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| 1 | |
Taxable income (TI) is computed after subtracting from adjusted gross income (AGI), the standard deduction or itemized deductions and personal and dependency exemptions. |
| | A) | True |
| | B) | False |
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| 2 | |
When a taxpayer's AGI exceeds certain levels, certain tax benefits are reduced or eliminated. |
| | A) | True |
| | B) | False |
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| 3 | |
Marital status of a taxpayer is determined on the last day of the tax year. |
| | A) | True |
| | B) | False |
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| 4 | |
A couple who is legally married on the last day of the tax year cannot file married filing separately. |
| | A) | True |
| | B) | False |
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| 5 | |
Even though the taxpayer is claimed as a dependent on another tax return, he or she can still receive an exemption amount for himself or herself when filing his or her tax return. |
| | A) | True |
| | B) | False |
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| 6 | |
In a multiple support agreement, the taxpayer who will receive the exemption must file all the forms 2120 with his or her tax return. |
| | A) | True |
| | B) | False |
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| 7 | |
The taxpayer's brother must live with the taxpayer for the entire year to meet the relationship or member of household test under qualifying relatives. |
| | A) | True |
| | B) | False |
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| 8 | |
If a married couple files separate returns and one of them itemizes, the other spouse must also itemize. |
| | A) | True |
| | B) | False |
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| 9 | |
A taxpayer who has income that is not subject to withholding is never required to make estimated payments during the year. |
| | A) | True |
| | B) | False |
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| 10 | |
If the taxpayer still owes tax after April 15, the IRS assesses interest based on the remaining amount owed. |
| | A) | True |
| | B) | False |
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| 11 | |
A single taxpayer is 35 years old and has only wages of $12,000. Which is the simplest form this person can file? |
| | A) | 1040 |
| | B) | 1040A |
| | C) | 1040EZ |
| | D) | 1040ES |
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| 12 | |
The early withdrawal penalty is a for AGI deduction. Which form can the taxpayer use to claim this benefit? |
| | A) | 1040ES |
| | B) | 1040EZ |
| | C) | 1040 |
| | D) | 1040A |
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| 13 | |
A 37 year old taxpayer with a dependent child and claiming head of household status has received $24,000 in child support payments and earned wages of $53,000. Which is the simplest form this person can file? |
| | A) | 1040 |
| | B) | 1040A |
| | C) | 1040ES |
| | D) | 1040EZ |
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| 14 | |
The taxpayer's spouse died at the beginning of 2007. He has no qualifying child. Which status should the taxpayer select when filing his tax return? |
| | A) | Single |
| | B) | Qualifying Widow(er) |
| | C) | Married Filing Jointly |
| | D) | Married Filing Separately |
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| 15 | |
Which condition listed below is not required for a taxpayer to qualify as a qualifying widow(er) with dependent child? |
| | A) | Taxpayer was eligible to file a joint return in the year the spouse died. |
| | B) | Taxpayer paid more than half the cost of keeping up a household. |
| | C) | Taxpayer must remarry before the end of the tax year in question. |
| | D) | The household was the principal place of abode for the entire year of both the taxpayer and his or her child. |
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| 16 | |
What is the amount of the personal and dependency exemption for 2007? |
| | A) | $ 3,100 |
| | B) | $ 3,250 |
| | C) | $ 3,300 |
| | D) | $ 3,400 |
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| 17 | |
Donald is 21 years of age and a full-time student living with his parents. He had wages of $1,050 ($150 of income tax withholding) for 2007. Can Donald claim his exemption on his return even though his parents will claim him as a dependent on their tax return? |
| | A) | Yes, Donald can claim the exemption |
| | B) | Donald and his parents can both claim the exemption |
| | C) | No one can claim the exemption for Donald |
| | D) | No, Donald cannot claim the exemption |
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| 18 | |
To be a qualifying relative, the taxpayer must meet three general tests and four specific tests. Which one is not part of the three general tests? |
| | A) | Citizen or resident test |
| | B) | Dependent taxpayer test |
| | C) | Support test |
| | D) | Joint return test |
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| 19 | |
Anthony, George and Daryl are supporting their father who lives in a separate apartment. Their contribution towards his support is 10%, 35% and 55%, respectively. In a multiple support agreement, who would be entitled to claim the father as a dependent? |
| | A) | Anthony |
| | B) | George or Daryl |
| | C) | Anthony, George or Daryl |
| | D) | None of the above |
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| 20 | |
Which of the following items would not be considered as support for a dependency exemption? |
| | A) | food |
| | B) | shelter |
| | C) | medical and dental care |
| | D) | life insurance premiums |
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| 21 | |
Which amount represents the standard deduction for a taxpayer who is single and 68 years of age? |
| | A) | $ 7,850 |
| | B) | $ 6,650 |
| | C) | $ 5,350 |
| | D) | $ 9,150 |
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| 22 | |
The additional standard deduction amount for a taxpayer who is 65, single and blind is: |
| | A) | $ 1,300 |
| | B) | $ 1,050 |
| | C) | $ 2,600 |
| | D) | $ 2,350 |
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| 23 | |
Mario's parents can claim him as a dependent on their tax return. In 2007, his only source of income was a part-time job as a supermarket clerk where he earned $3,200 during the year. What is Mario's standard deduction? |
| | A) | $ 3,400 |
| | B) | $ 3,200 |
| | C) | $ 3,500 |
| | D) | $ 5,350 |
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| 24 | |
The basic standard deduction in 2007 for a taxpayer, 66 and not blind, filing head of household is: |
| | A) | $ 5,350 |
| | B) | $ 9,150 |
| | C) | $ 6,650 |
| | D) | $ 7,850 |
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| 25 | |
What is the amount of the tax liability for a head of household person having taxable income of $132,500? All answers should be rounded to the nearest dollar. |
| | A) | $ 28,972 |
| | B) | $ 37,100 |
| | C) | $ 33,125 |
| | D) | $ 19,875 |
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| 26 | |
What is the amount of the tax liability for a single person having taxable income of $56,400? All answers should be rounded to the nearest dollar. |
| | A) | $ 8,460 |
| | B) | $ 10,518 |
| | C) | $ 14,100 |
| | D) | $ 10,530 |
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| 27 | |
What is the amount of the tax liability for a married couple having taxable income of $96,843? All answers should be rounded to the nearest dollar. |
| | A) | $ 14,526 |
| | B) | $ 24,211 |
| | C) | $ 17,054 |
| | D) | $ 21,607 |
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| 28 | |
What is the amount of the tax liability for a married person filing a separate return and having taxable income of $115,715? All answers should be rounded to the nearest dollar. |
| | A) | $ 38,186 |
| | B) | $ 27,786 |
| | C) | $ 32,400 |
| | D) | $ 26,896 |
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| 29 | |
The IRS can impose a _______ penalty of the tax due when negligence or any substantial understatement of income occurs. |
| | A) | 20% |
| | B) | 25% |
| | C) | 75% |
| | D) | 5% |
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| 30 | |
Gregory forgot to file his tax return by April 15. He did not file an extension. Gregory finally filed his tax return on August 1 and had a remaining tax liability of $2,500. What is Gregory's failure to file penalty? Assume he made all his payments on time. |
| | A) | $ 250 |
| | B) | $ 500 |
| | C) | $ 375 |
| | D) | $ 625 |
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