Exam 2: Determination of Tax

Paul and Sally file a joint return showing $87,000 of AGI.They have three dependent children ages 6,8,and 13.What is the amount of their child credit?

Kate is single and a homeowner.In 2016,she has property taxes on her home of $3,000,makes charitable contributions of $2,000,and pays home mortgage interest of $7,000.Kate's adjusted gross income for 2016 is $77,000. Required: Compute her taxable income for 2016.

Generally,deductions for (not from)adjusted gross income are personal expenses specifically allowed by tax law.

Charlie is claimed as a dependent on his parents' tax return in 2016.He received $8,000 during the year from a part-time acting job,which was his only income.What is his standard deduction?

The annual tax reporting form filed with the IRS by C corporations is the Schedule C.

A child credit is a partially refundable credit.

Amanda has two dependent children,ages 10 and 12.She earned $15,000 from her waitress job.How much of her child credit is refundable?

Elise,age 20,is a full-time college student with earned income from wages of $4,400 and interest income of $500.Elise's parents provide more than half of her support.Elise's 2016 taxable income is

For each of the following independent cases,indicate the total number of exemptions (personal and dependents)that may be claimed by the taxpayer in 2016. a.Cassie is a single mother providing the sole support of her three children,who all live with her.Her 16 year-old daughter,Tammy,earned $15,200 modeling during the year and her two sons,R.J.and Will,ages 10 and 8,have no income. b.Olivia,35 years old,provided eighty percent of the support of her grandmother who lived in another state.Her grandmother's only income was from non-taxable social security of $9,500. c.Vanessa and Matt Reardon are married and under 65 years of age.During 2016,they furnish more than half of the support of their 25 year-old son,Bill,who lives with them.Bill earns $2,000 from a part-time job,most of which he sets aside for future college expenses.Bill is not currently a student.Vanessa's father,Henry,who died on January 3,2016,at age 80,had for many years qualified as their dependent. d.Douglas and Marjorie are husband and wife and file a joint return.Both are under 65 years of age.They provide more than half of the support of their daughter,Ellen (age 23),who is a full-time medical student.Ellen receives a $3,400 taxable scholarship covering her room and board at college.They furnish all of the support of Henry (Douglas's grandfather),who is age 85 and lives in a nursing home.They also support Meg (age 69),who is a friend of the family and lives with them. e.Blair,who is divorced,maintains a home in which she,her twin sons,and her baby daughter live all year.The children's father,Ross,provides over half their support.No special arrangements exist between Blair and Ross.

When two or more people qualify to claim the same person as a dependent,a taxpayer who is entitled to the exemption through the qualified child rules has priority over a taxpayer who meets the requirements for other relatives.

The following information for 2015 relates to Emma Grace,a single taxpayer,age 18: a.Compute Emma Grace's taxable income assuming she is self-supporting. b.Compute Emma Grace's taxable income assuming she is a dependent of her parents.

The standard deduction may not be claimed by one married taxpayer filing a separate return if the other spouse itemizes deductions.

Blaine Greer lives alone.His support comes from the following sources: Assuming a multiple support declaration exists,which of the individuals may claim Blaine as a dependent?

Silver Inc.is an S corporation.This year it earned $50,000 of taxable income and paid a $10,000 distribution to Daisy,its sole shareholder.Daisy has a marginal tax rate of 25%.Due to the corporation's results and the distribution paid,the IRS will receive total taxes of

Parents must provide more than half the support of their child under the age of 19 in order to claim her as a dependent qualifying child.

Kadeisha is single with no dependents and has a salary of $102,000 for 2016,along with tax exempt interest income of $3,000 from a municipality.Her itemized deductions total $6,100. Required: Compute her taxable income.

David's father is retired and receives $14,000 per year in Social Security benefits.David's father saves $4,000 of the benefits and spends the remaining $10,000 for his support.How much support must David provide for his father to meet the dependent support requirement?

Amber supports four individuals: Erin,her stepdaughter,who lives with her;Amy,her cousin,who lives in another state;Britney,her friend,who lives legally in Amber's home all year long;and Charlie,her father,who lives in another state.Assume that the dependency requirements other than residence are all met.How many personal and dependency exemptions may Amber claim?

Which of the following types of itemized deductions are included in the category of miscellaneous expenses that are deductible only if the aggregate amount of such expenses exceeds 2% of the taxpayer's adjusted gross income?

Discuss why Congress passed the innocent spouse provision and detail the requirements to be met in order to qualify as an innocent spouse and be relieved of liability for tax on unreported income.