Exam 3: Computing the Tax

Which of the following taxpayers may file as a head of household in 2019? Marco provides all of the support for his mother, Sienna, who lives by herself in an apartment in Fort Lauderdale. Marco pays the rent and other expenses for the apartment and properly claims his mother as a dependent. Tammy provides over one-half the support for her 18-year old brother, Dan. He earned $4,200 in 2019 working at a fast-food restaurant and is saving his money to attend college in 2020. Dan lives in Tammy's home. Juan's wife left him late in December of 2018. No legal action was taken and Juan has not heard from her in 2019. Juan supported his 6-year-old son, who lived with him throughout 2019.

Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions. Explain and illustrate what this statement means.

In determining whether the gross income test is met for determining dependency status, only the taxable portion of a scholarship is considered.

Claude's deductions from AGI exceed the standard deduction allowed for the current year. Under these circumstances, Claude cannot claim the standard deduction.

A child who is married cannot be subject to the kiddie tax.

Deductions for AGI are often referred to as "above-the-line" or "Schedule 1" deductions. Explain.

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI. Since he plans to choose the standard deduction option for the year, does the distinction matter? Explain.

Dan and Donna are husband and wife and file separate returns for the year. If Dan itemizes his deductions from AGI, Donna cannot claim the standard deduction.

Jeremy is married to Amy, who abandoned him in 2018. He has not seen or communicated with her since April of that year. He maintains a household in which their son, Evan, lives. Evan is age 25 and earns over $6,000 each year. For tax year 2019, Jeremy's filing status is:

Since an abandoned spouse is treated as not married and has one or more dependent children, he or she qualifies for the standard deduction available to head of household.

In which of the following situations, if any, will the kiddie tax not apply?

Which of the following, if any, is a deduction for AGI?

Match the statements that relate to each other. Note: Choice k. may be used more than once. -Multiple support agreement

Derek, age 46, is a surviving spouse. If he has itemized deductions of $26,250 for 2019, Derek should not claim the standard deduction.

Butch and Minerva divorced in December 2019. Since they were married for more than one-half of the year, they are considered as married for 2019.

Which of the following, if any, is a deduction for AGI?

Michaella, age 23, is a full-time law student and is claimed by her parents as a dependent. During 2019, she received $1,400 interest income from a bank savings account and $12,000 from a part-time job. What is Michaella's taxable income for 2019?

Match the statements that relate to each other. Note: Some choices may be used more than once. -Scholarship funds for tuition

Taylor, who works for a public accounting firm, had the following transactions for 2019: Salary \ 85,000 Moving expenses incurred to change jobs (12,000) Inheritance received from deceased uncle 300,000 Life insurance proceeds from policy on uncle's life (Taylor was named the beneficiary) 200,000 Cash prize from church raffle 3,000 Payment of church pledge (4,500) What is Taylor's AGI for 2019?

For the past few years, Corey's filing status has been as follows: 2015 (married/joint); 2016 (married/separate); 2017 (surviving spouse); 2018 (surviving spouse); and 2019 (head of household). Explain what probably has happened.