Question 1

Mr.and Mrs.Warren's AGI last year was $90,300,and their total tax was $13,988.This year,the couple's total tax is $14,700.Unless the Warrens paid at least $13,988 in the form of withholding and quarterly estimated payments,they will incur an underpayment penalty this year.

Accepted Answer

A) True 
 B)False

Question 2

Last year,Mr.Tyker's AGI was $182,800,and his total tax liability was $51,650.This year,his total tax liability is $65,440.Compute the minimum amount of current year tax that Mr.Tyker had to prepay (withholding and estimated payments) to avoid an underpayment penalty.

Accepted Answer

A)  $65,440
B)  $51,650
C)  $56,815
D)  $58,896E) None of the above
F) All of the above

Question 3

Married individuals who elect to file separate tax returns may use the single rates to compute their tax.

Accepted Answer

A) True 
 B)False

Question 4

Alice Grim,a single taxpayer,has $719,000 taxable income,which includes a $240,000 capital gain taxed at 20%.Her alternative minimum taxable income in excess of her exemption amount is $937,400.Compute Alice's regular tax,AMT,and total tax.

Accepted Answer

Alice's regular tax is $191,440 = $143,4...

Question 5

Which of the following statements describing individual tax deductions is false?

Accepted Answer

A)  Individuals can take both above-the-line and the standard deduction in the same year.
B)  Individuals elect to itemize deductions in a tax year in which total itemized deductions exceed the standard deduction.
C)  In a year in which an individual takes the standard deduction,any itemized deductions yield no tax benefit.
D)  Individuals who pay self-employment tax can deduct the tax as an itemized deduction.E) C) and D)
F) B) and C)

Question 6

Mr.and Mrs.Dell,ages 29 and 26,file a joint return and have no dependents for the year.Here is their relevant information: Standard Deduction Table.  Compute their adjusted gross income (AGI) and taxable income.

Accepted Answer

A)  AGI $164,900; taxable income $134,700
B)  AGI $158,700; taxable income $132,500
C)  AGI $158,700; taxable income $108,500
D)  AGI $164,900; taxable income $8,500E) None of the above
F) C) and D)

Question 7

Mr.and Mrs.Reece couldn't complete their 2019 Form 1040 before April 15,2020.They estimate that they will have a $700 balance of tax due with the return.Which of the following statement is true?

Accepted Answer

A)  If the Reeces fail to file their return by April 15,they may opt to request an extension but still will owe penalties to the IRS.
B)  The Reeces can file an extension request by April 15 to extend the tax payment and filing date for six months without penalty.
C)  The Reeces can file an extension request by April 15 to extend the filing date for six months without penalty.They must pay the $700 estimated balance of tax due with the extension request.
D)  None of the above is true.E) A) and B)
F) A) and C)

Question 8

Mr.and Mrs.Harvey's tax liability before credits was $1,675.Their income tax withholding was $1,050,and they are entitled to a $1,189 earned income credit.Which of the following statements is true?

Accepted Answer

A)  The Harveys are entitled to a $1,050 tax refund.
B)  The Harveys are entitled to a $1,189 tax refund.
C)  The Harveys are entitled to a $564 tax refund.
D)  The Harveys owe no additional tax but they are not entitled to a refund.E) All of the above
F) None of the above

Question 9

Mr.and Mrs.Upton's marginal tax rate on their joint return is 32%.This year,their itemized deductions totaled $25,200,and their standard deduction (MFJ) was $24,400.Compute their incremental tax savings from their itemized deductions.

Accepted Answer

A)  $0
B)  $256
C)  $7,808
D)  $8,064E) None of the above
F) A) and B)

Question 10

In determining the standard deduction,which of the following statements is true?

Accepted Answer

A)  The standard deduction is a function of filing status.
B)  An individual who is both blind and age 65 by the last day of the taxable year is entitled to one additional standard deduction amount.
C)  An individual who is considered a dependent of another person for tax purposes is not allowed a standard deduction.
D)  The standard deduction for a head of household is twice the standard deduction for a single individual.E) C) and D)
F) B) and D)

Question 11

Meraleigh,age 16,is claimed as a dependent on her parents' tax return.This year,Meraleigh earned $510 from babysitting and $220 interest income from a savings account.Compute Meraleigh's standard deduction.

Accepted Answer

A)  $730
B)  $860
C)  $510
D)  $1,100E) B) and C)
F) All of the above

Question 12

Which of the following statements regarding the calculation of taxable income is false?

Accepted Answer

A)  The first step in the calculation of taxable income is determining the taxpayer's total income.
B)  Adjusted gross income is equal to total income less above-the-line deductions.
C)  Adjusted gross income can be reduced by the greater of the standard deduction or itemized deductions.
D)  Taxpayers are allowed to deduct the greater of itemized deductions or above-the-line deductions in calculating taxable income.E) None of the above
F) B) and C)

Question 13

Only natural children,adopted children,and stepchildren can be a qualified dependent for tax purposes.

Accepted Answer

A) True 
 B)False

Question 14

Mr.and Mrs.Queen provide 90% of the financial support for Mrs.Queen's mother,Doreen,who lives in the couple's home.Doreen's only income this year is a $7,500 taxable pension from her former employer.Doreen is not considered a dependent of Mr.and Mrs.Queen this year for tax purposes.

