Exam 4: Individual Income Tax Overview, Exemptions, and Filing Status

Which of the following statements regarding personal and dependency exemptions is false?

When determining whether a child meets the qualifying child support test for the parents, scholarships earned by the child do not count as self-support provided by the child.

To determine filing status, a taxpayer's marital status is determined on January 1 of each tax year in question.

Tax credits reduce taxable income dollar for dollar.

Lydia and John Wickham filed jointly in year 1. They divorced in year 2. In late year 2, the IRS discovered that the Wickham's underpaid their year 1 taxes by $2,000. Both Lydia and John worked in year 1 and received equal income but John had $2,000 less tax withheld than did Lydia. Who is legally liable for the tax underpayment?

Which of the following statements regarding exclusions and/or deferrals is false?

Anna is a 21-year-old full-time college student (she plans on returning home at the end of the school year). Her total support for the year was $34,000 (including $8,000 of tuition). Anna covered $12,000 of her support costs out of her own pocket (from savings, she did not work) and she received an $8,000 scholarship that covered all of her tuition costs. Which of the following statements regarding who is allowed to claim Anna as an exemption is true?

Sheri and Jake Woodhouse have one daughter, Emma, who is 16 years old. They also have taken in Emma's friend, Harriet, who has lived with them since February of the current year and is also 16 years of age. The Woodhouses have not legally adopted Harriet but Emma often refers to Harriet as "her sister." The Woodhouses provide all of the support for both girls, and both girls live at the Woodhouse residence. Which of the following statements is true regarding the dependency exemptions (and the reason for the exemptions) Sheri and Jake may claim for the current year for these girls?

Miguel, a widower whose wife died in year 1, maintains a household for himself and his daughter who qualifies as his dependent. Miguel did not remarry. What is the most favorable filing status that Miguel qualifies for in year 3?

Jennifer and Stephan are married at year end and they file separate tax returns. If Jennifer itemizes deductions on her return, Stephan must also itemize deductions on his return even if his itemized deductions don't exceed his standard deduction.

The standard deduction amount varies by filing status.

Which of the following is not a filing status?

Which of the following shows the correct relationship among standard deduction amounts for the respective filing statuses?

Relative to for AGI deductions, from AGI deductions tend to relate to items that are more personal in nature.

Earl and Lawanda Jackson have been married for 15 years. They have no children. Ned, who is an old friend from high school, has been living with the Jacksons during the current year. Which of the following is a true statement regarding whether the Jacksons can claim a dependency exemption for Ned in the current year?

Taxpayers are allowed to deduct more for each personal exemption they claim than for each dependency exemption they claim.

A taxpayer may qualify for the head of household filing status if she has no dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father.

The Tanakas filed jointly in 2016. Their AGI is $120,000. They reported $10,000 of itemized deductions and they have two dependent children. The 2016 standard deduction amount is $12,600 and each exemption is $4,050. What is the total amount of from AGI deductions they are allowed to claim on their 2016 tax return?

Which of the following statements regarding the difference between the requirements for a qualifying child and the requirements for a qualifying relative is false?

In certain circumstances, a married taxpayer who files separately may qualify for the head of household filing status.