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

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Question 1

Multiple Choice

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Which of the following is not an itemized deduction?

A) Alimony paid.
B) Medical expenses.
C) Real estate taxes.
D) Charitable contributions.

E) C) and D)
F) A) and D)

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Question 2

Multiple Choice

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Which of the following relationships does NOT pass the relationship test for a qualifying child?

A) Stepsister's daughter.
B) Half-brother.
C) Cousin.
D) Stepsister.

E) B) and D)
F) A) and B)

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C

Question 3

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

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

Char and Russ Dasrup have one daughter, Siera, who is 16 years old. In November of last year, the Dasrups took in Siera's 16-year-old friend Angela, who has lived with them ever since. The Dasrups have not legally adopted Angela but Siera often refers to Angela as her "sister." The Dasrups provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrups' residence. Which of the following statements is true regarding whom Char and Russ may claim as dependents for the current year?

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.

The standard deduction amount varies by filing status.

All of the following represent a type or character of income except:

Taxpayers are allowed to claim a child tax credit for their qualifying children and certain other qualifying dependents.

Which of the following shows the correct relationship among standard deduction amounts for the respective filing statuses?

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 Jasmine's most favorable filing status for the year?

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

Joanna received $60,600 compensation from her employer, the value of her stock in ABC company appreciated by $13,600 during the year (but she did not sell any of the stock) , and she received $35,000 of life insurance proceeds from the death of her husband. What is the amount of Joanna's gross income from these items?

Tax credits are generally more valuable than tax deductions because tax credits reduce a taxpayer's gross tax liability dollar for dollar while tax deductions do not.

The test for a qualifying child includes a gross income restriction while the test for qualifying relative does not.

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?

In April of Year 1, Martin left his wife, Marianne. While the couple was apart, they were not legally divorced. Marianne found herself having to financially provide for the couple's only child (who qualifies as Marianne's dependent) and to pay all the costs of maintaining the household. When Marianne filed her tax return for Year 1, she filed a return separate from Martin. What is Marianne's most favorable filing status for Year 1?

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

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

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 adjusted gross income?