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Exam 3: Computing the Tax

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Question 51

True/False

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Using borrowed funds from a mortgage on her home, Leah provides 52% of her own support, while her sons furnished the rest. Leah can be claimed as a dependent under a multiple support agreement.

A) True
B) False

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Question 52

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Which of the following taxpayers may file as a head of household in 2018? Marco provides all the support for his mother, Sienna, who lives by herself in an apartment in Fort Lauderdale. Marco pays the rent and other expenses for the apartment and properly claims his mother as a dependent. Tammy provides over one-half the support for her 18-year old brother, Dan. Dan earned $4,200 in 2018 working at a fast food restaurant and is saving his money to attend college in 2019. Dan lives in Tammy's home. Juan's wife left him late in December of 2017. No legal action was taken and Juan has not heard from her in 2018. Juan supported his 6-year-old son, who lived with him throughout 2018.

A) Marco only
B) Tammy only
C) Juan only
D) Marco and Juan only
E) Marco, Tammy, and Juan

F) A) and B)
G) A) and C)

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Question 53

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Dan and Donna are husband and wife and file separate returns for the year. If Dan itemizes his deductions from AGI, Donna cannot claim the standard deduction.

Which, if any, of the statements regarding the standard deduction is correct?

Regarding classification as a dependent, classify each statement in one of the four categories: a. Could be a qualifying child. b. Could be a qualifying relative. c. Could be either a qualifying child or a qualifying relative. d. Could be neither a qualifying child nor a qualifying relative. -A son lives with taxpayer and earns $3,000.

Kim, a resident of Oregon, supports his parents who are residents of Canada but citizens of Korea. Kim can claim a dependent tax credit for his parents.

Married taxpayers who file a joint return cannot later (i.e., after the filing due date) switch to separate returns for that year.

Monique is a resident of the U.S. and a citizen of France. If she files a U.S. income tax return, Monique cannot claim the standard deduction.

Since an abandoned spouse is treated as not married and has one or more dependent children, he or she qualifies for the standard deduction available to head of household.

The major advantage of being classified as an abandoned spouse is that the taxpayer is treated for tax purposes as being single and not married. This means that an abandoned spouse can use the more favorable tax rates available to single persons than those available to married persons filing separately. Comment on the accuracy of this conclusion.

Lena is 66 years of age, single, and blind and is not claimed as a dependent. How much gross income must she have before she is required to file a Federal income tax return for 2018?

Match the statements that relate to each other. Note: Choice l. may be used more than once. a. Available to a 70-year-old father claimed as a dependent by his son. b. Equal to tax liability divided by taxable income. c. The highest income tax rate applicable to a taxpayer. d. Not eligible for the standard deduction. e. No one qualified taxpayer meets the support test. f. Taxpayer's ex-husband does not qualify. g. A dependent child (age 18) who has only unearned income. h. Highest applicable rate is 37%. i. Applicable rate could be as low as 0%. j. Maximum rate is 28%. k. No correct match provided. -Marginal income tax rate

Regarding classification as a dependent, classify each statement in one of the four categories: a. Could be a qualifying child. b. Could be a qualifying relative. c. Could be either a qualifying child or a qualifying relative. d. Could be neither a qualifying child nor a qualifying relative. -A granddaughter, who lives with taxpayer, is 19 years old, earns $5,000, and is not a full-time student.

Because they appear on page 1 of Form 1040, itemized deductions are also referred to as "page 1 deductions."

In 2018, a child who has unearned income of $2,100 or less cannot be subject to the kiddie tax.

An "above the line" deduction refers to a deduction for AGI.

In 2018, Ashley earns a salary of $55,000, has capital gains of $3,000, and receives interest income of $5,000. Her husband died in 2017. Ashley has a dependent son, Tyrone, who is age 8. Her itemized deductions are $9,000. a. What is her filing status? b. Calculate Ashley's taxable income for 2018.

Hannah, age 70 and single, is claimed as a dependent by her daughter. During 2018, she had interest income of $2,550 and $800 of earned income from babysitting. Hannah's taxable income is:

Claude's deductions from AGI exceed the standard deduction allowed for the current year. Under these circumstances, Claude cannot claim the standard deduction.

For the year a spouse dies, the surviving spouse is considered married for the entire year for income tax purposes.