Exam 14: The Individual Tax Formula

It is impossible for a progressive income tax system to be both marriage neutral and horizontally equitable.

Ms. Dorley's regular tax liability on her Form 1040 is $45,890. Which of the following statements is true?

Determine Mr. Smith's 2012 filing status in each of the following independent cases. a. Mr. Smith and Mrs. Smith were legally divorced on December 1. Mr. Smith has not remarried and has no dependent children. b. Mr. Smith and the first Mrs. Smith were legally divorced on February 10. Mr. Smith remarried the second Mrs. Smith on December 5. He has no dependent children. c. Mrs. Smith dies on June 22. Mr. Smith has not remarried and has no dependent children. d. Mrs. Smith died on November 1, 2010. Mr. Smith has not remarried and maintains a home for one dependent child. e. Mrs. Smith died on April 3, 2011. Mr. Smith has not remarried and has no dependent children. f. Mr. and Mrs. Smith were legally divorced on September 10, 2008. Mr. Smith has not remarried and maintains a home for his two dependent children.

Marie, an unmarried taxpayer, is 26 years old. This year, Marie earned $50,000 gross income. Her itemized deductions totaled $5,100. Marie maintained a home for her 12-year-old sister who qualifies as Marie's dependent. Compute Marie's taxable income.

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

Melissa, age 16, is claimed as a dependent on her parents' tax return. This year, Melissa earned $510 from babysitting and $220 interest income from a savings account. Compute Melissa's standard deduction.

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 and number of exemptions for the year?

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.

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.

Mr. and Mrs. Stern reported $312,400 alternative minimum taxable income before any exemption on their 2011 Form 1040. Calculate their AMT exemption.

Samantha died on January 18, 2011. Her husband Dave lived by himself until he remarried in 2015. What was Dave's filing status in 2011 and 2012?

Mr. and Mrs. King's regular tax liability on their joint return was $111,850. Which of the following statements is true?

Mr. Jones and his first wife were legally divorced on February 19, 2012. Mr. Jones remarried the second Mrs. Jones on December 20, 2012. Which of the following describes Mr. Jones' filing status in 2012?

Mr. and Mrs. Steel, who file a joint return, have $513,200 taxable income in 2012. Compute their regular tax liability.

Married individuals who elect to file separate tax returns may use the single rates to compute their tax.

Mr. Andrews is age 58, legally blind, and files as a single taxpayer. His standard deduction for 2012 is $5,950.

Miss Blixen's regular income tax is $77,390, and her tentative minimum tax is $74,100. Consequently, Miss Blixen's alternative minimum tax (AMT) is zero.

The tax rates for individuals who qualify as a head-of-household are lower than the tax rate for single individuals.

Mrs. Paley died on July 14, 2011. Her husband has not remarried. The Paleys' two children, ages 34 and 36, are financially independent. Mr. Paley may file as a surviving spouse in 2012 and 2013.

In order to be claimed as a dependent, an individual must be either a qualifying child or a qualifying relative.