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Exam 3: Computing the Tax

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Question 71

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For the past few years, Corey's filing status has been as follows: 2008 (married/joint); 2009 (married/separate); 2010 (surviving spouse); 2011 (surviving spouse); and 2012 (head of household).Explain what probably has happened.

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One probable explanation is that Corey's...

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Question 72

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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 cannot be claimed as a dependent under a multiple support agreement.

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Question 73

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

The additional standard deduction for age and blindness is not the same amount for single as for married taxpayers.

Sylvia, age 17, is claimed by her parents as a dependent.During 2012, she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200.Sylvia's taxable income is:

DeWayne is a U.S.citizen and resident.He spends much of each year in the United Kingdom on business.He is married to Petula, a U.K.citizen and resident of London.DeWayne has heard that it is possible that he can file a joint income tax return for U.S.purposes.If this is so, what are the constraints he should consider in making any such decision?

When the kiddie tax applies, the child need not file an income tax return because the child's income will be reported on the parents' return.

After her divorce, Hope continues to support her ex-husband's sister, Cindy, who does not live with her.Hope can claim Cindy as a dependent.

For 2012, Jackson has taxable income of $30,005.When he uses the Tax Tables, Jackson finds that his tax liability is higher than under the Tax Rate Schedules.

Butch and Minerva are divorced in December of 2012.Since they were married for more than one-half of the year, they are considered asmarried for 2012.

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

Warren, age 17, is claimed as a dependent by his father.In 2012, Warren has dividend income of $1,500 and earns $400 from a part-time job.

Ed is divorced and maintains a home in which he and a dependent friend live.Ed does not qualify for head of household filing status.

Keith, age 17 and single, earns $3,000 during 2012.Keith's parents cannot claim him as a dependent even if he does not live with them.

The Dargers have itemized deductions that exceed the standard deduction.However, when they file their joint return, they choose the standard deduction option.

When the kiddie tax applies and the parents are divorced, the applicable parent (for determining the parental tax) is the one who has custody.

Which of the following items, if any, is deductible?

Lee, a citizen of Korea, is a resident of the U.S.Any rent income Lee receives from land he owns in Korea is not subject to the U.S.income tax.

Emily, whose husband died in December 2011, maintains a household in which her dependent daughter lives.Which (if any) of the following is her filing status for the tax year 2012? (Note: Emily is the executor of her husband's estate.)

Which, if any, of the following is a correct statement relating to the kiddie tax?