Accepted Answer

A) True 
 B)False

Question 15

Mr.Thomas is age 69,has perfect vision,and files as a single taxpayer.His standard deduction for 2019 is $13,850.

Accepted Answer

A) True 
 B)False

Question 16

An above-the-line deduction reduces both adjusted gross income and taxable income.

Accepted Answer

A) True 
 B)False

Question 17

Samantha died on January 18,2018.Her husband Dave lived by himself until he remarried in 2019.What was Dave's filing status in 2018 and 2019?

Accepted Answer

A)  Married filing jointly in 2018; surviving spouse in 2019.
B)  Married filing jointly in 2018; single in 2019.
C)  Surviving spouse in 2018 and 2019.
D)  Surviving spouse in 2018; single in 2019.E) A) and B)
F) A) and C)

Question 18

An individual's taxable income equals adjusted gross income less the QBI deduction.

Accepted Answer

A) True 
 B)False

Question 19

The earned income credit is available only to low-income taxpayers with dependent children.

Accepted Answer

A) True 
 B)False

Question 20

Ruth Anne,a single taxpayer,reported $529,500 alternative minimum taxable income before any exemption on her 2019 Form 1040.Calculate Ruth Anne's AMT exemption.

Accepted Answer

A)  $4,800
B)  $66,900
C)  $71,700
D)  None of the aboveE) A) and C)
F) A) and B)

Exam 14: The Individual Tax Formula

Mr.and Mrs.Harvey's tax liability before credits was $1,675.Their income tax withholding was $1,050,and they are entitled to a $1,189 earned income credit.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Mr.and Mrs.Queen provide 90% of the financial support for Mrs.Queen's mother,Doreen,who lives in the couple's home.Doreen's only income this year is a $7,500 taxable pension from her former employer.Doreen is not considered a dependent of Mr.and Mrs.Queen this year for tax purposes.

Correct AnswerverifiedShow Answer

Mr.and Mrs.Warren's AGI last year was $90,300,and their total tax was $13,988.This year,the couple's total tax is $14,700.Unless the Warrens paid at least $13,988 in the form of withholding and quarterly estimated payments,they will incur an underpayment penalty this year.

Correct AnswerverifiedShow Answer

Meraleigh,age 16,is claimed as a dependent on her parents' tax return.This year,Meraleigh earned $510 from babysitting and $220 interest income from a savings account.Compute Meraleigh's standard deduction.

Correct AnswerverifiedShow Answer

An above-the-line deduction reduces both adjusted gross income and taxable income.

Correct AnswerverifiedShow Answer

Alice Grim,a single taxpayer,has $719,000 taxable income,which includes a $240,000 capital gain taxed at 20%.Her alternative minimum taxable income in excess of her exemption amount is $937,400.Compute Alice's regular tax,AMT,and total tax.

Correct AnswerverifiedAlice's regular tax is $191,440 = $143,4...View AnswerShow Answer

Ruth Anne,a single taxpayer,reported $529,500 alternative minimum taxable income before any exemption on her 2019 Form 1040.Calculate Ruth Anne's AMT exemption.

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Married individuals who elect to file separate tax returns may use the single rates to compute their tax.

Correct AnswerverifiedShow Answer

Only natural children,adopted children,and stepchildren can be a qualified dependent for tax purposes.

Correct AnswerverifiedShow Answer

Which of the following statements describing individual tax deductions is false?

Correct AnswerverifiedShow Answer

Mr.and Mrs.Dell,ages 29 and 26,file a joint return and have no dependents for the year.Here is their relevant information: Standard Deduction Table. Compute their adjusted gross income (AGI) and taxable income.

Correct AnswerverifiedShow Answer

Last year,Mr.Tyker's AGI was $182,800,and his total tax liability was $51,650.This year,his total tax liability is $65,440.Compute the minimum amount of current year tax that Mr.Tyker had to prepay (withholding and estimated payments) to avoid an underpayment penalty.

Correct AnswerverifiedShow Answer

Mr.Thomas is age 69,has perfect vision,and files as a single taxpayer.His standard deduction for 2019 is $13,850.

Correct AnswerverifiedShow Answer

The earned income credit is available only to low-income taxpayers with dependent children.

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Which of the following statements regarding the calculation of taxable income is false?

Correct AnswerverifiedShow Answer

In determining the standard deduction,which of the following statements is true?

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Mr.and Mrs.Upton's marginal tax rate on their joint return is 32%.This year,their itemized deductions totaled $25,200,and their standard deduction (MFJ) was $24,400.Compute their incremental tax savings from their itemized deductions.

Correct AnswerverifiedShow Answer

Samantha died on January 18,2018.Her husband Dave lived by himself until he remarried in 2019.What was Dave's filing status in 2018 and 2019?

Correct AnswerverifiedShow Answer

Mr.and Mrs.Reece couldn't complete their 2019 Form 1040 before April 15,2020.They estimate that they will have a $700 balance of tax due with the return.Which of the following statement is true?

Correct AnswerverifiedShow Answer

An individual's taxable income equals adjusted gross income less the QBI deduction.

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Alice's regular tax is $191,440 = $143,4...
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