Exam 14: The Individual Tax Formula

Harry and Sally were married on December 23, 2012. Their income for the entire year is reported on a joint return.

Determine Mr. Smith's 2013 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, 2011. Mr. Smith has not remarried and maintains a home for one dependent child. e. Mrs. Smith died on April 3, 2012. Mr. Smith has not remarried and has no dependent children. f. Mr. and Mrs. Smith were legally divorced on September 10, 2009. Mr. Smith has not remarried and maintains a home for his two dependent children.

In determining the standard deduction, which of the following statements is true?

Individual taxpayers can obtain an automatic extension of time to file a calendar year Form 1040 until October 15 of the following year.

Mr. and Mrs. Warren's AGI last year was $90,300, and their total tax was $13,988. This year, the couple's total tax is $14,700. Unless the Warrens paid at least $13,988 in the form of withholding and quarterly estimated payments, they will incur an underpayment penalty this year. The Warrens will not incur a penalty if they paid at least $13,230 (90% of current year tax).

For the taxable year in which a married person dies, the widow or widower can file a joint return with the deceased.

Which of the following statements concerning extensions of time to file an individual tax return is false?

Bill and Afton are married and file a joint tax return. Bill is 67 and Afton is 66, and neither is legally blind. Their standard deduction for 2013 is $14,600.

Mr. and Mrs. Cox reported $115,900 AGI on their joint return. The couple has three dependent children under age 17. Compute their child credit.

An itemized deduction doesn't result in any tax savings in a year in which an individual taxpayer takes the standard deduction.

Mrs. Raines died on June 2, 2012. Mr. Raines has not remarried and has no children or other dependents. What is his filing status for 2012 and 2013?

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

Mr. Lenz died on May 4, 2012. 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 2013.

Mr. and Mrs. Lansing, who file a joint tax return, have four dependent children under age 17. Which of the following statements is false?

Mrs. Lincoln was employed by GGH Inc. until October, when he accepted a new position with Murdock Inc. Mrs. Lincoln earned $145,000 compensation from GGH and $36,000 compensation from Murdock. Which of the following statements is false?

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 credit.

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.

Which of the following statements concerning the exemption phaseout is true?

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

Mr. Jones and his first wife were legally divorced on February 19, 2013. Mr. Jones remarried the second Mrs. Jones on December 20, 2013. Which of the following describes Mr. Jones' filing status in 2013?