Essentials of Federal Income Taxation for Individuals and Business: Individual Income Tax Accounting Review Flashcards


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created 10 years ago by GreenHero64
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The study of individual income tax principles underlying filing status, personal exemptions, dependency, gross income, deductions for adjusted gross income, standard and itemized deductions, and income tax calculation. This is a hands-on course consisting of the preparation of various individual income tax returns using Form1040EZ, Form1040A, Form1040, and IL 1040.
Grade levels:
College: First year, College: Second year, College: Third year, College: Fourth year
Subjects:
accounting, business & economics, taxation
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1

Which of the following is not a deduction for AGI on an individual taxpayer’s tax return?

Charitable contributions

2

Ann’s husband died last year. Ann maintains a household where she and her 8-year-old daughter reside for the tax year. On her tax return, she properly claims her daughter as a dependent. For the current year, Ann should file her tax return as:

Qualifying widow(er)

3

Carol is 20 years old and single. Her parents properly claim her as a dependent on their joint tax return. During 2013, Carol had the following income and expense items:

  • Wages from a part-time summer job $3,000
  • Interest income from her own savings account 2,500
  • State and local income taxes paid 800
  • State and local sales tax paid 200

Carol’s 2013 taxable income is:

Wages $3,000

Int. 2,500

Income 5,500

Std. ded. (3,350)

Taxable $2,150

4

The minimum percentage of support that a member of a multiple support group must provide to claim a dependency exemption for the supported person is more than:

10%

5

Dorsey and Thelma Packard (ages 42 and 45) file a joint return. They claim Dorsey’s blind mother (age 67) as a dependent. The Packards’ 2013 standard deduction is:

$12,200

  • Basic standard deduction (MFJ) = $12,200
  • No deduction for Dorsey’s blind mother

6

Education tax credits are reported on:

Form 8863

7

The full child tax credit is available to unmarried taxpayers whose AGI does not exceed:

$75,000

8

A 25-year-old files Form 1040EZ and indicates that another taxpayer can claim him as a dependent. This taxpayer may not:

Claim an earned income credit.

Claim an exemption for him or himself.

9

Which of the following is a refundable credit?

The earned income credit

10

Is Head of Household the most advantageous filing system Teresa can use?

No, filing as a qualifying widow(er) is the more favorable filing status.

11

Because Zach is disabled and meets the other tests, Teresa can claim him as a qualifying child for the earned income credit.

True

12

What is Teresa’s total federal income tax withholding?

$2,500

+ 150

+ 260

$2,910

13

What is the credit for child and dependent care expenses on Form 2441, line 11?

  • Amount paid is $2,800
  • Income is $41,800

$2,800

x .21

$588

14

Teresa has three qualifying children for the child tax credit.

False. Because Zack is over the age of 17, Teresa has only two qualifying children.

15

Teresa must pay a 10% additional tax on the distribution from her 401(k) because she is under 59 ½ years old and does not qualify for an exemption.

True