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

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Question 21

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Tom Suzuki's tax liability for the year is $2,450. He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits. What are Tom's taxes due or tax refund for the year?

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$1,600 tax...

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Question 22

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Joanna received $60,000 compensation from her employer, the value of her stock in ABC company appreciated by $5,000 during the year (but she did not sell any of the stock) , she received $30,000 of life insurance proceeds from the death of her husband. What is the amount of Joanna's gross income from these items?

A) $65,000.
B) $95,000.
C) $60,000.
D) $90,000.

E) A) and C)
F) A) and B)

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Question 23

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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.

Mason and his wife Madison have been married for five years. Jaxon, who is 18 years old and unrelated to Mason and Madison, has been living with Mason and Madison for the last two years. In May of year 1, Mason and Madison divorced. Mason and Jaxon stayed in the home and Madison moved out. During year 2, Mason provided all ofJaxon's support and Jaxon lived in the home for all of year 2. Jaxon did not earn any income during year 2. What is Mason's most favorable filing status for year 2?

For filing status purposes, the taxpayer's marital status is determined at what point during the year?

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?

Lebron received $50,000 of compensation from his employer and he received $400 ofinterest from a municipal bond. What is the amount of Lebron's gross income from these items?

Eric and Josephine were married in year 1. In year 2, Eric dies. The couple did not have any children. Assuming Josephine does not remarry, she may file as a qualifying widow in year 3.

Taxpayers may prepay their tax liability through withholdings and through estimated tax payments.

Katy has one child, Dustin, who is 18 years old at the end of the year. Dustin lived at home for three months during the year before leaving home to work full-time in another city. During the year, Dustin earned $15,000. Katy provided more than half of Dustin's support for the year. Which of the following statements regarding whether Katy may claim Dustin as a dependent for the current year is accurate?

For AGI deductions are commonly referred to as deductions "above the line."

Which of the following statements regarding exemptions is correct?

The Dashwoods have calculated their taxable income to be $80,000 for 2017, which includes $2,000 of long-term capital gains. Using the appropriate tax rate schedule, calculate the Dashwood's income tax liability assuming they are married and file a joint return.

The Tanakas filed jointly in 2017. Their AGI is $120,000. They reported $10,000 of itemized deductions and they have two dependent children. The 2017 standard deduction amount for MFJ taxpayers is $12,700 and each exemption is $4,050. What is the total amount of from AGIdeductions they are allowed to claim on their 2017 tax return?

Lydia and John Wickham filed jointly in year 1. They divorced in year 2. In late year 2, the IRS discovered that the Wickham's underpaid their year 1 taxes by $2,000. Both Lydia and John worked in year 1 and received equal income but John had $2,000 less tax withheld than did Lydia. Who is legally liable for the tax underpayment?

Doug and Lisa have determined that their tax liability on their joint return is $3,700. They have made prepayments of $1,000 and also are entitled to child tax credits of $2,000. What is the amount of their tax refund or taxes due?

Inventory is a capital asset.

The income tax base for an individual tax return is:

Which of the following statements regarding personal and dependency exemptions istrue?

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