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

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Question 41

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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 notaxes, her parents can still claim her as a dependent.

A) True
B) False

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Question 42

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Which of the following statements regarding tax credits is true?

A) Tax credits reduce taxes payable dollar for dollar.
B) Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate.
C) Tax credits reduce taxable income dollar for dollar.
D) None of these statements is true.

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

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Question 43

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Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2017, Ed and Jane realized the following items of income and expense: They also qualified for a $1,000 tax credit. Their employers withheld $1,800 in taxes from their paychecks (in the aggregate). Finally, the 2017 standard deduction amount for MFJ taxpayers is $12,700 and the 2017exemption amount is $4,050.What are the couple's taxes due or tax refund (use the tax rate schedules not tax tables)?

A taxpayer may qualify for the head of household filing status if she has no dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father.

The relationship test for qualifying relative requires the potential qualifying relative to have a family relationship with the taxpayer.

In order to be a qualifying relative of another, an individual's gross income must be less than ________.

In 2017, 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?

An individual may meet the relationship test to be a taxpayer's qualifying relative even if the individual has no family relationship with the taxpayer.

If no one qualifies as the dependent of an unmarried taxpayer, the unmarried taxpayer may still be able to qualify for the head of household filing status.

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?

For purposes of the qualifying child residence test, a child's temporary absence from the taxpayer's home for attending school full-time is counted as though the child lived in the taxpayer's home during the absence.

The character of income is a factor in determining the rate at which the income is taxed.

In determining filing status purposes, which of the following is not a requirement for a married taxpayer to be treated as unmarried at the end of the year?

Certain types of income are taxed at a lower rate than ordinary income.

Relative to for AGI deductions, from AGI deductions tend to relate to items that are more personal in nature.

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

Sullivan's wife Susan died four years ago. Sullivan has not remarried and he maintains a home for his dependent child Sammy. In 2017, Sullivan received $70,000 of salary from his employer and he paid $6,000 of itemized deductions. What is Sullivan's taxable income for 2017?

When determining whether a child meets the qualifying child support test for the parents, scholarships earned by the child do not count as self-support provided by the child.

Sheri and Jake Woodhouse have one daughter, Emma, who is 16 years old. They also have taken in Emma's friend, Harriet, who has lived with them since February of the current year and is also 16 years of age. The Woodhouses have not legally adopted Harriet but Emma often refers to Harriet as "her sister." The Woodhouses provide all of the support for both girls, and both girls live at the Woodhouse residence. Which of thefollowing statements is true regarding the dependency exemptions (and the reason for the exemptions) Sheri and Jake may claim for the current year for these girls?

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