Exam 3: Computing the Tax

Meg, age 23, is a full-time law student and is claimed by her parents as a dependent.During 2012, she received $1,400 interest income from a bank savings account and $5,800 from a part-time job.What is Meg's taxable income for 2012?

Under what circumstances, if any, may an ex-spouse be claimed as a dependent?

Benjamin, age 16, is claimed as a dependent by his parents.During 2012, he earned $700 at a car wash.Benjamin's standard deduction is $1,250 ($950 + $300).

Regarding the tax formula and its relationship to Form 1040, which, if any, of the following statements is correct?

Surviving spouse filing status begins in the year in which the deceased spouse died.

A dependent cannot claim a personal exemption on his or her own return.

In terms of timing as to any one year, the Tax Tables are available before the Tax Rate Schedules.

An "above the line" deduction refers to a deduction for AGI.

Currently, the top income tax rate in effect is not the highest it has ever been.

The Dargers have itemized deductions that exceed the standard deduction.However, when they file their joint return, they choose the standard deduction option.

In satisfying the support test and the gross income test for claiming a dependency exemption, a scholarship received by the person being claimed is handled the same way for each test.Do you agree or disagree with this statement? Why?

For the past few years, Corey's filing status has been as follows: 2008 (married/joint); 2009 (married/separate); 2010 (surviving spouse); 2011 (surviving spouse); and 2012 (head of household).Explain what probably has happened.

Ellen, age 12, lives in the same household with her father, grandfather, and uncle.The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%).Disregarding tie-breaker rules, Ellen is a qualifying child as to:

Which, if any, of the following statements relating to the standard deduction is correct?

Match the statements that relate to each other.Note: Choice L may be used more than once.

When married persons file a joint return, joint and several liability results.What does this mean?

An individual taxpayer uses a fiscal year March 1-February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

In determining the filing requirement based on gross income received, both additional standard deductions (i.e., age and blindness) are taken into account.

During the current year, Doris received a large gift from her parents and a sizeable inheritance from an uncle. She also paid premiums on an insurance policy on her life. Doris is confused because she cannot find any place on Form 1040 to report these items. Explain.

Arnold is married to Sybil, who abandoned him in 2011.He has not seen or communicated with her since April of that year.He maintains a household in which their son, Evans, lives.Evans is age 25 and earns over $6,000 each year.For tax year 2012, Arnold's filing status is: