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

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Question 41

True/False

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An individual receiving $5,000 of tax exempt income during the year could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

A) True
B) False

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Question 42

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Which of the following statements is true?

A) Income character determines the tax year in which the income is taxed.
B) Income character depends on the taxpayer's filing status.
C) Qualified dividend income is taxed at a lower rate than an equal amount of ordinary income.
D) A taxpayer selling a capital asset at a gain recognizes ordinary income.

E) All of the above
F) None of the above

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Question 43

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Which of the following types of income are not considered ordinary income?

All of the following are tests for determining qualifying child status except the ________.

Beginning in 2018, taxpayers are allowed to deduct dependency exemptions but they are not allowed to deduct personal exemptions.

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

A taxpayer who is claimed as a dependent on another's tax return may not claim any dependents on his or her tax return.

Jan is unmarried and has no children, but she provides all of the financial support for her mother, who lives in an apartment across town. Jan's mother qualifies as Jan's dependent. Which is the most advantageous filing status available to Jan?

An individual may be considered as a qualifying child of her parents and a qualifying child of her grandparents in the same year.

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.

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

Jasmine and her husband Arty have been married for 25 years. In May of this year, the couple divorced. During the year, Jasmine provided all the support for herself and her 22-year-old child Dexter who lived in the same home as Jasmine for the entire year. Dexter is employed full-time, earning $29,000 this year. What is the Jasmine's most favorable filing status for the year?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2018, Ed and Jane realized the following items of income and expense: They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2018 standard deduction amount for MFJ taxpayers is $24,000. What is the couple's gross income?

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?

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

Which of the following statements regarding realized income is true?

Bonnie and Ernie file a joint return. Bonnie works and receives income during the year but Ernie does not. If the couple files a joint tax return, Ernie is responsible for paying any taxes due if Bonnie is unable to pay the taxes.

The standard deduction amount for married filing separately taxpayers (MFS) is less than the standard deduction amount for married filing jointly taxpayers.

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

Itemized deductions and the standard deduction are deductions from AGI but the deduction for qualified business income is a deduction for AGI.