Filing Information: Individual Income Tax Return

Question 1

Ann and Jim have been separated for two years as of December 31, 20X4 although they reconciled and lived together during the month of October, 20X4. They have never obtained a separate maintenance agreement or filed for divorce. They have two children who live full time with Ann and qualify as her dependents. What filing status must Ann use?

• Head of household
• Single
• Married filing separately only
• Married filing jointly or married filing separately at the taxpayers’ option

Answer 1

-Married filing jointly or married filing separately at the taxpayers’ option

For individual income tax purposes, filing status is determined by examining the taxpayer’s marital status as of December 31 of the tax year. Taxpayers who are married as of the end of the year and do not have a separate maintence agreement file either a joint return or each must file as married but filing separately. However, Ann would be able to file as head of household if she and Jim had not lived together during the last six months of the year under the abandoned spouse rule

Question 2

Doug is 67 and single at the end of 2017. He is required to file a tax return if his income is:

$6,300 or higher

At least $10,000

$11,950 or higher

More than his amount of itemized deductions

Answer 2

$11,950 or higher

Question 3

Peter is single and provides more than half of the support for his father, who lived with Peter for all of 2017. His father’s income in 2017 consisted of $2,000 in wages, $4,000 in Social Security benefits, $1,200 of municipal bond interest, $1,000 of corporate bond interest, $1,400 of dividends, $4,000 of rent income. His father also has $2,000 of rent expenses. How much 2017 gross income does Peter’s father have for determining the dependency exemption?

• $10,400
• $8,400
• $12,400
• $11,600

Answer 3

$8,400

Gross income is all income in the form of money, property, and services that is not exempt from tax. Social Security benefits (in this example) and municipal bond interest are not taxable and not included in gross income for this test. The question asks about gross income for purposes of a dependency exemption, which includes rental income (before deductions). Do not deduct taxes, repairs, etc., to determine the gross income from rental property. .

Question 4

Jon and Marlena were married several years ago and have lived together since that time. They have no children. On December 29 of the prior year, they were granted a decree of separate maintenance and they moved into two separate apartments. In January, Marlena came to you to advise her on filing her income tax return for the prior year. What filing status would you mostly likely advise her to take?

Single
HOH
MFJ
MFS

Answer 4

Single

If a couple has divorced or received a legal separation (decree of divorce or separate maintenance), as is the case here, by the end of the tax year, they cannot file as married. There is no information to indicate that Marlena would qualify as head of household. Therefore, you will probably advise her that she will need to file as a single taxpayer. However, it is possible that she might qualify as head of household, especially if she has maintained a home for a dependent parent.

Question 5

Which of the following statements is correct about Duke’s personal exemption for the year of his wife’s death?
*If Duke remarries in the same year as his wife’s death, he can still claim an exemption for his wife.

• Duke must file a joint return with the deceased spouse.
• As long as Duke has no gross income for the year of his wife’s death, he can remarry in that year and be claimed as an exemption on both a final separate return of his deceased wife and the separate return of his new wife.
• Duke can claim an exemption for his deceased wife only if she had no income.

Answer 5

As long as Duke has no gross income for the year of his wife’s death, he can remarry in that year and be claimed as an exemption on both a final separate return of his deceased wife and the separate return of his new wife.

An individual without gross income who remarries in the year of a spouse’s death can be claimed as an exemption on both the final separate return of a deceased spouse and the separate return of a new spouse. If filing a joint return with a new spouse, the exemption is appropriate only for that return.

Question 6

Frank and Nancy are married and file a joint tax return. They have four children. Their ages are 21, 14, 12, and 9. Their 21-year-old daughter is a full-time student who earned $7,000 working part-time. Frank and Nancy provided more than half the support for all of their children. How many exemptions are claimed on their tax return?

A. 5
B. 4
C. 6
D. 3

Answer 6

C. 6

All are entitled to an exemption. The children are dependents as they meet the definition of a Qualifying Child.

Relationship Test - The child must be a son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

Age Test –To meet this test, a child must be under age 19 at the end of the year, or under age 24 at the end of the year and a full-time student, or any age if permanently and totally disabled.

Residency Test - The child must have lived with the taxpayer for more than half of the year. A child who was born or died during the year passes this test if the home was the child’s home the entire time he or she was alive during the year.

Support Test - The child cannot provide more than half of their own support.