Exam 3: Computing the Tax

Katrina, age 16, is claimed as a dependent by her parents. During 2019, she earned $5,600 as a checker at a grocery store. Her standard deduction is $5,950 ($5,600 earned income + $350).

For the year a spouse dies, the surviving spouse is considered married for the entire year for income tax purposes.

Pedro is married to Consuela who lives with him. Both are U.S. citizens and residents of Nebraska. Pedro furnishes all of the support of his parents who are citizens and residents of the United States. He also furnishes all of the support of Consuela's parents who are citizens and residents of El Salvador. Consuela has no gross income for the year. If Pedro and Consuela file as married persons filing jointly, how many dependents can they claim?

In terms of income tax consequences, abandoned spouses are treated the same way as married persons filing separate returns.

Warren, age 17, is claimed as a dependent by his father. In 2019, Warren has dividend income of $1,500 and earns $400 from a part-time job. a. What is Warren's taxable income for 2019? b. Suppose that Warren earned $1,200 (not $400) from the part-time job. What is his taxable income for 2019?

Gain on the sale of collectibles held for more than 12 months always is subject to a tax rate of 28%.

Regarding head of household filing status, comment on the following: a. A taxpayer qualifies even though he maintains a household which he and the dependent do not share. a. If the household is that of a dependent parent, it need not be taxpayer's household. b. A taxpayer does not qualify even though the person sharing the household is a dependent. c. The usual eventual filing status of a surviving spouse.

Under what circumstances, if any, may an ex-spouse be claimed as a dependent?

After her divorce, Hope continues to support her ex-husband's sister, Cindy, who does not live with her. Hope can claim Cindy as a dependent.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Kiddie tax does not apply

During 2019, Marvin had the following transactions: Salary \ 50,000 Bank loan (proceeds used to buy personal auto) 10,000 Alimony paid (divorce was finalized in 2010). 12,000 Child support paid 6,000 Gitt from aunt 20,000 Marvin's AGI is:

In meeting the criteria of a qualifying child for dependency purposes, when if ever, might the child's income become relevant?

In 2019, Tom is single and has AGI of $50,000. He is age 70, has no dependents, and has itemized deductions (i.e., from AGI) of $7,000. Determine Tom's taxable income for 2019.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Abandoned spouse

The basic and additional standard deductions both are subject to an annual adjustment for inflation.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Multiple support agreement

In 2019, a child who has unearned income of $2,200 or less cannot be subject to the kiddie tax.

If an individual does not spend funds that have been received from another source (e.g., interest on municipal bonds), the unexpended amounts are not considered for purposes of the support test.

Kyle and Liza are married and under 65 years of age. During 2019, they furnish more than half of the support of their 19-year old daughter, Kendra, who lives with them. She graduated from high school in May 2018. Kendra 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, 2019, at age 90, has for many years qualified as their dependent. How many dependents can Kyle and Liza claim?

Which the following, if any, of is a correct statement relating to the kiddie tax in 2019?