Exam 14: The Individual Tax Formula

Jennifer and Jamar are married and live in a home with their 13-year-old dependent son, Oscar. This year, they had the following tax information. Jamar's salary \6 0,000 Jennifer's Qualified Business Income from sole 95,000 proprietorship Dividend income 2,800 Deduction for self-employment tax 6,712 Itemized deductions 19,200 Compute adjusted gross income (AGI) and taxable income.

Ms. Lewis maintains a household which is the principal place of residence for Kathy. Ms. Lewis provides more than 50% of Kathy's financial support. Assuming Kathy is not disabled, in which of the following cases can Ms. Lewis claim Kathy as a qualifying child?

Ms. Dorley's regular tax liability on her Form 1040 is $451,890. Which of the following statements is true?

Because a QBI deduction affects AGI, it may impact the ability to claim a deduction for unreimbursed medical expenses.

Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no dependents for the year. Here is their relevant information: Standard Deduction Table. Salaries \1 63,000 Dividend income 1,900 Above-the-line deductions 6,200 Itemized deductions 26,200 Compute their adjusted gross income (AGI) and taxable income.

Mr. and Mrs. Anderson file a joint return. They provide more than 50% of the financial support for their two children, Dana, age 26, and John, age 17. Both children live in the Andersons' home. Dana earned $7,100 from a part-time job, while John earned no income this year. Which of the following statements is true?

Mr. and Mrs. Toliver's AGI on their jointly filed return is $339,000. Regardless of the number of their children, the Tolivers are not eligible for a child credit.

Mr. Lenz died on May 4, 2019. His widow, Mrs. Lenz, maintains a home for her three children, ages 4, 6, and 11. Mrs. Lenz must file as a head of household in 2020.

The earned income credit offsets the burden of the federal payroll tax on low-income families and encourages individuals to seek employment rather than to depend on welfare.

Tamara and Todd Goble, ages 66 and 60, file a joint return. Todd is legally blind. Compute their standard deduction.

Mrs. Starling worked for Abbot Inc. from January 1 through September 19. Her salary from Abbot for this period totaled $150,000. Mrs. Starling worked for JJT Inc. from October 1 through December 31. Her salary from JJT for this period totaled $38,000. JJT is not required to withhold Social Security tax from Mrs. Starling's salary because Abbot Inc. already withheld the maximum tax for the year.

An individual who files his own tax return but is claimed as a dependent on another individual's return is not allowed any standard deduction.

Which of the following statements regarding filing status is false?

Mr. and Mrs. Eller's AGI last year was $287,300, and their total tax was $70,268. The couple's safe-harbor estimate of current year tax is $77,295.

Ms. Dolan, a divorced individual, invited her elderly uncle, Martin, to move into her home in January of this year. Martin's only income item was $2,390 of taxable interest on a savings account. Ms. Dolan provides over 90% of her uncle's financial support. What is Ms. Dolan's filing status for the year?

Benjamin, who files as a single taxpayer, has $359,900 taxable income in 2020. Compute his regular tax liability.

Mr. and Mrs. Kain reported $80,000 AGI on their joint return. The couple has four dependent children: Beatrice, age 19; Bruce, age 16; Angie, age 11, and Arnold, age 8. Compute the Kains' child tax credit.

A taxpayer with a non-child dependent may be eligible for the full $2,000 child tax credit provided the taxpayer's AGI does not exceed the phase-out thresholds.

Melissa, age 16, is claimed as a dependent on her parents' tax return. This year, Melissa earned $2,000 from babysitting and $1,280 interest income from a savings account. Compute Melissa's standard deduction.

Mr. and Mrs. King's regular tax liability on their joint return was $479,580. Which of the following statements is true?