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

Taxpayers are generally allowed to claim deductions for expenditures unless a specific tax provision indicates the expenditure is not deductible.

For purposes of the qualifying child residence test, a child's temporary absence from the taxpayer's home for attending school full-time is counted as though the child lived in the taxpayer's home during the absence.

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

It is generally more advantageous from a nontax perspective for a married couple to file separately than it is for them to file jointly.

In April of year 1, Martin left his wife Marianne. While the couple was apart, they were not legally divorced. Marianne found herself having to financially provide for the couple's only child (who qualifies as Marianne's dependent) and to pay all the costs of maintaining the household. When Marianne filed her tax return for year 1, she filed a return separate from Martin. What is Marianne's most favorable filing status for year 1?

Tax credits are generally more valuable than tax deductions because tax credits reduce a taxpayer's gross tax liability dollar for dollar while tax deductions do not.

Which of the following statements regarding for AGI tax deductions is true?

An individual receiving $5,000 of tax exempt income during the year could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

In 2016, Brittany, who is single, cares for her father Raymond. Brittany pays the bills relating to Raymond's home. She also buys groceries and provides the rest of his support. Raymond has no gross income. Brittany received $45,000 of salary from her employer during the year. Brittany reports $3,000 of itemized deductions. What is Brittany's taxable income?

Jan is unmarried and has no children, but she provides all of the financial support for her mother, who lives in an apartment across town. Jan's mother qualifies as Jan's dependent. Which is the most advantageous filing status available to Jan?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2016, Ed and Jane realized the following items of income and expense: They also qualified for a $1,000 tax credit. Their employers withheld $1,800 in taxes from their paychecks (in the aggregate). Finally, the 2016 standard deduction amount is $12,600 and the 2016 exemption amount is $4,050. What is the couple's adjusted gross income?

All of the following represents a type or character of income except:

For AGI deductions are commonly referred to as deductions "above the line."

In certain circumstances, a taxpayer who provides less than half the support of another may still be able to claim a dependency exemption for that person as a qualifying relative.

In June of year 1, Jake's wife Darla died. The couple did not have any children and Jake did not remarry in year 1 or year 2. Which is the most favorable filing status for Jake in year 2?

The relationship test for qualifying relative requires the potential qualifying relative to have a family relationship with the taxpayer.

By the end of year 1, Harold and Jamie Allred had been married for 30 years and have filed a joint return every year of their marriage. Their three sons, Jacob, Larry, and Andi, are ages 13, 16, and 23 respectively and all live at home and are fully supported by their parents. Andi is employed full time, earning $17,000 in year 1. How many exemptions are Harold and Jamie entitled to claim?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2016, Ed and Jane realized the following items of income and expense: They also qualified for a $1,000 tax credit. Their employers withheld $1,800 in taxes from their paychecks (in the aggregate). Finally, the 2016 standard deduction amount is $12,600 and the 2016 exemption amount is $4,050. What are the couple's taxes due or tax refund? (use the tax rate schedules not tax tables)

Madison's gross tax liability is $9,000. Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer. What is Madison's taxes due (or taxes refunded) with her tax return?

In order to be a qualifying relative of another, an individual's gross income must be less than _______.