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

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Question 31

Multiple Choice

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Which of the following is not a filing status?

A) Head of household.
B) Unmarried.
C) Qualifying widow or widower.
D) Married filing jointly.

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

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Question 32

Multiple Choice

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In June of Year 1, Eric's wife, Savannah, died. Eric did not remarry during Year 1, Year 2, or Year 3. Eric maintains the household for his dependent daughter, Catherine, in Year 1, Year 2, and Year 3. Which is the most advantageous filing status for Eric in Year 2?

A) Head of household.
B) Qualifying widower.
C) Single.
D) Married filing separately.

E) A) and D)
F) All of the above

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Question 33

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In certain circumstances, a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

Tax credits reduce taxable income dollar for dollar.

Hannah, who is single, received a qualified dividend of $1,000. Hannah's marginal ordinary income tax rate is 32 percent. What amount of tax must she pay on the $1,000 dividend?

Which of the following statements regarding tax credits is true?

Jennifer and Stephan are married at year-end and they file separate tax returns. If Jennifer itemizes deductions on her return, Stephan must also itemize deductions on his return even if his itemized deductions don't exceed his standard deduction.

In June of Year 1, Edgar's wife, Cathy, died, and Edgar did not remarry during the year. What is his filing status for Year 1 (assuming they did not have any dependents) ?

Sally received $71,200 of compensation from her employer and she received $410 of interest from a corporate bond. What is the amount of Sally's gross income from these items?

If an unmarried taxpayer iseligible to claim another as a dependent, the taxpayer is automatically eligible for the head of household filing status.

Qualified dividends are taxed at the same rate as ordinary income.

Which of the following statements regarding realized income is true?

Anna is a qualifying child of her parents. However, she was recently married. Anna and her husband filed a joint return. If they had filed separately, Anna would have owed no taxes, though her husband would have owed just $5. Because Anna herself owed no taxes, her parents can still claim her as a dependent.

In 2020, 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?

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 are Jamison's taxes due (or taxes refunded) with his tax return?

Taxpayers may prepay their tax liability through withholdings and through estimated tax payments.

Michael, Diane, Karen, and Kenny provide support for their mother, Janet, who is 75 years old. Janet lives by herself in an apartment in Los Angeles. Janet's gross income for the year is $3,000. Janet provides 10 percent of her own support, Michael provides 40 percent of Janet's support, Diane provides 8 percent of Janet's support, Karen provides 10 percent of Janet's support, and Kenny provides the remaining 32 percent of Janet's support. Under a multiple support agreement, who is eligible to claim Janet as a dependent as a qualifying relative?

The Dashwoods have calculated their taxable income to be $88,000 for 2020, which includes $2,000 of long-term capital gains. Using the appropriate tax rate schedules, calculate the Dashwoods' income tax liability assuming they are married and file a joint return.

An individual with gross income of $6,000 could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

Charles, who is single, pays all of the costs of maintaining a home for himself and Damarcus. Charles and Damarcus have no family relationship but Damarcus lives with Charles for the entire year. Damarcus qualifies as a qualifying relative of Charles. (Charles claims Damarcus as a dependent on his tax return.)Charles qualifies for head of household filing status.