Exam 4: Individual Income Tax Overview, Exemptions, and Filing Status

An individual receiving $5,000 of tax exempt income during the year could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

In addition to the individual income tax, individuals may be required to pay taxes imposed on tax bases other than the individual's regular taxable income.

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

William and Charlotte Collins divorced in November of year 1. William moved out and Charlotte remained in their house with their 10-month-old daughter Autumn. Diana, Charlotte's mother, lived in the home and acted as Autumn's nanny for all of year 1. William provided 70% of Autumn's support, Diana provided 20%, and Charlotteprovided 10%. When the time came to file their tax returns for year 1, William, Charlotte, and Diana each wanted to claim Autumn as a dependent. Their respective AGIs for year 1 were $50,000, $35,000, and $52,000. Who has priority to claim Autumn as a dependent?

For AGI deductions are commonly referred to as deductions "below the line."

By the end of year 1, Harold and Jamie Allred had been married for 30 years and have filed a joint return every year of their marriage. Their three sons, Jacob, Larry, and Andi, are ages 13, 16, and 23 respectively and all live at home and are fully supported by their parents. Andi is employed fulltime, earning $17,000 in year 1. How many exemptions are Harold and Jamie entitled to claim?

Tax credits are generally more valuable than tax deductions because tax credits reduce a taxpayer's gross tax liability dollar for dollar while tax deductions do not.

Filing status determines all of the following except ________

Taxpayers need not include an income item in gross income unless there is a specific taxprovision requiring the taxpayer to include the income item in gross income.

All of the following represents a type or character of income except:

From AGI deductions are generally more valuable to taxpayers than for AGI deductions.

To determine filing status, a taxpayer's marital status is determined on January 1 of each tax year in question.

Sally received $50,000 of compensation from her employer and she received $400 of interest from a corporate bond. What is the amount of Sally's gross income from these items?

An individual may be considered as a qualifying child of her parents and a qualifying child of her grandparents in the same year.

A child who is her parents' qualifying child can claim a personal exemption for herself as long as her parents choose not to claim her as a dependent.

Greg is single. During 2017, he received $60,000 of salary from his employer. That was his only source of income. He reported $3,000 of for AGI deductions and $7,000 of itemized deductions. The 2017 standard deduction amount for a single taxpayer is $6,350 and the 2017 exemption amount is $4,050. What is Greg's taxable income?

The standard deduction amount for married filing separately taxpayers (MFS) is less than the standard deduction amount for married filing jointly taxpayers.

Charlotte is the Lucas family's 22-year-old daughter. She is a full-time student at an out-of-state university but plans to return home when the school year ends. During the year, Charlotte earned $4,000 of income working part-time. Her support totaled $30,000 for the year. Of this amount, Charlotte paid $7,000 with her own funds, her parents paid$14,000, and Charlotte's grandparents paid $9,000. Which of the following statements most accurately describes whether Charlotte's parents can claim a dependency exemption for Charlotte?

In April of year 1, Martin left his wife Marianne. The couple has two children under the age of 15. While the couple was apart, they were not legally divorced. Marianneremained in the home and paid all the costs of maintaining the home for the remainder of the year. Assuming the couple does not file jointly, which of the following statementsregarding filing status is true?

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 for Charles(Charles claims a dependency exemption for Damarcus on his tax return). Charles qualifies for head of household filing status.