CHAPTER 1 c
THE INDIVIDUAL INCOME TAX RETURN c c c c
Group 1 – Multiple Choice Questions
c c c c c
1. D c The income tax includes elements of social
c c c c c c 20. C Surviving spouse is preferred to head of c c c c c c
and economic policy (LO 1.1)
c c c c c household (LO 1.5)
c c c
2. C The income tax was authorized by the 16th
c c c c c c c 21. E Either Margaret or her sister (but not both) c c c c c c c
Amendment in 1913 (LO 1.1)
c c c c c may claim the mother as a dependent under
c c c c c c c c
3. C The 1040A and 1040-EZ no longer exist and
c c c c c c c
a multiple support agreement (LO 1.6)
c c c c c c
the 1120 is for corporations (LO 1.2)
c c c c c c c 22. D The daughter fails the age test to be a
c c c c c c c c c
4. D c Partnerships use Form 1065 to report c c c c c
qualifying child and she fails the gross
c c c c c c c
income tax information. A partner will
c c c c c c
income test ($4,400 in 2022) to be a
c c c c c c c c
report their share of income from a part-
c c c c c c c c
qualifying relative (LO 1.6)
c c c c
nership on a Form1040 (LO 1.2)
c c c c c c 23. D The child tax credit in 2022 is $2,000
c c c c c c c c
5. D c Capital gains and losses are reported c c c c c
(LO 1.6) c c
directly on the face of the Form 1040
c c c c c c c c 24. B The child tax credit for the 13-year-old child
c c c c c c c
(from Schedule D) (LO 1.2)
c c c c c is $2,000. The mother does not meet the
c c c c c c c c
6. D c A partnership is not generally a tax-paying
c c c c c c
support test and cannot be claimed (LO 1.6)
c c c c c c c c
entity (LO 1.2)
c c c 25. B Must be age 16 or under for child tax credit
c c c c c c c c c
7. C Student loan interest is a for AGI deduction. c c c c c c c
(LO 1.6) c c
The other responses are all itemized (from
c c c c c c c 26. A Head of household standard deduction plus c c c c c
AGI) deductions (LO 1.3)
c c c c additional standard deduction for age 65
c c c c c c
8. B The deduction for IRA contributions is a
c c c c c c
($19,400 + $1,750) (LO 1.7)
c c c c c
for AGI deduction (LO 1.3)
c c c c c 27. B Taxpayers age 65 or older are eligible
c c c c c c c
9. D c $98,000 – $13,000 (standard deduction is c c c c c
for an additional standard deduction
c c c c c
less than itemized deductions) (LO 1.3)
c c c c c c
amount (LO 1.7)
c c c
10. D c For AGI adjustments are deducted to get
c c c c c c
28. B Taxpayers that are blind are eligible for c c c c c c
to AGI (LO 1.3)
c c c c
an additional standard deduction amount
c c c c c
11. B The larger of the two may be deducted
c c c c c c c
(LO 1.7) c c
(LO 1.3)
c c
29. D Earned income plus $400 (LO 1.7)
c c c c c c c
12. A An exclusion reduces gross income (LO 1.3)
c c c c c c
30. E Standard deduction may not exceed typical c c c c c
13. B Filing thresholds generally are the same as
c c c c c c
amount (LO 1.7)
c c c
the standard deduction amount (LO 1.4)
c c c c c c 31. D Business inventory is not considered a
c c c c c c
14. D c Ben’s income would need to exceed the c c c c c c
capital asset (LO 1.8)
c c c c
standard deduction to require filing a tax
c c c c c c c 32. A Gain of $15,000 ($25,000 amount realized
c c c c c c
return (LO 1.4)
c c c less $10,000 adjusted basis) has been held
c c c c c c c
15. D c c $25,900 + $1,400 (LO 1.4) c c c c
for more than 12 months and is long-term
c c c c c c c c
(LO 1.8) c c
16. C Single dependent over 65 and blind thresh-
c c c c c c
old is $4,500 for unearned income (LO 1.4)
c c c c c c c c
33. C $10,000 = $240,000 – ($270,000 – $40,000)
c c c c c c c
(LO 1.8) c c
17. C c Joan qualifies as either single or head of
c c c c c c c
household; however, head of household
c c c c c
34. A $43,000 – $3,000. Net capital losses of up
c c c c c c c c
is more advantageous (LO 1.5)
c c c c c
to $3,000 may be deducted from ordinary
c c c c c c c
income for individual taxpayers (LO 1.8)
c c c c c c
18. D c Although Dorothy does not live with c c c c c
Glenda, since Dorothy is a parent that
c c c c c c c
35. C Line 7 is capital gain or (loss) (LO 1.9)
c c c c c c c c c c
Glenda supports, Glenda may file as head
c c c c c c c 36. B Preparers must get a signed authorization to
c c c c c c c
of household (LO 1.5)
c c c c e-file from the taxpayer. (LO 1.10)
c c c c c c
19. D c Taxpayer may file married filing jointly in c c c c c c 37. B About 90% of returns are filed electronically
c c c c c c c
year of spouse’s death (LO 1.5)
c c c c c c (LO 1.10) c c
1-1
,1-2 Chapter 1 – The Individual Income Tax Return
c c c c c c c
Group 2 – Problems
c c c
1. a. Raising revenue to operate the government.
