Exam 3: Computing the Tax

Debby,age 18,is claimed as a dependent by her mother.During 2017,she earned $1,100 in interest income on a savings account.Debby's standard deduction is $1,450 ($1,100 + $350).

In January 2017,Jake's wife dies and he does not remarry.For tax year 2017,Jake may not be able to use the filing status available to married persons filing joint returns.

Lee,a citizen of Korea,is a resident of the U.S.Any rent income Lee receives from land he owns in Korea is not subject to the U.S.income tax.

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:

Regarding dependency exemptions, classify each statement in one of the four categories: a.Could be a qualifying child. b.Could be a qualifying relative. c.Could be either a qualifying child or a qualifying relative. d.Could be neither a qualifying child nor a qualifying relative. -A half-brother who lives with taxpayer.

Under the income tax formula,a taxpayer must choose between deductions for AGI and the standard deduction.

During 2017,Jackson had the following capital gains and losses: ​ a.How much is Jackson's tax liability if he is in the 15% tax bracket? b.If his tax bracket is 33% (not 15%)?

For the past few years,Corey's filing status has been as follows: 2013 (married/joint); 2014 (married/separate); 2015 (surviving spouse); 2016 (surviving spouse); and 2017 (head of household).Explain what probably has happened.

Match the statements that relate to each other. a.Available to a 70-year-old father claimed as a dependent by his son. b.Equal to tax liability divided by taxable income. c.The highest income tax rate applicable to a taxpayer. d.Not eligible for the standard deduction. e.No one qualified taxpayer meets the support test. f.Taxpayer's ex-husband does not qualify. g.A dependent child (age 18) who has only unearned income. h.Highest applicable rate is 39.6%. i.Applicable rate could be as low as 0%. j.Maximum rate is 28%. k.Income from foreign sources is not subject to tax. l.No correct match provided. -Tax Rate Schedule

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

Ellen,age 39 and single,furnishes more than 50% of the support of her parents,who do not live with her; their only source of income are Social Security benefits.Ellen practices as a self-employed interior decorator and has gross income in 2017 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized. a.​Can Ellen qualify for head of household filing status? Explain. b.What is Ellen's taxable income for 2017?

The Hutters filed a joint return for 2017.They provide more than 50% of the support of Carla,Melvin,and Aaron.Carla (age 18) is a cousin and earns $2,800 from a part-time job.Melvin (age 25) is their son and is a full-time law student.He received from the university a $3,800 scholarship for tuition.Aaron is a brother who is a citizen of Israel but resides in France.Carla and Melvin live with the Hutters.How many personal and dependency exemptions can the Hutters claim on their Federal income tax return?

In terms of income tax consequences,abandoned spouses are treated the same way as married persons filing separate returns.

Wilma,age 70 and single,is claimed as a dependent on her daughter's tax return.During 2017,she had interest income of $2,500 and $800 of earned income from babysitting.Wilma's taxable income is:

When the kiddie tax applies and the parents are divorced,the applicable parent (for determining the parental tax) is the one with the greater taxable income.

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

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

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

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return,Sarah cannot claim them as dependents.

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