itemized deductions before applicable floor limitations for 2018: What are Samuel's itemized deductions for alternative minimum tax purposes?

A married person filing a separate return has the lowest standard deduction amount.

What types of insurance premiums are deductible as an itemized deduction?

To qualify as a dependent, most individuals (except a qualifying child) must earn gross income that is less than an amount equal to:

Beginning in 2019, qualified medical expenses for a 66-year-old single individual must exceed 10 percent of AGI to be deductible for regular income tax purposes.

Which is more advantageous, a deduction for or a deduction from adjusted gross income? Why?

In 2018 safe deposit box rental fees are deductible as miscellaneous itemized deductions and must exceed two percent of AGI to be deductible.

An abandoned spouse must only live apart from his or her spouse during the last six months of the tax year.

Taxpayers can apply any excess FICA tax paid to their income tax liability.

Susan (age 29) is single but has the son of her brother living with her as her dependent. If her AGI is $27,450, what is her tax liability in 2018 before any allowable tax credits?

Justin, age 42 and divorced, is the sole support of his mother, age 69, who resided in a local nursing home for the entire year. Justin's mother had no income for the year. Justin's filing status is:

The maximum annual lifetime learning credit is $2,000 per taxpayer.