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

In June of year 1, Eric's wife Savannah died. Eric did not remarry during year 1, year 2, or year 3. Eric maintains the household for his dependent daughter Catherine in year 1, year 2, and year 3. Which is the most advantageous filing status for Eric in year 2?

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?

Itemized deductions and the standard deduction are deductions from AGI but deductions for personal and dependency exemptions are deductions for AGI.

Madison's gross tax liability is $9,000. Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer. What is Madison's taxes due (or taxes refunded) with her tax return?

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?

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

An individual may never be considered as both a qualifying relative and a qualifying child of the same taxpayer.

Tax credits reduce taxable income dollar for dollar.

Kabuo and Melinda got married on December 15, year 1. Kabuo's salary for the year was $54,000, and Melinda's was $62,000. In addition, Kabuo received $250 of interest income, ($100 of which was from municipal bonds), and Melinda received $10,000 of alimony from a former spouse. If Kabuo and Melinda choose to file jointly, what is their year 1 gross income?

Jane is unmarried and has no children, but provides more than half of her mother's financial support. Jane's mother lives in an apartment across town and has a part-time job earning $5,000 a year. Which is the most advantageous filing status available to Jane?

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

Sullivan's wife Susan died four years ago. Sullivan has not remarried and he maintains a home for his dependent child Sammy. In 2014, Sullivan received $70,000 of salary from his employer and he paid $6,000 of itemized deductions. What is Sullivan's taxable income for 2014?

Doug and Lisa have determined that their tax liability on their joint return is $3,700. They have made prepayments of $1,000 and also are entitled to child tax credits of $2,000. What is the amount of their tax refund or taxes due?

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.

Michael, Diane, Karen, and Kenny provide support for their mother Janet who is 75 years old. Janet lives by herself in an apartment in Los Angeles. Janet's gross income for the year is $3,000. Janet provides 10% of her own support, Michael provides 40% of Janet's support, Diane provides 8% of Janet's support, Karen provides 10% of Janet's support, and Kenny provides the remaining 32% of Janet's support. Under a multiple support agreement, who may claim a dependency exemption for Janet as a qualifying relative?

Char and Russ Dasrup have one daughter, Siera, who is 16 years old. In November of last year, the Dasrup's took in Siera's 16 year old friend, Angela, who has lived with them ever since. The Dasrup's have not legally adopted Angela but Siera often refers to Angela as "her sister." The Dasrup's provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrup's residence. Which of the following statements is true regarding the dependency exemptions (and the reason for the exemptions) Char and Russ may claim for the current year for these girls?

Which of the following is not a filing status?

What are the couple's taxes due or tax refund (use the tax rate schedules not tax tables)?

Certain types of income are taxed at a lower rate than ordinary income.

Greg is single. During 2014, he received $60,000 of salary from his employer. That was his only source of income. He reported $3,000 of for AGI deductions, $7,000 of itemized deductions. The 2014 standard deduction amount of a single taxpayer is $6,200 and the 2014 exemption amount is $3,950. What is Greg's taxable income?