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Katy has one child,Dustin,who is 18 years old at the end of the year.Dustin lived at home for three months during the year before leaving home to work full-time in another city.During the year,Dustin earned $15,000.Katy provided more than half of Dustin's support for the year.Which of the following statements regarding whether Katy may claim Dustin as a dependent for the current year is accurate?


A) Yes,Dustin is a qualifying child of Katy.
B) Yes,Dustin fails the residence test for a qualifying child but he is considered a qualifying relative of Katy.
C) No,Dustin fails the support test for a qualifying relative.
D) No,Dustin fails the gross income test for a qualifying relative.Dustin fails the qualifying child residence test and he fails the qualifying relative gross income test so Katy may not claim Dustin as a dependent.

E) C) and D)
F) B) and D)

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From AGI deductions are commonly referred to as deductions "below the line."

A) True
B) False

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Taxpayers may prepay their tax liability through withholdings and through estimated tax payments.

A) True
B) False

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In certain circumstances,a married taxpayer who files separately may qualify for the head of household filing status.

A) True
B) False

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Eric and Josephine were married in year 1.In year 2,Eric dies.The couple did not have any children.Assuming Josephine does not remarry,she may file as a qualifying widow in year 3.Josephine does not qualify for the qualifying widow filing status because there is no dependent child involved.

A) True
B) False

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Which of the following statements about a qualifying person for head of household filing status is true?


A) One individual (who is a qualifying person) may qualify more than one taxpayer for head of household filing status.
B) The taxpayer is required to live with a qualifying person for the entire year in order to qualify for head of household filing status.
C) A taxpayer's parent cannot be a qualifying person for purposes of determining head of household filing status.
D) A qualifying person must have a family relationship with the taxpayer in order for the qualifying person to qualify the taxpayer for head of household filing status.A qualifying person must have a family relationship with the taxpayer in order to qualify the taxpayer for head of household filing status.An individual may qualify only one taxpayer for head of household filing status.A parent who does not live with the taxpayer may still be considered a qualifying person.

E) A) and C)
F) C) and D)

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Sheri and Jake Woodhouse have one daughter,Emma,who is 16 years old.They also have taken in Emma's friend,Harriet,who has lived with them since February of the current year and is also 16 years of age.The Woodhouses have not legally adopted Harriet but Emma often refers to Harriet as "her sister." The Woodhouses provide all of the support for both girls,and both girls live at the Woodhouse residence.Which of the following statements is true regarding the dependency exemptions (and the reason for the exemptions) Sheri and Jake may claim for the current year for these girls?


A) One exemption for their daughter Emma as a qualifying child but no exemption for Harriet.
B) One exemption for Emma as a qualifying child and one exemption for Harriet as a qualifying child.
C) One exemption for Emma as a qualifying child and one exemption for Harriet as a qualifying relative.
D) None of these statements is true.Emma passes all tests of a qualifying child.Harriet,however,must be tested as a qualifying relative because she does not meet the relationship test of a qualifying child.In order to be considered a qualifying relative,she would have had to live at the Woodhouse residence for the entire year,and not just 11 of 12 months.

E) None of the above
F) B) and C)

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Mason and his wife Madison have been married for five years.Jaxon,who is 18 years old and unrelated to Mason and Madison,has been living with Mason and Madison for the last two years.In May of year 1,Mason and Madison divorced.Mason and Jaxon stayed in the home and Madison moved out.During year 2,Mason provided all of Jaxon's support and Jaxon lived in the home for all of year 2.Jaxon did not earn any income during year 2.What is Mason's most favorable filing status for year 2?


A) Single
B) Married filing separately
C) Surviving spouse
D) Head of household

E) None of the above
F) C) and D)

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Which of the following is not an itemized deduction?


A) Alimony paid
B) Medical expenses
C) Personal property taxes
D) Charitable contributions

E) All of the above
F) None of the above

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The relationship requirement for qualifying relative includes cousins.

