TAX 4001 Exam Prep Questions with
Complete Solutions
People who cannot use Standard Deduction - ANSWER Married, filing separately, and
either spouse itemizes deductions, then both must itemize deductions
Nonresident aliens must itemize
Individual filing return for tax year or less than 12 months because of change in
annual accounting period
BSD Limit for Person Claimed as Dependent - ANSWER Dependent of someone has a Basic
Standard Deduction limited to greater of:
1050 -or-
350 + earned income (but not exceeding normal Basic Standard Deduction)
normal ASD amount(s) still available for Dependents
Personal and Dependency Exemptions - ANSWER Personal Exemption Amount = Dependency
Exemption Amount
One per taxpayer (two personal exemptions when married filing jointly)
Exception: individual claimed as dependent by another taxpayer does not receive
personal exemption of their own
Personal Exemption - ANSWER Taken by taxpayer
,Dependency Exemption - ANSWER Taken by taxpayer by claiming a child/someone you are
responsible for as a Dependent
Personal Exemptions in year of death for joint return - ANSWER 2 Personal Exemptions allowed
on joint return where one of the spouses died that same year (like any other normal year for
married filing joint return)
Dependency Exemption available for either - ANSWER Qualifying Child
Qualifying Relative
Qualifying Child tests - ANSWER Relationship
Residence
Age
Support
Relationship Test (child) - ANSWER Child must be taxpayer's:
(step)son / (step)daughter
(step)brother / (step)sister
half-brother / half-sister
descendant of such individual (grandchildren, nephews, nieces) -or-
A child who has been adopted, or whose adoption is pending -or-
A foster child
Residence Test (child) - ANSWER Must live with taxpayer for more than 1/2 the year
Temporary absences from household due to special circumstances (illness, education) not
considered part of "the year"
Age Test (child) - ANSWER Must be under age 19 (18 or younger)
, Or if a student, under age 24 (23 or younger)
Cannot be older than taxpayer
Student = child who, during any part of 5 months of the year, is enrolled full time at school
or government-sponsored on-farm training course
Disabled Individuals Exception: not subject to age test if disabled
Support Test (child) - ANSWER Qualifying child is not self-supporting
Cannot provide more than 1/2 his/her own support
In case of full-time student: scholarships not considered support, so can't count against student
Tiebreaker Rules - ANSWER For situations where child may be qualifying child dependent
for more than one taxpayer
Specify which person has priority in claiming dependency exemption
Qualifying Relative Tests - ANSWER Relationship
Gross Income
Support
Relationship Test (for relative) - ANSWER more expansive than for qualifying child. also included
are:
1) Lineal ascendants (parents, grandparents)
2) Collateral ascendants (uncles, aunts)
3) Certain in-laws (son/daughter, father/mother, brother/sister-in-law)
4) Unrelated parties who live with taxpayer
Gross Income Test (qualifying relative) - ANSWER Qualifying Dependent Relative's Gross
Income must be less than the Dependency Exemption amount
Complete Solutions
People who cannot use Standard Deduction - ANSWER Married, filing separately, and
either spouse itemizes deductions, then both must itemize deductions
Nonresident aliens must itemize
Individual filing return for tax year or less than 12 months because of change in
annual accounting period
BSD Limit for Person Claimed as Dependent - ANSWER Dependent of someone has a Basic
Standard Deduction limited to greater of:
1050 -or-
350 + earned income (but not exceeding normal Basic Standard Deduction)
normal ASD amount(s) still available for Dependents
Personal and Dependency Exemptions - ANSWER Personal Exemption Amount = Dependency
Exemption Amount
One per taxpayer (two personal exemptions when married filing jointly)
Exception: individual claimed as dependent by another taxpayer does not receive
personal exemption of their own
Personal Exemption - ANSWER Taken by taxpayer
,Dependency Exemption - ANSWER Taken by taxpayer by claiming a child/someone you are
responsible for as a Dependent
Personal Exemptions in year of death for joint return - ANSWER 2 Personal Exemptions allowed
on joint return where one of the spouses died that same year (like any other normal year for
married filing joint return)
Dependency Exemption available for either - ANSWER Qualifying Child
Qualifying Relative
Qualifying Child tests - ANSWER Relationship
Residence
Age
Support
Relationship Test (child) - ANSWER Child must be taxpayer's:
(step)son / (step)daughter
(step)brother / (step)sister
half-brother / half-sister
descendant of such individual (grandchildren, nephews, nieces) -or-
A child who has been adopted, or whose adoption is pending -or-
A foster child
Residence Test (child) - ANSWER Must live with taxpayer for more than 1/2 the year
Temporary absences from household due to special circumstances (illness, education) not
considered part of "the year"
Age Test (child) - ANSWER Must be under age 19 (18 or younger)
, Or if a student, under age 24 (23 or younger)
Cannot be older than taxpayer
Student = child who, during any part of 5 months of the year, is enrolled full time at school
or government-sponsored on-farm training course
Disabled Individuals Exception: not subject to age test if disabled
Support Test (child) - ANSWER Qualifying child is not self-supporting
Cannot provide more than 1/2 his/her own support
In case of full-time student: scholarships not considered support, so can't count against student
Tiebreaker Rules - ANSWER For situations where child may be qualifying child dependent
for more than one taxpayer
Specify which person has priority in claiming dependency exemption
Qualifying Relative Tests - ANSWER Relationship
Gross Income
Support
Relationship Test (for relative) - ANSWER more expansive than for qualifying child. also included
are:
1) Lineal ascendants (parents, grandparents)
2) Collateral ascendants (uncles, aunts)
3) Certain in-laws (son/daughter, father/mother, brother/sister-in-law)
4) Unrelated parties who live with taxpayer
Gross Income Test (qualifying relative) - ANSWER Qualifying Dependent Relative's Gross
Income must be less than the Dependency Exemption amount
