Chapter 2 Flashcards
In 2019, George is 21 years old. He is a full-time student at the University and is claimed as a dependent by his parents. He had earned income of $600 from a part-time job. In addition he had $10,000 interest from a savings account. What is George’s taxable income for 2019?
For #1 we calculate George’s income by taking $600 income + $10,000 interest to get $10,600 total earned income. Then we need to subtract the greater of the Basic Standard Deduction (BSD) in which one choice is $1,100 (this is just the standard amount no calculations to get it) or we take the income of $600 (not the interest) and add $350 to it to get $950. In this case, the $1,100 is the greater amount (over the other $950 choice) so we then take the $10,600 and subtract it by $1,100 to get George’s taxable income of $9,500.
In 2019, Cinnamon, age 21 and a full time student for a degree at State University, is claimed as a dependent on her parents’ return. During the summer, she earned $5,600 from a part-time job. Her only other income consisted of $1,050 interest on a savings account. What is Cinnamon’s taxable income for 2019?
We take Cinnamon’s income of $5,600 and add her interest of $1,050 to get a total earned income of $6,650. Then we need to again find the larger of the BSD so our options again are the standard $1,100 or taking the income of $5,600 (again don’t include interest, only income) and add $350 to get $5,950. In this case, the amount of %5,950 is more than the $1,100 so we pick this choice and take $6,650 and subtract it by $5,950 to get Cinnamon’s taxable income of $700.
Diane’s husband died in 2016. Diane did not remarry and continued to maintain a home for herself and her dependent infant child during 2017, 2018, and 2019, providing full support for herself and her child during these three years. For 2016, Diane properly filed a joint return. For 2019, Diane’s filing status is:
your new choice is correct and should be Head of Household since Qualifying Widow doesn’t work since her two years of this status are up (used in 2017,2018). This option also makes sense, because the other two options wouldn’t benefit her as much as Head of Household.
Sam Smith, a 40-year-old unmarried individual, is the sole support of his parents who live with him and have no income. His father is age 67 and is in good health. His mother is age 64 and is blind. What is Sam's standard deduction in 2019? $12,200 $20,000 $18,350 $24,400
$18,350-Head of household 2019 standard deduction
Which of the following individuals qualifies as a dependent of John Smith?
A 25-year-old son who earned $4,900 during the Christmas season but was unemployed the remainder of the year. He was supported by John Smith.
A 10-year-old cousin living with John Smith’s parents but supported by John Smith.
A 7-year old foster child who has lived in John’s home the entire year and has been fully supported by him.
A 25-year-old married daughter who filed a joint return on which there was a tax liability with her husband. She is a student, had no income, and was supported by John Smith.
A 7-year old foster child who has lived in John’s home the entire year and has been fully supported by him.
Brett is a qualifying child of his parents. Since Brett received interest income of $400 and earned $7,000 in 2019 selling novelties at the college he attended full time, Brett is required to file a 2019 income tax return. How much should Brett claim as a standard deduction on his 2019 individual income tax return? $1,100 $7,000 $7,350 $12,000
$7,350,
If a taxpayer is claimed as a dependent by someone else, that taxpayer doesn’t get the normal standard deduction. Instead the standard deduction is the greater of:
- $350 + earned income (in this instance it would be $350+7,000=7,350); or
- $1,100
The higher of the two is obviously $7,350, which is the answer to this question.
Robert's spouse died in 2017 and he never remarried. Robert has two small children who live with him full time and whom he fully supports financially. Which filing status should Robert use for 2019? Single Married Filing Separately Head of Household Surviving Spouse
Surviving Spouse
As the IRS publication you quote states, “The year of death is the last year for which you can file jointly with your deceased spouse.” So only in 2017 could Robert file as MFJ. Robert would then be eligible to file as a qualifying widower for 2 years following the year of the spouse’s death, which would be 2018 and 2019 in this problem.
So for question 8, Robert should use “Surviving Spouse” as his filing status for 2019. In 2020, Robert could file as Head of Household as he is unmarried and fully supports his two children.
To select the Head of Household filing status, which of the following taxpayers would be considered unmarried for the tax year?
Hal, who was married until his divorce in November
Kris, who got married in December
Torre, whose spouse died in February
Joel, a U.S. citizen who got married in December in Canada and lives with his spouse in Canada
Hal; who was married until his divorce in November
A taxpayer’s marital status is determined on the last day of the year. Therefore, it doesn’t matter if Hal was married during the year. All that matters is if Hal was married on December 31. Since Hal’s divorce was final in November, Hal was not married on December 31. Therefore, Hal is unmarried for that tax year.
Lily divorced her spouse in August. Her three small children live with her full time and she fully supports them financially. Which filing status should Lily use?
it is also Head of Household because this status only applies to taxpayers that are unmarried so she would be eligible for this status since it’s based on her status at the end of the year(which August is more than enough time). She also has three children that she supports so this status would be more beneficial to her than the other options. She could file for Single but it would not be beneficial as she would have a smaller standard deduction and thus have a larger taxable income.
The two filing statuses that generally result in the lowest tax amounts are Married Filing Jointly and \_\_\_\_\_. Married filing separately Head of Household Surviving Spouse Single
Surviving Spouse
Mr. and Mrs. Long provided over one-half of the total support during 2019 of the following individuals:
Their daughter, age 26, who was married on December 30, 2019, has no gross income of her own and for 2019 files a joint return on which there was a tax liability with her husband.
Mrs. Long’s sister, age 15, who lives with the Longs the entire year and is a full-time student. She has gross income of $8,000 from a part-time job.
Their neighbor’s daughter, age 16, who has lived with them since March 2019 (while her parents are in Mexico) and has no gross income.
Mr. and Mrs. Long file a joint return for 2019. How many dependents do they have?
All of them are dependents of Mr. and Mrs. Long
Only the neighbor’s daughter
Only their daughter
Only Mrs. Long’s sister
Only Mrs. Long’s Sister
Their daughter, age 26, who was married on December 30, 2019, has no gross income of her own and for 2019 files a joint return on which there was a tax liability with her husband.
Not a dependent because she is married and files with her spouse.
Mrs. Long’s sister, age 15, who lives with the Longs the entire year and is a full-time student. She has gross income of $8,000 from a part-time job.
She is a dependent because she is a “qualifying child.” A sibling of the taxpayer can qualify as a qualifying child. As a qualifying child, her income is not an issue because the qualifying child test does not impose income limitations. She meets all four prongs to be a qualifying child. She is a dependent.
Their neighbor’s daughter, age 16, who has lived with them since March 2019 (while her parents are in Mexico) and has no gross income.
She is not a dependent. She is not a qualifying child because she fails the relationship test. To be a qualifying relative she must have lived with the taxpayer the entire year and she’s only lived there since March.
Mr. and Mrs. Smith were both 67 years old in 2019 and had no dependents. Mr. Smith died during 2019. For 2019, Mrs. Smith’s filing status is:.
Single
Married Filing Jointly
Surviving Spouse
Married filing separately
Married Filing Jointly
When a spouse dies, the surviving spouse files MFJ for the year of death and then as QW (qualifying widow) for the following two years. After the two years, the person goes to his/her normal filing status (either single or head of household if there are dependents). Therefore, in 2019 Mrs. Smith will still file as Married Filing Jointly with her deceased spouse because he died during 2019.