A) True
B) False

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In addition to the individual income tax,individuals may be required to pay taxes imposed on tax bases other than the individual's regular taxable income.

A) True
B) False

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A taxpayer may qualify for the head of household filing status even if she does not have any dependent children.

A) True
B) False

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Which of the following is not a requirement for a married taxpayer to be treated as unmarried at the end of the year for filing status purposes?


A) The taxpayer claims a dependency exemption for a child.
B) The taxpayer pays more than half the costs of maintaining his or her home for the entire year and the home is the principal residence for a dependent qualifying child for more than half the year.
C) The taxpayer files a tax return separate from the other spouse.
D) The spouse does not live in the taxpayer's home at all during the year.The spouse must not live in the taxpayer's home during the last six months of the year.

E) C) and D)
F) A) and D)

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Itemized deductions and the standard deduction are deductions from AGI but deductions for personal and dependency exemptions are deductions for AGI.

A) True
B) False

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Which of the following statements regarding realized income is true?


A) Taxpayers need not include realized income in gross income unless a specific provision of the tax code requires them to do so.
B) Realized income requires some type of transaction or exchange with a second party.
C) Once income is realized it may not be excluded from gross income.
D) None of these statements is true.Realized income requires a transaction with a second party in which there is a change in property rights between parties.

E) A) and B)
F) All of the above

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Charlotte is the Lucas family's 22-year-old daughter.She is a full-time student at an out-of-state university but plans to return home when the school year ends.During the year,Charlotte earned $4,000 of income working part-time.Her support totaled $30,000 for the year.Of this amount,Charlotte paid $7,000 with her own funds,her parents paid $14,000,and Charlotte's grandparents paid $9,000.Which of the following statements most accurately describes whether Charlotte's parents can claim a dependency exemption for Charlotte?


A) Yes,Charlotte is a qualifying child of her parents.
B) No,Charlotte fails the support test for both qualifying children and qualifying relatives.
C) No,Charlotte does not pass the gross income test.
D) Yes,Charlotte is a qualifying relative of her parents.Because Charlotte is a full-time student and under 24 she passes the age test of a qualifying child.Her time spent away from school is counted as time at home for the residence test.Also,Charlotte did not provide more than half of her own support.There is no gross income test for qualifying children.

E) A) and B)
F) A) and C)

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It is generally more advantageous from a tax perspective for a married couple to file separately than it is for them to file jointly.

A) True
B) False

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Char and Russ Dasrup have one daughter,Siera,who is 16 years old.In November of last year,the Dasrup's took in Siera's 16 year old friend,Angela,who has lived with them ever since.The Dasrup's have not legally adopted Angela but Siera often refers to Angela as "her sister." The Dasrup's provide all of the support for both girls,neither girl receives any income during the year,and both girls live at the Dasrup's residence.Which of the following statements is true regarding the dependency exemptions (and the reason for the exemptions) Char and Russ may claim for the current year for these girls?


A) One exemption for their daughter Siera as a qualifying child but no exemption for Angela.
B) One exemption for Siera as a qualifying child and one exemption for Angela as a qualifying child.
C) One exemption for Siera as a qualifying child and one exemption for Angela as a qualifying relative.
D) None of these statements is true.Siera passes all tests of a qualifying child.Angela,however,must be tested as a qualifying relative because she does not meet the relationship test of a qualifying child.Because Angela lived in the Dasrup's home for the entire year,Char and Russ may claim a dependency exemption for Angela as a qualifying relative.

E) B) and D)
F) All of the above

Correct Answer

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A taxpayer who is claimed as a dependent on another's tax return may not claim any personal or dependency exemptions on his or her tax return.

A) True
B) False

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Taxpayers who file as qualifying widows/widowers are treated exactly the same for tax purposes in all respects as taxpayers who are married filing jointly for tax purposes.

A) True
B) False

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