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

In April of year 1, Martin left his wife Marianne. While the couple was apart, they were not legally divorced. Marianne found herself having to financially provide for the couple's only child (who qualifies as Marianne's dependent) and to pay all the costs of maintaining the household. When Marianne filed her tax return for year 1, she filed a return separate from Martin. What is Marianne's most favorable filing status for year 1?

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.

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

When determining whether a child meets the qualifying child support test for the child's grandparents, scholarships earned by the child do not count as self support provided by the child.

Joanna received $60,000 compensation from her employer, the value of her stock in ABC company appreciated by $5,000 during the year (but she did not sell any of the stock), she received $30,000 of life insurance proceeds from the death of her husband. What is the amount of Joanna's gross income from these items?

Qualified dividends are taxed at the same rate as ordinary income.