c c c c c
b. Furthering economic goals such as reducing unemployment. c c c c c c
c. Furthering social goals such as encouraging contributions to charities. (LO 1.1)
c c c c c c c c c c
2. a. Form 1040 c
b. Schedule B c
c. Schedule D c
d. Schedule A c
e. Schedule 2 c
f. Schedule E c
g. Schedule 3 c
h. Schedule C c
i. Schedule 1 (LO 1.2) c c c
3. a. $36,300 = $42,000 + $300 – $6,000. c c c c c c
b. $25,900, the greater of itemized deductions or the standard deduction of $25,900.
c c c c c c c c c c c
c. $10,400 = $36,300 – $25,900. (LO 1.3) c c c c c c
4. a. $25,000.
b. $12,950, the greater of total itemized deductions or the standard deduction amount.
c c c c c c c c c c c
c. $12,050 = $25,000 – $12,950. (LO 1.3) c c c c c c
5. a. $53,800 = $54,000 + $2,800 – $3,000 ($7,000 capital loss limited to $3,000).
c c c c c c c c c c c c
b. $12,950
c. $40,850 = $53,800 – $12,950. (LO 1.3 and 1.8)
c c c c c c c c
6. a. $47,500 = $48,000 + $2,500 – $3,000.c c c c c c
b. $25,900, the greater of itemized deductions or the standard deduction of $25,900.
c c c c c c c c c c c
c. $21,600 = $47,500 – $25,900. c c c c
d. $2,184 (Tax Table) (LO 1.3, 1.5, and 1.7)
c c c c c c c
7. Adjusted gross income c $18,000 c
Less:
c Itemized deductions
c c –2,400 c cc
Taxable income c $15,600
Marco’s tax liability from the Tax Table is $1,670. Note: because they are married and filing separately and Mar-
c c c c c c c c c c c c c c c c c c
co’s spouse Tatiana itemizes her deductions, Marco must also itemize his deductions, even though the itemized
c c c c c c c c c c c c c c c c
deductions total is less than the standard deduction he would be otherwise entitled to. (LO 1.3, 1.5, and 1.7)
c c c c c c c c c c c c c c c c c c c
8. Adjusted gross income ($13,200 + $1,450)
c $14,650 c c c c c
Less: Standard deduction
c –12,950 c c
Taxable income c $ 1,700 c
(LO 1.3, 1.5, and 1.7)
c c c c
(Note: See Chapter 6 for the tax credit computation for dependent college students under age 24.)
c c c c c c c c c c c c c c c
9. a. $34,050 = $47,000 – $12,950. c c c c
b. Tax tables. Taxpayers with income up to $100,000 must use the tax tables.
c c c c c c c c c c c c
c. $3,884. (LO 1.3, 1.5, and 1.7) c c c c c
10. a. $66,000 = $50,000 + $8,000 + $5,000 + $3,000.
c c c c c c c c
b. $63,500 = $66,000 – $2,500. c c c c
c. $27,000, the greater of itemized deductions or the standard deduction of $25,900.
