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

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Question 41

Multiple Choice

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Which of the following series of inequalities is generally most accurate?

A) Gross income ≥ adjusted gross income ≥ taxable income
B) Adjusted gross income ≥ gross income ≥ taxable income
C) Adjusted gross income ≥ taxable income ≥ gross income
D) Gross income ≥ taxable income ≥ adjusted gross income

E) None of the above
F) B) and D)

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Question 42

Multiple Choice

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Lydia and John Wickham filed jointly in year 1. They divorced in year 2. Late in 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?

A) Lydia.
B) John.
C) Both Lydia and John.
D) Neither Lydia nor John.

E) All of the above
F) B) and C)

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Question 43

Multiple Choice

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Jamison's gross tax liability is $7,000. Jamison had $2,000 of available credits and he had $4,000 of taxes withheld by his employer. What is Jamison's taxes due (or taxes refunded) with his tax return?

From AGI deductions are commonly referred to as deductions "below the line."

Char and Russ Dasrup have one daughter, Siera, who is 16 years old. In November of last year, the Dasrup's took in Siera's 16 year old friend, Angela, who has lived with them ever since. The Dasrup's have not legally adopted Angela but Siera often refers to Angela as "her sister." The Dasrup's provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrup's residence. Which of the following statements is True regarding who Char and Russ may claim as dependents for the current year?

Catherine de Bourgh has one child, Anne, who is 18 years old at the end of the year. Anne lived at home for seven months during the year before leaving home to attend State University for the rest of the year. During the year, Anne earned $6,000 while working part time. Catherine provided 80 percent of Anne's support and Anne provided the rest. Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?

Charlotte is the Lucas family's 22-year-old daughter. She is a full-time student at an out-of-state university but plans to return home when the school year ends. During the year, Charlotte earned $4,000 of income working part-time. Her support totaled $30,000 for the year. Of this amount, Charlotte paid $7,000 with her own funds, her parents paid $14,000, and Charlotte's grandparents paid $9,000. Which of the following statements most accurately describes whether Charlotte's parents can claim Charlotte as a dependent?

If a taxpayer does not provide more than half the support of a child, that child cannot qualify as the taxpayer's qualifying child.

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

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. Who can the Allreds claim as dependents?

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 Ned as a dependent for the current year?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2018, Ed and Jane realized the following items of income and expense: They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2018 standard deduction amount for MFJ taxpayers is $24,000. What is the couple's taxable income?

All of the following are for AGI deductions except:

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.

The standard deduction amount varies by filing status.

Kabuo and Melinda got married on December 15, year 1. Kabuo's salary for the year was $54,000, and Melinda's was $62,000. In addition, Kabuo received $250 of interest income, ($100 of which was from municipal bonds), and Melinda received $10,000 of alimony from a former spouse (pre 2018 divorce decree). If Kabuo and Melinda choose to file jointly, what is their year 1 gross income?

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

Filing status determines all of the following except ________

The relationship requirement is more broadly defined (includes more relationships) for a qualifying relative than it is for a qualifying child.

Even though taxpayers can no longer deduct dependency exemptions, it is still important to determine who qualifies as a taxpayer's dependent.