Question 1

Most taxpayers make payments to the IRS through income tax withholdings and quarterly estimated tax payments.

Accepted Answer

A) True 
 B)False  True

Question 2

To be a qualifying child, the taxpayer must meet three general tests and five specific tests. What are the three general tests?

Accepted Answer

A)   Relationship test, residency test and gross income test.
B)   Support test, age test and relationship test.
C)   Dependent taxpayer test, relationship test and citizen or resident test.
D)  Dependent taxpayer test, joint return test and citizen or resident test. D

Question 3

List and describe the five tests that a person must meet to qualify as a qualifying child.

Accepted Answer

To be a qualifying child, the person must meet five tests:
1. Relationship test.
2. Age test.
3. Residency test.
4. Support test.
5. Special test for qualifying child of more than one taxpayer.
The relationship test is met if the dependent is one of the following: child or descendant of child; stepchild; eligible foster child; or brother, sister, half-brother, half-sister, stepbrother, or stepsister, or a descendant of them.
The age test is met if, at the end of the year, the child is under the age of 19, under the age of 24 and a full- time student, or totally and permanently disabled regardless of age. After 2008, the child must be younger than the person claiming the dependency.
The residency test is met if the child lived with the taxpayer for more than half of the year.
The support test is met if the child did not provide more than half of his or her support.
The special test for qualifying child of more than one taxpayer applies if the child meets the other four tests and can be the qualifying child for more than one taxpayer. In this case, only one individual can claim the exemption.

Question 4

Even if the total of the itemized deductions is lower than the standard deduction, a taxpayer should choose to itemize on his or her tax return.

Accepted Answer

A) True 
 B)False

Question 5

Severin, who is 20 years old and a full- time student, is claimed by his parent as a dependent. However, in 2015, he earned $5,350. What is the amount of the personal exemption that he can claim on his tax return?

Accepted Answer

A)   $3,950.
B)   $1,000.
C)   $0.
D)  $5,400.

Question 6

To be a qualifying child, the taxpayer must meet three general tests and five specific tests. Which one is not part of the five specific tests?

Accepted Answer

A)   Gross income test.
B)   Relationship test.
C)   Residency test.
D)  Special test for qualifying child of more than one taxpayer.

Question 7

The tax code defines adjusted gross income (AGI) as gross income minus a list of permitted deductions.

Accepted Answer

A) True 
 B)False

Question 8

Taxable income (TI) is computed after subtracting from adjusted gross income (AGI), the standard deduction or itemized deductions and personal and dependency exemptions.

Accepted Answer

A) True 
 B)False

Question 9

The exemption amount is subject to annual adjustment for inflation.

Accepted Answer

A) True 
 B)False

Question 10

Marital status of a taxpayer is determined on the last day of the tax year.

Accepted Answer

A) True 
 B)False

Question 11

What is the amount of the tax liability for a qualifying widow(er) with a dependent child and having taxable income of $18,355? All answers should be rounded to the nearest dollar.

Accepted Answer

A)   $1,836.
B)   $2,331.
C)   $2,149.
D)  $1,838.

Question 12

What is the amount of the tax liability for a married couple having taxable income of $96,843? All answers should be rounded to the nearest dollar.

Accepted Answer

A)   $14,526.
B)   $13,604.
C)   $15,794.
D)  $15,923.

Question 13

An extension to file a tax return is an extension of time to file and an extension of time to pay.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following items would not be considered as support for a dependency exemption?

Accepted Answer

A)   shelter.
B)   food.
C)   medical and dental care.
D)  life insurance premiums.

Question 15

What is the limit on the social security amount for 2015?

Accepted Answer

A)   $118,500.
B)   $117,000.
C)   $113,700.
D)  $110,100.

Question 16

The standard deduction in 2015 for a married couple, under 65 and not blind, is $12,600.

Accepted Answer

A) True 
 B)False

Question 17

The failure to file penalty is ________ of the tax shown on the return for each month (or fraction of a month) the tax return is not filed, up to a maximum of 25%.

Accepted Answer

A)   0.25%
B)   0.5%
C)   5.0%
D)  5.5%

Question 18

If the taxpayer still owes tax after April 15, the IRS assesses interest based on the remaining amount owed.

Accepted Answer

A) True 
 B)False

Question 19

Why is the concept of "Adjusted Gross Income (AGI)" important?

Accepted Answer

The answer of Why is the concept of "Adjusted Gross...

Question 20

If a married couple files separate returns and one of them itemizes, the other spouse must also itemize.

Accepted Answer

A) True 
 B)False

Exam 2: Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Most taxpayers make payments to the IRS through income tax withholdings and quarterly estimated tax payments.

To be a qualifying child, the taxpayer must meet three general tests and five specific tests. What are the three general tests?

List and describe the five tests that a person must meet to qualify as a qualifying child.

Even if the total of the itemized deductions is lower than the standard deduction, a taxpayer should choose to itemize on his or her tax return.

Severin, who is 20 years old and a full- time student, is claimed by his parent as a dependent. However, in 2015, he earned $5,350. What is the amount of the personal exemption that he can claim on his tax return?

To be a qualifying child, the taxpayer must meet three general tests and five specific tests. Which one is not part of the five specific tests?

The tax code defines adjusted gross income (AGI) as gross income minus a list of permitted deductions.

Taxable income (TI) is computed after subtracting from adjusted gross income (AGI), the standard deduction or itemized deductions and personal and dependency exemptions.

The exemption amount is subject to annual adjustment for inflation.

Marital status of a taxpayer is determined on the last day of the tax year.

What is the amount of the tax liability for a qualifying widow(er) with a dependent child and having taxable income of $18,355? All answers should be rounded to the nearest dollar.

What is the amount of the tax liability for a married couple having taxable income of $96,843? All answers should be rounded to the nearest dollar.

An extension to file a tax return is an extension of time to file and an extension of time to pay.

Which of the following items would not be considered as support for a dependency exemption?

What is the limit on the social security amount for 2015?

The standard deduction in 2015 for a married couple, under 65 and not blind, is $12,600.

The failure to file penalty is ________ of the tax shown on the return for each month (or fraction of a month) the tax return is not filed, up to a maximum of 25%.

If the taxpayer still owes tax after April 15, the IRS assesses interest based on the remaining amount owed.

Why is the concept of "Adjusted Gross Income (AGI)" important?

If a married couple files separate returns and one of them itemizes, the other spouse must also itemize.