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

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Question 51

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Sullivan's wife, Susan, died four years ago. Sullivan has not remarried and he maintains a home for his dependent child, Sammy. In 2020, Sullivan received $70,000 of salary from his employer and $3,000 of qualified business income from a business investment, and he paid $10,000 of itemized deductions. What is Sullivan's taxable income for 2020?

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Question 52

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Which of the following statements regarding dependents is false?

A) A taxpayer may be allowed to claim another as a dependent even if the taxpayer has no family relationship with the other person.
B) To qualify as a dependent of another, an individual must be a resident of the United States.
C) An individual who qualifies as a dependent of another taxpayer may not claim any dependents.
D) An individual cannot qualify as a dependent of another as a qualifying relative taxpayer if the individual's gross income exceeds a certain amount.

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Question 53

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In Year 1, the Bennetts' 25-year-old daughter, Jane, is a full-time student at an out-of-state university but she plans to return home after the school year ends. In previous years, Jane has never worked and her parents have always been able to claim her as a dependent. In Year 1, a kind neighbor offers to pay for all of Jane's educational and living expenses. Which of the following statements is most accurate regarding whether Jane's parents would be allowed to claim Jane as a dependent for Year 1, assuming the neighbor pays for all of Jane's support?

From AGI deductions are generally more valuable to taxpayers than for AGI deductions.

Jane and Ed Rochester are married with a 2-year-old child, who lives with them and whom they support financially. In 2020, 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 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the couple's taxable income?

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year, the taxpayer will qualify for head of household filing status.

All of the following are for AGI deductions except:

Madison's gross tax liability is $9,000. Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer. What are Madison's taxes due (or taxes refunded) with her tax return?

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

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

Catherine de Bourgh has one child, Anne, who is 18 years old at the end of the year. Anne lived at home for seven months during the year before leaving home to attend State University for the remaining five months of the year. During the year, Anne earned $6,000 while working part time. Catherine provided 80 percent of Anne's support and Anne provided the rest. Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?

Taxpayers are generally allowed to claim deductions for expenditures unless a specific tax provision indicates the expenditure is not deductible.

Which of the following is NOT a from AGI deduction?

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

All of the following are for AGI deductions except:

Which of the following series of inequalities is generally most accurate?

Greg is single. During 2020, he received $60,000 of salary from his employer. That was his only source of income. He reported $3,000 of for AGI deductions and $9,000 of itemized deductions. The 2020 standard deduction amount for a single taxpayer is $12,400. What is Greg's taxable income?

It is generally more advantageous for liability protection purposes for a married couple to file separately than it is for them to file jointly.

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.

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