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Exam 3: Computing the Tax

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Question 91

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A qualifying child cannot include:

A) A nonresident alien.
B) A married son who files a joint return.
C) A daughter who is away at college.
D) A brother who is 28 years of age and disabled.
E) A grandmother.

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

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Question 92

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An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

A) True
B) False

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Question 93

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Benjamin,age 16,is claimed as a dependent by his parents.During 2015,he earned $850 at a car wash.Benjamin's standard deduction is $1,400 ($1,050 + $350).

Kyle and Liza are married and under 65 years of age.During 2015,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 2014.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 3,2015,at age 90,has for many years qualified as their dependent.How many personal and dependency exemptions should Kyle and Liza claim?

During 2015,Esther had the following transactions: Salary $70,000 Interest income on Xerox bonds 2,000 Inheritance from uncle 40,000 Contribution to traditional IRA 5,500 Capital losses 2,500 Esther's AGI is:

Darren,age 20 and not disabled,earns $4,000 during 2015.Darren's parents cannot claim him as a dependent unless he is a full-time student.

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 39.6%.i.Applicable rate could be as low as 0%.j.Maximum rate is 28%.k.Income from foreign sources is not subject to tax.l.No correct match provided. -Long-term capital gains

Regarding dependency exemptions, 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 family friend who is supported by and lives with the taxpayer.

Kyle,whose wife died in December 2012,filed a joint tax return for 2012.He did not remarry,but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status as to 2015?

When can a taxpayer not use Form 1040EZ? Form 1040A?

Match the statements that relate to each other.Note: Choice l.may be used more than once. a.Not available to 65-year old taxpayer who itemizes.b.Exception for U.S.citizenship or residency test (for dependency exemption purposes).c.Largest basic standard deduction available to a dependent who has no earned income.d.Considered for dependency exemption purposes.e.Qualifies for head of household filing status.f.A child (age 15) who is a dependent and has only earned income.g.Considered in applying gross income test (for dependency exemption purposes).h.Not considered in applying the gross income test (for dependency exemption purposes).i.Unmarried taxpayer who can use the same tax rates as married persons filing jointly.j.Exception to the support test (for dependency exemption purposes).k.A child (age 16) who is a dependent and has only unearned income of $4,500.l.No correct match provided. -Abandoned spouse

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.

Surviving spouse filing status begins in the year in which the deceased spouse died.

For tax purposes,married persons filing separate returns are treated the same as single taxpayers.

Howard,age 82,dies on January 2,2015.On Howard's final income tax return,the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.

In which,if any,of the following situations will the kiddie tax not apply?

Pedro is married to Consuela,who lives with him.Both are U.S.citizens and residents of Nebraska.Pedro furnishes all of the support of his parents,who are citizens and residents of Mexico.He also furnishes all of the support of Consuela's parents,who are citizens and residents of El Salvador.Consuela has no gross income for the year.If Pedro files as a married person filing separately,how many personal and dependency exemptions can he claim on his return?

In 2015,Ed is 66 and single.If he has itemized deductions of $7,400,he should not claim the standard deduction alternative.

Regarding dependency exemptions, 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. -An uncle who lives with taxpayer.

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.