Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

For purposes of the qualifying child residence test,a child's temporary absence from the taxpayer's home for attending school full-time is counted as though the child lived in the taxpayer's home during the absence.

Accepted Answer

A) True 
 B)False

Question 3

Madison's gross tax liability is $9,000.Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer.What is Madison's taxes due (or taxes refunded) with her tax return?

Accepted Answer

A)  $0 taxes due and $0 tax refund.
B)  $6,000 taxes due.
C)  $2,000 tax refund.
D)  $1,000 taxes due.E) All of the above
F) B) and C)

Question 4

Which of the following statements regarding tax credits is true?

Accepted Answer

A)  Tax credits reduce taxable income dollar for dollar.
B)  Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate.
C)  Tax credits reduce taxes payable dollar for dollar.
D)  None of these statements is true.E) All of the above
F) C) and D)

Question 5

Which of the following statements regarding realized income is true?

Accepted Answer

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.E) None of the above
F) A) and C)

Question 6

Taxpayers are generally allowed to claim deductions for expenditures unless a specific tax provision indicates the expenditure is not deductible.

Accepted Answer

A) True 
 B)False

Question 7

Taxpayers need not include an income item in gross income unless there is a specific tax provision requiring the taxpayer to include the income item in gross income.

Accepted Answer

A) True 
 B)False

Question 8

In order to be a qualifying relative of another,an individual's gross income must be less than ________.

Accepted Answer

A)  the applicable standard deduction amount
B)  a fixed amount,indexed for inflation
C)  one-half of the individual's support
D)  None of the choices are correct.E) C) and D)
F) A) and B)

Question 9

All of the following are tests for determining qualifying child status except the ________.

Accepted Answer

A)  gross income test
B)  age test
C)  support test
D)  residence testE) A) and D)
F) A) and C)

Question 10

Which of the following is not an itemized deduction?

Accepted Answer

A)  Alimony paid.
B)  Medical expenses.
C)  Real estate taxes.
D)  Charitable contributions.E) A) and B)
F) A) and C)

Question 11

For AGI deductions are commonly referred to as deductions "above the line."

Accepted Answer

A) True 
 B)False

Question 12

If no one qualifies as the dependent of an unmarried taxpayer,the unmarried taxpayer may still be able to qualify for the head of household filing status.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following series of inequalities is generally most accurate?

Accepted Answer

A)  Gross income ≥ adjusted gross income ≥ taxable income
B)  Adjusted gross income ≥ gross income ≥ taxable income
C)  Adjusted gross income ≥ taxable income ≥ gross income
D)  Gross income ≥ taxable income ≥ adjusted gross incomeE) B) and C)
F) A) and D)

Question 14

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year,the taxpayer will qualify for head of household filing status.

Accepted Answer

A) True 
 B)False

Question 15

All of the following represents a type or character of income except:

Accepted Answer

A)  Tax exempt.
B)  Capital.
C)  Qualified dividend.
D)  Normal.E) C) and D)
F) B) and C)

Question 16

Which of the following statements regarding dependents is true?

Accepted Answer

A)  To qualify as a dependent of another,an individual must be a resident of the United States.
B)  To qualify as a dependent of another,an individual may not file a joint return with the individual's spouse under any circumstance.
C)  To qualify as a dependent of another,an individual must have a family relationship with the other person.
D)  To qualify as a dependent of another,an individual must be either a qualifying child or a qualifying relative of the other person.E) A) and B)
F) A) and D)

Question 17

The relationship test for qualifying relative requires the potential qualifying relative to have a family relationship with the taxpayer.

Accepted Answer

A) True 
 B)False

Question 18

Tax credits are generally more valuable than tax deductions because tax credits reduce a taxpayer's gross tax liability dollar for dollar while tax deductions do not.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following relationships does NOT pass the relationship test for a qualifying child?

Accepted Answer

A)  Stepsister's daughter.
B)  Half-brother.
C)  Cousin.
D)  Stepsister.E) B) and C)
F) A) and B)

Question 20

From AGI deductions are generally more valuable to taxpayers than for AGI deductions.

Accepted Answer

A) True 
 B)False

Exam 4: Individual Income Tax Overview dependents and Filing Status

Which of the following statements regarding realized income is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Tax credits are generally more valuable than tax deductions because tax credits reduce a taxpayer's gross tax liability dollar for dollar while tax deductions do not.

Correct AnswerverifiedShow Answer

Which of the following relationships does NOT pass the relationship test for a qualifying child?

Correct AnswerverifiedShow Answer

Which of the following statements regarding tax credits is true?

Correct AnswerverifiedShow Answer

Taxpayers need not include an income item in gross income unless there is a specific tax provision requiring the taxpayer to include the income item in gross income.

Correct AnswerverifiedShow Answer

Which of the following series of inequalities is generally most accurate?

Correct AnswerverifiedShow Answer

All of the following represents a type or character of income except:

Correct AnswerverifiedShow Answer

For AGI deductions are commonly referred to as deductions "above the line."

Correct AnswerverifiedShow Answer

Which of the following is not an itemized deduction?

Correct AnswerverifiedShow Answer

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year,the taxpayer will qualify for head of household filing status.

Correct AnswerverifiedShow Answer

From AGI deductions are generally more valuable to taxpayers than for AGI deductions.

Correct AnswerverifiedShow Answer

For purposes of the qualifying child residence test,a child's temporary absence from the taxpayer's home for attending school full-time is counted as though the child lived in the taxpayer's home during the absence.

Correct AnswerverifiedShow Answer

The relationship test for qualifying relative requires the potential qualifying relative to have a family relationship with the taxpayer.

Correct AnswerverifiedShow Answer

All of the following are tests for determining qualifying child status except the ________.

Correct AnswerverifiedShow Answer

Which of the following statements regarding dependents is true?

Correct AnswerverifiedShow Answer

Taxpayers are generally allowed to claim deductions for expenditures unless a specific tax provision indicates the expenditure is not deductible.

Correct AnswerverifiedShow Answer

Madison's gross tax liability is $9,000.Madison had $3,000 of tax credits available and she had $8,000 of taxes withheld by her employer.What is Madison's taxes due (or taxes refunded) with her tax return?

Correct AnswerverifiedShow Answer

If no one qualifies as the dependent of an unmarried taxpayer,the unmarried taxpayer may still be able to qualify for the head of household filing status.

Correct AnswerverifiedShow Answer

In order to be a qualifying relative of another,an individual's gross income must be less than ________.

Correct AnswerverifiedShow Answer

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