Finance
Autor: Nicole Mobley • May 23, 2016 • Coursework • 691 Words (3 Pages) • 898 Views
Page 1 of 3
- The U.S. tax laws are based on the all-inclusive concept where gross income includes all realized income from “whatever source derived.”
- Income that is taxed in the current year according to the tax rate schedule is referred to as ordinary income.
- How does a taxpayer determine which filing status to use?
- Whether or not the taxpayer has dependents
- Whether or not the taxpayer is married at the end of the year
- Put the following items in the order in which they are found in the individual income tax formula.
- Gross Income
- Minus for AGI deductions
- Equals adjusted gross income
- Minus from AGI deductions
- Equals taxable income
- Which of the choices below is NOT one of the tests that must be met to qualify as a qualifying relative? Age (the tests are gross income, relationship, and support)
- In order to meet the Support test, the taxpayer must pay more than half of the living expenses for the qualifying relative.
- When can the married filing jointly or married filing separately filing status be used?
- When on spouse died during the year and the surviving spouse has not remarried
- When the taxpayers are married as of the last day of the tax year
- Rank the filing status according to which is the most favorable for taxpayers.
- Married filing jointly
- Head of the household
- Single
- A tax deduction is subtracted from an individual’s taxable income.
- If a taxpayer is unmarried at the end of the year, which of the following filing statuses could possibly be used by the individual?
- Qualifying widow or widower
- Single
- Head of the Household
- Which of the following individuals would NOT meet the relationship test for being a qualifying relative of the taxpayer through a qualifying family relationship? Cousin
- The gross income test requires that a qualifying relative’s gross income for the year be less than the personal exemption.
- Which of the following items are deductions FOR adjusted gross income?
- Alimony paid
- Health insurance for self-employed persons
- Contributions to (non-Roth) qualified retirement accounts
- Capital losses
- Dividends from corporations that meet certain requirements may be taxed at a favorable rate. These dividends are referred to as: Qualified dividends
- The category of exemption deductions allowed for the taxpayer and the taxpayer’s spouse are referred to as Personal Exceptions. The deductions the taxpayer is allowed to take for other persons he is supporting are called dependency exemptions.
- Expenses such as alimony paid, moving expenses, contributions to qualified retirement accounts, and business expenses for self-employed persons are deductions for AGI.
- Which filing status is allowed the highest standard deduction amount?
- Married filing jointly
- Melina’s daughter, Linda, is considered permanently and totally disabled. Linda is 30 years old and still lives with Melina. Which of the following statements is accurate regarding the age test for a qualifying child as it applies to Linda?
- Linda is deemed to meet the age test because she is permanently and totally disabled.
- Which of the following individuals would meet the relationship test for being a qualifying relative of the taxpayer if s/he has only lived with the taxpayer for eight months of the year?
- Brother
- Granchild
- Niece
- Father
- A tax deduction reduces taxable income and a tax credit reduces the tax liability dollar for dollar.
- Which of the following expenses are classified as itemized deductions for tax purposes?
- Certain job expenses
- Charitable contributions
- Mortgage interest expense
- Which one of the following individuals CANNOT meet the residence test for being a qualifying child of another taxpayer?
- Amy lived with her parents until the end of April. She moved into an apartment on May 1.
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