ITX - 42

Question 1

(42.1) Dependency exemptions: Social Security counts for the ___ test.

Answer 1

support

Question 2

(42.1) Dependency exemptions: For a relative, such as a dependent parent or ADULT child, to qualify, they do not have to __ with the taxpayer.

Answer 2

live

Question 3

(42.1) Dependency exemptions: Children of ANY age who are permanently and totally disabled qualify as a dependent if the parent provides ___.

Answer 3

at least half of the support

Question 4

(42.1) Dependency exemptions: If the parent qualifies as a dependent for ___ purposes, a single child will be able to file as ___ (unless the dependency status is a result of a Multiple Support Agreement.

Answer 4

• exemption

- head of household

Question 5

(42.2) Medical Expenses: If the child pays for __ for his or her parents, these premiums may be added to the medical expenses (applies to expenses greater than 10% of AGI).

Answer 5

Medigap or long-term care insurance premiums

Question 6

(42.2) Medical Expenses: If the parent does not qualify as a dependent due to the income test, medical expenses paid by the child on their behalf may still be permitted as a deduction as long as more than ___% of the support of the parent is provided by the child.

Answer 6

50%

Question 7

(42.2) Dependent care credit: Each taxpayer is allowed a credit of __% (higher if AGI is less than $___) of the amount of dependent care expenses paid to allow a taxpayer to be gainfully employed.

Answer 7

• 20%

- $43,000

Question 8

(42.2) Dependent care credit: To qualify, the taxpayer must provide a home for more than half of the year for a dependent child under __ or an older ___ who is incapable of self-care.

Answer 8

• 13

- dependent/spouse

Question 9

(42.2) Dependent care credit: The maximum amount of expenses used to calculate the credit is $___ for one dependent parent who is incapable of self-care and $___ for two.

Answer 9

• $3,000

- $6,000

Question 10

(42.2) When siblings are sharing the cost of support for elderly parents, but none of them provides more than half of the support, a ___ may be used to allow tax benefits to be claimed, provided that each sibling contributes at least ___% of the cost of care and that, when combined, they provide at least ___% of the support for the parent.

Answer 10

• multiple support declaration
• 10%
• 50%

Question 11

(42.2) Form ___, the “Multiple Support Declaration,” allows one sibling to claim the tax benefits by having the others waive their tax claims for that year.

Answer 11

Form 2120

Question 12

(42.3) Alimony - Sec. 71: Alimony is deductible to __ in calculating AGI and are included in gross income of ___.

Answer 12

• the payer

- the receiver

Question 13

(42.3) Alimony - Sec. 71: Requirements for alimony are:

Answer 13

• It must be paid in cash
• It must be paid under a divorce or separation agreement
• It must continue only until the death of the recipient spouse (or until the death of the payor, if earlier)
• The spouses cannot be members of the same household, and they may not file a joint return

Question 14

(42.3) Alimony - Sec. 71: Cash payments to third parties are deductible alimony when the payment is to meet the ex-spouse’s obligation, such as for ___.

Answer 14

mortgage

real estate tax payments

Question 15

(42.3) Child Support: Payments for child support are not deductible by the ___.

Answer 15

payer

Question 16

(42.3) Child Support: If an amount in the divorce instrument is subject to change, based on the age or situation of a child, then the payments are considered ___ child support. The recipient of child support, does not include that amount in ___.

Answer 16

• nondeductible

- gross income

Question 17

(42.4) Dependency exemption: If the decree or agreement was entered into after 2008, a noncustodial parent can claim the child only where the custodial parent signs a Form ___ to release their claim to the exemption, and the noncustodial parent must attach the form to his or her return.

Answer 17

Form 8332

Question 18

(42.4) Dependency exemption: If the decree or agreement was entered into prior to ___, the noncustodial parent may be able to attach certain pages from the decree rather than Form 8332.

Answer 18

2009

Question 19

(42.4) The parent with whom the child spent the most number of nights during the year.

Answer 19

custodial parent

Question 20

(42.4) Property Settlements - Sec. 1041: Property transfers (settlements) that occur between spouses, incidental to a divorce and with __ year of the divorce, are ___ to the spouse who gives up the property and are not included in the income of the spouse who ___.

Answer 20

• one
• nondeductible
• receives it

Question 21

(42.5) Excess Alimony Recapture - Sec. 71(f): Excess alimony payments are defined as the SUM of two amounts: 1) the amount by which the second-year payment exceeds the third-year payment, plus $___; and 2) the amount by which the first-year payment exceeds the average of the second-year and third-year payments, plus $___. The excess alimony is recaptured and included in income for the ___ year.

Answer 21

• $15,000
• $15,000
• third

Question 22

(42.5) Excess Alimony Recapture - Sec. 71(f): Excess alimony payments are defined as the SUM of two amounts: 1) the amount by which the ___-year payment exceeds the third-year payment, plus $15,000; and 2) the amount by which the ___-year payment exceeds the average of the second-year and third-year payments, plus $15,000. The excess alimony is recaptured and included in income for the ___ year.

Answer 22

• second
• first
• third

Question 23

(42.6) What does QDRO stand for?

Answer 23

Qualified Domestic Relations Order

Question 24

(42.6) A ___ is an order from the court that tells the administrator or trustee of a qualified retirement plan how much to pay out to the nonowner-spouse pursuant to a divorce.

Answer 24

QDRO

Question 25

(42.6) Life Insurance: If the husband is paying alimony to the wife, the husband could MAINTAIN ownership of an existing policy on his life, pay the premiums for that policy, and name his wife as irrevocable beneficiary. In this case, the premiums are ___. The wife receives the benefits ___.

Answer 25

not considered alimony
not deductible by the husband

income tax free

Question 26

(42.6) Life Insurance: If the husband is paying alimony to the wife, the husband could TRANSFER ownership of an existing policy on his life, pay the premiums for that policy, and name his wife as irrevocable beneficiary. In this case, the premiums are ___. The wife receives the benefits ___.

Answer 26

treated as alimony
are tax deductible to the husband

income tax free