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

Mason and his wife Madison have been married for five years.Jaxon,who is 18 years old and unrelated to Mason and Madison,has been living with Mason and Madison for the last two years.In May of year 1,Mason and Madison divorced.Mason and Jaxon stayed in the home and Madison moved out.During year 2,Mason provided all of Jaxon's support and Jaxon lived in the home for all of year 2.Jaxon did not earn any income during year 2.What is Mason's most favorable filing status for year 2?

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year,the taxpayer will qualify for head of household filing status.

The Tanakas filed jointly in 2017.Their AGI is $120,000.They reported $10,000 of itemized deductions and they have two dependent children.The 2017 standard deduction amount for MFJ taxpayers is $12,700 and each exemption is $4,050.What is the total amount of from AGI deductions they are allowed to claim on their 2017 tax return?

Lebron received $50,000 of compensation from his employer and he received $400 of interest from a municipal bond.What is the amount of Lebron's gross income from these items?

Tax credits reduce taxable income dollar for dollar.

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 Charlotte provided 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?

All of the following are tests for determining qualifying child status except the ________.

Sheri and Jake Woodhouse have one daughter,Emma,who is 16 years old.They also have taken in Emma's friend,Harriet,who has lived with them since February of the current year and is also 16 years of age.The Woodhouses have not legally adopted Harriet but Emma often refers to Harriet as "her sister." The Woodhouses provide all of the support for both girls,and both girls live at the Woodhouse residence.Which of the following statements is true regarding the dependency exemptions (and the reason for the exemptions)Sheri and Jake may claim for the current year for these girls?

The relationship test for qualifying relative requires the potential qualifying relative to have a family relationship with the taxpayer.

Catherine de Bourgh has one child,Anne,who is 18 years old at the end of the year.Anne lived at home for seven months during the year before leaving home to attend State University for the rest of the year.During the year,Anne earned $6,000 while working part time.Catherine provided 80 percent of Anne's support and Anne provided the rest.Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?

In determining filing status purposes,which of the following is not a requirement for a married taxpayer to be treated as unmarried at the end of the year?

A taxpayer may qualify for the head of household filing status even if she does not have any dependent children.

Lydia and John Wickham filed jointly in year 1.They divorced in year 2.In late year 2,the IRS discovered that the Wickham's underpaid their year 1 taxes by $2,000.Both Lydia and John worked in year 1 and received equal income but John had $2,000 less tax withheld than did Lydia.Who is legally liable for the tax underpayment?

For purposes of the dependency exemption qualification,the test for qualifying children includes an age restriction but the test for qualifying relative does not.

Which of the following statements regarding realized income is true?

Which of the following statements regarding for AGI tax deductions is true?

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.

Jeremy and Annie are married.During the year Jeremy dies.When Annie files her tax return for the year in which her husband dies,she may file under the married filing jointly filing status even if she does not remarry.

Which of the following statements regarding personal and dependency exemptions is false?

The relationship requirement for qualifying relative includes cousins.