Exam 3: Computing the Tax

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. -Kiddie tax may be imposed

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

Kyle,whose wife died in December 2014,filed a joint tax return for 2014.He did not remarry,but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status in 2017?

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. -Multiple support agreement

Lena is 66 years of age,single,and blind and is not claimed as a dependent.How much gross income must she have before she is required to file a Federal income tax return for 2017?

During the year,Irv had the following transactions: How are these transactions handled for income tax purposes?

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. -An uncle who lives with taxpayer.

During 2017,Addison has the following gains and losses: ​ a.How much is Addison's tax liability if she is in the 15% tax bracket? b.If her tax bracket is 33% (not 15%)?

Katelyn is divorced and maintains a household in which she and her daughter,Crissa,live.Crissa,age 22,earns $11,000 during 2017 as a model.Katelyn does not qualify for head of household filing status.

Darren,age 20 and not disabled,earns $4,100 during 2017.Darren's parents cannot claim him as a dependent unless he is a full-time student.

Regarding head of household filing status,comment on the following: a.​A taxpayer qualifies even though he maintains a household which he and the dependent do not share. b.​A taxpayer does not qualify even though the person sharing the household is a dependent. c.The usual eventual filing status of a surviving spouse.

Ed is divorced and maintains a home in which he and a dependent friend live.Ed does not qualify for head of household filing status.

Which of the following taxpayers may file as a head of household in 2017? ​ Ron provides all the support for his mother,Betty,who lives by herself in an apartment in Fort Lauderdale.Ron 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.Dan earned $4,200 in 2017 working at a fast food restaurant and is saving his money to attend college in 2018.Dan lives in Tammy's home. ​ Joe's wife left him late in December of 2016.No legal action was taken and Joe has not heard from her in 2017.Joe supported his 6-year-old son,who lived with him throughout 2017.

Meg,age 23,is a full-time law student and is claimed by her parents as a dependent.During 2017,she received $1,400 interest income from a bank savings account and $6,100 from a part-time job.What is Meg's taxable income for 2017?

Adjusted gross income (AGI) appears at the bottom of page 1 and at the top of page 2 of Form 1040.

Match the statements that relate to each other. Note: Some choices may be used more than once. a.Not available to 65-year old taxpayer who itemizes. b.Exception for U.S. citizenship or residency test (for dependency exemption purposes). c.Largest basic standard deduction available to a dependent who has no earned income. d.Considered for dependency exemption purposes. e.Qualifies for head of household filing status. f.A child (age 15) who is a dependent and has only earned income. g.Considered in applying gross income test (for dependency exemption purposes). h.Not considered in applying the gross income test (for dependency exemption purposes). i.Unmarried taxpayer who can use the same tax rates as married persons filing jointly. j.Exception to the support test (for dependency exemption purposes). k.A child (age 16) who is a dependent and has only unearned income of $4,500. l.No correct match provided. -Basic standard deduction

All exclusions from gross income are reported on Form 1040.

Frank sold his personal use automobile for a loss of $9,000.He also sold a personal coin collection for a gain of $10,000.As a result of these sales,$10,000 is subject to income tax.

After paying down the mortgage on their personal residence,the Hills have found that their itemized deductions for each year are always slightly less than the standard deduction option. a.​Explain what has happened. b.What remedy do you suggest?

In order to claim a dependency exemption for other than a qualifying child,a taxpayer must meet the support test.Generally,this is done by furnishing more than 50% of a dependent's support.What exceptions exist,if any,where the support furnished need not be more than 50%?