Exam 2: Determination of Tax

For each of the following independent cases,indicate the total number of exemptions (personal and dependents) that may be claimed by the taxpayer in 2017. a.Cassie is a single mother providing the sole support of her three children,who all live with her.Her 16-year-old daughter,Tammy,earned $15,200 modeling during the year and her two sons,R.J.and Will,ages 10 and 8,have no income. b.Olivia,35 years old,provided eighty percent of the support of her grandmother who lived in another state.Her grandmother's only income was from non-taxable social security of $9,500. c.Vanessa and Matt Reardon are married and under 65 years of age.During 2017,they furnish more than half of the support of their 25-year-old son,Bill,who lives with them.Bill earns $2,000 from a part-time job,most of which he sets aside for future college expenses.Bill is not currently a student.Vanessa's father,Henry,who died on January 3,2017,at age 80,had for many years qualified as their dependent. d.Douglas and Marjorie are husband and wife and file a joint return.Both are under 65 years of age.They provide more than half of the support of their daughter,Ellen (age 23),who is a full-time medical student.Ellen receives a $3,400 taxable scholarship covering her room and board at college.They furnish all of the support of Henry (Douglas's grandfather),who is age 85 and lives in a nursing home.They also support Meg (age 69),who is a friend of the family and lives with them. e.Blair,who is divorced,maintains a home in which she,her twin sons,and her baby daughter live all year.The children's father,Ross,provides over half their support.No special arrangements exist between Blair and Ross.

The requirement to file a tax return is based on the individual's adjusted gross income.

Mary Ann pays the costs for her Aunt Hazel to live in a nursing home.Aunt Hazel receives Social Security benefits of $7,000 a year which are turned over to the nursing home.Mary Ann pays the remaining cost of $33,000.Hazel has no other income.Mary Ann visits Hazel twice a week and meets with doctors and nurses regarding Hazel's medical care.What tax issues should Mary Ann consider?

In October 2017,Joy and Paul separated and have not lived with each other since,but they are still legally married.They do not file a joint return.Joy supports their children after the separation and pays the cost of maintaining their home.Joy's filing status in 2017 and 2018 is,respectively

When a spouse dies,the surviving spouse for the year of death

Suri,age 8,is a dependent of her parents and has unearned income of $6,000.She must file her own tax return.

Amanda has two dependent children,ages 10 and 12.She earned $15,000 from her waitress job.How much of her child credit is refundable?

Husband and wife,who live in a common law state,are eligible to file a joint return for 2017,but elect to file separately.They do not have dependents.Wife has adjusted gross income of $25,000 and has $2,200 of expenditures which qualify as itemized deductions.She is entitled to one exemption.Husband deducts itemized deductions of $11,200.What is the taxable income for the wife?

Nate and Nikki have three dependent children ages 12,15,and 17.Their modified AGI is $120,000.What is the amount of the child credit to which they are entitled?

Lewis,who is single,is claimed as a dependent on his parents' tax return.He received $2,000 during the year in dividends,which was his only income.What is his standard deduction for 2017?

Charishma is a taxpayer with taxable income exceeding $500,000.She sells a stock for a $50,000 gain.She acquired the stock 13 months earlier.The gain will be taxed at a total tax rate of 20%.

A child credit is a partially refundable credit.

Alexis and Terry have been married five years and file joint tax returns.Alexis began embezzling funds from her employer during the third year of their marriage.Last year,Alexis suddenly left the country and Terry does not know where she is.In the current year,Terry learned that the IRS had assessed him $27,000 in unpaid taxes due to Alexis's embezzlement.What tax issue(s) are present in Terry's situation? What questions would you ask Terry to determine his appropriate response to the IRS?

Which of the following credits is considered a refundable credit?

The following information for 2017 relates to Emma Grace,a single taxpayer,age 18: a.Compute Emma Grace's taxable income assuming she is self-supporting. b.Compute Emma Grace's taxable income assuming she is a dependent of her parents.

A taxpayer can receive innocent spouse relief if

Oscar and Diane separated in June of this year although they continue to live in the same town.They have twin sons,Blake and Cliff,who remain in the family home with Diane.Oscar's income this year was $45,000 while Diane worked only part-time and made $15,000.Oscar also gambles heavily but told Diane that he had no winnings this year.What tax issues should they consider?

Lila and Ted are married and have AGI of $340,000 in 2017.They had their first children this year,twins.Lila and Ted will be allowed a deduction for personal and dependency exemptions of

Kadeisha is single with no dependents and has a salary of $102,000 for 2017,along with tax exempt interest income of $3,000 from a municipality.Her itemized deductions total $6,100. Required: Compute her taxable income.

Michelle,age 20,is a full-time college student with earned income from wages of $5,200 and interest income of $700.Michelle's parents provide more than half of Michelle's support.Michelle's 2017 taxable income is