Exam 14: The Individual Tax Formula

The standard deduction for single individuals equals one-half of the standard deduction for married individuals filing jointly.

Which of the following statements concerning the individual alternative minimum tax (AMT) is true?

Mr. and Mrs. Stern reported $312,400 alternative minimum taxable income before any exemption on their 2013 Form 1040. Calculate their AMT exemption.

Mrs. Starling worked for Abbot Inc. from January 1 through September 19. Her salary from Abbot for this period totaled $122,000. Mrs. Starling worked for JJT Inc. from October 1 through December 31. Her salary from JJT for this period totaled $38,000. JJT is not required to withhold Social Security tax from Mrs. Starling's salary because Abbot Inc. already withheld the maximum tax for the year.

Last year, Mr. Corbett's AGI was $141,000, and his total tax liability was $33,650. This year, his total tax liability is $35,290. Compute the minimum amount of current year tax that Mr. Corbett had to prepay (withholding and estimated payments) to avoid an underpayment penalty.

Mr. and Mrs. Casey have two dependent children, ages 3 and 6. The Caseys spent $10,300 for child care this year. Mrs. Casey is employed full-time as an attorney. Mr. Casey is an unpublished novelist who has yet to earn any money from his writing. The Caseys are eligible for a dependent care credit.

A husband and wife are allowed only one exemption on a jointly filed return.

Mr. and Mrs. Borem spent $1,435 for child care for their two dependent children, who are two and four years old. Mr. Borem's earned income was $55,870, Mrs. Borem had no earned income, and the AGI on their joint return was $66,210. Calculate their dependent care credit.

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

Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no dependents for the year. Here is their relevant information. Compute their adjusted gross income (AGI) and taxable income.

Julie, an unmarried individual, lives in a home with her 13-year-old dependent son, Oscar. This year, Julie had the following tax information. Compute Julie's adjusted gross income (AGI) and taxable income.

Which of the following statements regarding tax payments is true?

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.

Samantha died on January 18, 2012. Her husband Dave lived by himself until he remarried in 2015. What was Dave's filing status in 2012 and 2013?

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

Which of the following taxpayers can't use the tax rates for married filing jointly in 2013?

Ms. Kilo's regular income tax before credits on her Form 1040 is $45,890, and she has a $5,700 minimum tax credit from a previous year. Which of the following statements is true?

Charlie is single and provides 100% of the financial support for his dependent mother, Angela, who lives with Charlie. Charlie's filing status is head of household.

The highest individual marginal rate for regular tax purposes is 39.6%, while the highest individual marginal rate for alternative minimum tax (AMT) purposes is only 28%.

Every individual taxpayer is entitled to an AMT exemption, the amount of which varies with filing status.