Exam 14: The Individual Tax Formula

Last year, Mr. Corbett's AGI was $141,000, and his total tax liability was $33,650. This year, his total tax liability is $35,290. Compute the minimum amount of current year tax that Mr. Corbett had to prepay (withholding and estimated payments) to avoid an underpayment penalty.

Which of the following statements regarding tax payments is true?

The tax rate schedule for individuals who qualify as a head-of-household is more favorable than the tax rate schedule for single individuals.

Mr. Marshall was employed by IMP Inc. until October, when he accepted a new position with Turine Inc. Mr. Marshall earned $140,000 compensation from IMP and $36,000 compensation from Turine. Which of the following statements is false?

Individual taxpayers can obtain an automatic extension of time to file a calendar year Form 1040 until October 15 of the following year.

Ms. Kilo is an unmarried individual. She has $219,344 taxable income in 2020. Compute Ms. Kilo's regular tax liability if she files as a single taxpayer and if she files as a surviving spouse.

Mr. and Mrs. Jelk file a joint return. They provide 65% of the financial support for David, the 14-year old son of a friend who died three years ago. David lives in the home of his aunt Sarah, who provides 35% of his financial support. Which of the following statements is true?

Mr. and Mrs. Harvey's tax liability before credits was $1,675. Their income tax withholding was $1,050, and they are entitled to a $1,189 earned income credit. Which of the following statements is true?

Which of the following statements regarding the calculation of regular tax liability is false?

Only natural children, adopted children, and stepchildren can be a qualified dependent for tax purposes.

Mr. and Mrs. Kay, ages 68 and 66, file a joint return. Mrs. Kay is legally blind. Compute their standard deduction.

Mr. and Mrs. Reece could not complete their 2020 Form 1040 before April 15, 2021. They estimate that they will have a $700 balance of tax due with the return. Which of the following statement is true?

Jay Blount, 26-years old and a full-time student, lives in his parents' home. Although Jay earned $8,400 from a part-time job, his parents provide at least 75% of his financial support. For tax purposes, this year Jay is considered a dependent of his parents.

Kent, an unmarried individual, invited his widowed father, Martin, to move into his home in January of this year. Martin's only income item was a $14,000 taxable pension from his former employer. Kent provides about 75% of his father's financial support. What is Kent's filing status for the year?

Which of the following statements describing individual tax deductions is false?

Mrs. Raines died on June 2, 2019. Mr. Raines has not remarried and has no children or other dependents. What is his filing status for 2019 and 2020?

Mr. Pearl's total income and self-employment tax on this year's Form 1040 is $72,610. If Mr. Pearl paid at least $65,349 of this tax in the form of withholding or quarterly estimated payments, he will not incur an underpayment penalty.

In computing taxable income, an individual is allowed to deduct both the standard deduction and any itemized deduction for the year.

A taxpayer who knowingly signs a joint return on which his spouse has failed to report her income is liable for any tax assessments made by the IRS on that income.

An itemized deduction does not result in any tax savings in a year in which an individual taxpayer takes the standard deduction.