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Exam 9: Individuals As the Taxpayer

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Question 1

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Emily, whose husband died in December 2015, maintains a household in which her dependent mother lives. Which (if any) of the following is her filing status for the tax year 2016? (Note: Emily is the executor of her husband's estate.)

A) Single
B) Married, filing separately
C) Surviving spouse
D) Head of household
E) Married, filing jointly

F) D) and E)
G) A) and C)

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Question 2

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When married persons file a joint return, joint and several liability results. What does this mean?

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Joint and several liability me...

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Question 3

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For the past few years, Corey's filing status has been as follows: 2012 (married/joint); 2013 (married/separate); 2014 (surviving spouse); 2015(surviving spouse); and 2016 (head of household). Explain what probably has happened.

Which, if any, of the following is a deduction for AGI?

Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions. Explain.

Kyle and Liza are married and under 65 years of age. During 2016, they furnish more than half of the support of their 19-year old daughter, May, who lives with them. She graduated from high school in May 2015. May earns $15,000 from a part-time job, most of which she sets aside for future college expenses. Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them. Liza's father, who died on January 3, 2016, at age 90, has for many years qualified as their dependent. How many personal and dependency exemptions should Kyle and Liza claim?

Debby, age 18, is claimed as a dependent by her mother. During 2016, she earned $1,100 in interest income on a savings account. Debby's standard deduction is $1,450 ($1,100 + $350).

Regarding dependency exemptions, classify each statement in one of the four categories: -A family friend who is supported by and lives with the taxpayer.

During 2016, Lisa (age 66) furnished more than 50% of the support of the following persons: Presuming all other dependency tests are met, on a separate return how many personal and dependency exemptions may Lisa claim?

The filing status of a taxpayer (e.g., single, head of household) must be identified before the applicable standard deduction is determined.

A dependent cannot claim a personal exemption on his or her own return.

Contrast the tax consequences resulting from the following filing status situations: a.​Married filing jointly versus married filing separately. b.​Married filing separately versus single filing separately. c.Married filing separately versus abandoned spouse status.

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

After paying down the mortgage on their personal residence, the Hills have found that their itemized deductions for each year are always slightly less than the standard deduction option. a.​Explain what has happened. b.What remedy do you suggest?

Regarding dependency exemptions, classify each statement in one of the four categories: -A niece who lives with taxpayer, is 20 years old, earns $5,000, and is a full-time student.

The Dargers have itemized deductions that exceed the standard deduction. However, when they file their joint return, they choose the standard deduction option. a.Is this proper procedure? b.​Aside from a possible misunderstanding as to the tax law, what might be the reason for the Darger's choice?

Match the statements that relate to each other. Note: Choice l. may be used more than once. -Marginal income tax rate

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

Heloise, age 74 and a widow, is claimed as a dependent by her daughter. For 2016, she had income as follows: $2,500 interest on municipal bonds; $3,200 Social Security benefits; $3,000 income from a part-time job; and $2,800 dividends on stock investments. What is Heloise's taxable income for 2016?

For 2016, Tom has taxable income of $48,005. When he uses the Tax Tables, Tom finds that his tax liability is higher than under the Tax Rate Schedules. a.​Why is there a difference? b.Can Tom use the Tax Rate Schedules?