Summary Tax Exam I Study Guide Questions with Answers 2023/2024

What are the five pieces of information needed to determine if a taxpayer must or should file a return? - ***1. Date of birth 2. Income questions 3. Marital status 4. If the taxpayer can be claimed as a dependent on someone else's return 5. Taxpayer's potential dependents List five examples of taxable income. - ***1. Wages, salaries, bonuses, commissions 2. Business income/self-employment 3. Military pay 4. Rent (gross rent) 5. Social security benefits Note: Table A obtains examples of taxable income. List three examples of nontaxable income. - ***1. Child support 2. Gifts 3. Inheritance Note: Table B obtains examples of nontaxable income. What does Chart A tell you? - ***For most people who must file-- Whether or not a person needs to file a tax return. What does Chart B tell you? - ***For children and other dependents. What does Chart C tell you? - ***Other situations when a person must file. What does Chart D tell you? - ***For who should file even if the taxpayer is not required to file a federal income tax return. Lucy is 36 years old and single. Her gross income is $20,000. Is Lucy required to file a tax return? - ***Yes, Lucy must file since her income exceeds the amount for her age and filing status. Henrietta and Javier are married and plan to file a joint return. Henrietta is 67 and had a gross income of $11,000 for the tax year. Javier is 66. His gross income was $5,000 for the year. Do they need to file a tax return? - ***No. Since their combined gross income is less than the minimum amount for their ages and filing status, then they do not have to file a return. Which of the following is considered taxable income? a. Child support b. Insurance proceeds c. Veterans benefits d. Interest - ***D. Interest Which of the following individuals could use Chart A to determine if they must file a tax return? a. Mrs. Harlan, 68, who is recently widowed and supported by her son. b. Mrs. Fulton, 70, who is single and whose only sources of income are her pension and investments. Her income was less than $10,000. c. Mr. Emmet, 45, a stay-at-home dad filing Head of Household, whose income is $6,000 and who received Form 1095-A showing Advanced Premium Tax Credit (APTC). - ***B. Mrs. Fulton, 70, who is single and whose only sources of income are her pension and investments. Her income was less than $10,000. Note: Mrs. Harlan can be claimed as a dependent on her son's return, so she must use Chart B. Mr. Emmet must use Chart C. True or False? Bob is 27 years old. No one can claim him as a dependent. His gross income was $17,000 during the tax year. Based only on this information, Bob is required to file a tax return. - ***True True or False? Janet and Harry are married, file jointly, and lived together all year. During the tax year, Janet turned 66 and Harry turned 64. Their gross income was $18,000. Based only on this information, they are required to file a tax return. - ***False True or False? Juanita can file as a Qualifying Widow(er). She is 47 years old. Her gross income was $27,000. Based only on this information, she is required to file a tax return. - ***True Which of the following can be used to verify a taxpayer's Social Security number and correct name spelling? a. Driver's license b. Passport c. Social security card d. Birth certificate - ***C. Social Security Card Note: A driver's license or passport should not be used in lieu of SSA records. Larry and Zelda are married but will not file a joint return. Both are under 65. Larry's gross income from wages is $30,150 and Zelda's is $4,100. Which of the following is true? a. Just Larry is required to file b. Just Zelda is required to file c. Both Larry and Zelda are required to file d. Neither Larry nor Zelda must file - ***C. Both Larry and Zelda are required to file