Exam 14: The Individual Tax Formula

Mr. Jones and his first wife were legally divorced on February 19, 2015. Mr. Jones remarried the second Mrs. Jones on December 20, 2015. Which of the following describes Mr. Jones' filing status in 2015?

The majority of individual taxpayers take the standard deduction rather than itemizing.

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.

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

Leon died on August 23, 2013, and his wife Mary has not remarried. Since her husband's death, Mary has maintained a home for her two dependent children, who were ages 7 and 4 when their father died. Which of the following describes Mary's filing status for 2014, 2015, and 2016?

Samantha died on January 18, 2014. Her husband Dave lived by himself until he remarried in 2016. What was Dave's filing status in 2014 and 2015?

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.

Mr. Pearl's total income and self-employment tax on this year's Form 1040 is $72,610. If Mr. Pearl paid at least $65,349 of this tax in the form of withholding or quarterly estimated payments, he will not incur an underpayment penalty.

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

Which of the following statements describing individual tax deductions 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 2015 is $15,100.

Mr. and Mrs. Bennett file a joint tax return. Determine if each of the following unmarried individuals is either a qualifying child or a qualifying relative for whom the couple can claim an exemption. a. Son Alex, age 22, lives in his parents' home and works fulltime as a tax accountant. Alex is self-supporting except for the fact that he does not pay rent to his parents. b. Daughter Samantha, age 20, is a full-time college student. Samantha lives in a dormitory during the school year, but her parents' home is her permanent residence and they provide 100% of her financial support. c. Mr. Bennett's brother Max is 42 years old and mentally handicapped. Max lives in a privately operated group home, and Mr. and Mrs. Bennett provide 100% of his financial support. Max has no gross income. d. Mrs. Bennett's mother, Vera, age 67, lives in a retirement community. Mr. and Mrs. Bennett provide about 75% of her financial support. Vera earned $5,000 this year as a part-time receptionist.

Mr. and Mrs. Luang reported $517,900 ordinary taxable income for regular tax purposes and had $39,100 positive AMT adjustments and preferences. Compute their tentative minimum tax.

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.

An individual with $500,000 taxable income has the same marginal rate as a single taxpayer or as a head of household.

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

Mr. and Mrs. Reece couldn't complete their 2015 Form 1040 before April 15, 2016. They estimate that they will have a $700 balance of tax due with the return. Which of the following statement is true?

Alice is an unmarried individual. She has $182,340 taxable income in 2015. Compute Alice's regular tax liability if she files as a single taxpayer and if she files as a head of household.

Alice Grim, a single taxpayer, has $219,000 taxable income, which includes a $20,000 capital gain taxed at 15%. Her alternative minimum taxable income in excess of her exemption amount is $237,400. Compute Alice's regular tax, AMT, and total tax.

Ms. Dolan, an unmarried individual, invited her elderly uncle, Martin, to move into her home in January of this year. Martin's only income item was $2,390 of taxable interest on a savings account. Ms. Dolan provides over 90% of her uncle's financial support. What is Ms. Dolan's filing status and number of exemptions for the year?