c c c c c c c c c c c
d. $36,500 = $63,500 – $27,000. c c c c
e. $3,972 (LO 1.3, 1.5, and 1.7) c c c c c
, Solutions for Questions and Problems – Chapter 1 c c c c c c c 1-3
11. a. $89,400 = $85,400 + $4,000. c c c c
b. $0.
c. $63,500 = $89,400 – $25,900 (standard deduction). (LO 1.3, 1.5, 1.6, and 1.7)
c c c c c c c c c c c c
12. Taxable income is: $28,050 = $41,000 – $12,950. Tax liability from the tax tables not the tax rate schedules:
c c c c c c c c c c c c c c c c c c
$3,164. (LO 1.3, 1.5, and 1.7)
c c c c c
13. Yes. Since Griffin owes Social Security taxes on the unreported tips (greater than $400), he must file an
c c c c c c c c c c c c c c c c
income tax return. (LO 1.4)
c c c c c
14. a. No. Income is less than the $19,400 standard deduction. Although not required to file, Helen is likely
c c c c c c c c c c c c c c c
to be eligible for refundable credits and should.
c c c c c c c c
b. Yes. Unearned income was more than $1,150. Also, gross income is more than the larger of $1,150
c c c c c c c c c c c c c c c
or $1,950 (earned income of $1,550 plus $400).
c c c c c c c c
c. No. Their income is under the $27,300 standard deduction [$25,900 + $1,400 (over 65 years old)].
c c c c c c c c c c c c c c
d. Yes. Gross income is greater than $25,900, the 2022 standard deduction.
c c c c c c c c c
e. Yes. His earnings exceeded the $400 limit for self-employed persons.
c c c c c c c c
(Note: All answers can be found in the figures in LO 1.4.)
c c c c c c c c c c c c
15. a. Allen $2,396. $34,600 – $12,950 = $21,650 c c c c c
b. Boyd $2,702. $37,175 – $12,950 = $24,225 c c c c c
c. Caldwell $4,008. $62,710 – $25,900 = $36,810 c c c c c
d. Dell $3,322. $49,513 – $19,400 = $30,113 c c c c c
e. Evans $5,391. $57,397 – $12,950 = $44,447 (LO 1.5) c c c c c c c
16. a. D The mother is a qualifying person for head of household. c c c c c c c c c
b. A The significant other is not a qualifying person as this individual is not one of the relatives
c c c c c c c c c c c c c c c c
that can be considered a qualifying person for head of household.
c c c c c c c c c c c
c. A The brother does not qualify as a dependent (support test). c c c c c c c c c
d. B or C MFJ can be claimed in the year of the spouse’s death and is probably preferable.
c c c c c c c c c c c c c c c c
e. A, D or E. Surviving spouse is likely to be preferable but single or head of household are also possible.
c c c c c c c c c c c c c c c c c c c
(LO 1.5 and 1.6) c c c c
17. a. Because their income exceeds $100,000, the tax rate schedules must be used.
c c c c c c c c c c c
b. $14,554 = $9,615 + 22% x ($106,000 – $83,550). (LO 1.5)
c c c c c c c c c c
18. Jonas could qualify as either a qualifying child or qualifying relative. The qualifying child tests should be
c c c c c c c c c c c c c c c c
applied first:
c c
1. Relationship test: Confirm Jonas’ relationship to Karl. c c c c c c
2. Domicile test: Where did Jonas live during the tax year? Was it more than one-half of the year with Karl?
c c c c c c c c c c c c c c c c c c c
3. Age test: What is Jonas’ age and is he a full-time student?
c c c c c c c c c c c
4. Joint return test: What type of tax return does Jonas file (if any)? If MFJ, is this only to obtain a refund?
c c c c c c c c c c c c c c c c c c c c c
5. Citizenship test: Is Jonas a US citizen or a tax resident of the US, Canada, or Mexico?
c c c c c c c c c c c c c c c c
6. Support test: How much of Jonas’ support is provided by Jonas? Is it more than one-half?
c c c c c c c c c c c c c c c
If Jonas is a qualifying child, then he need not meet the citizenship test to be a qualifying person for head
c c c c c c c c c c c c c c c c c c c c
of household filing status. If Jonas is not a qualifying child, he might be a qualifying relative which would
c c c c c c c c c c c c c c c c c c c
prompt the following questions:
c c c c
1. Relationship or member of household test: If Jonas is Karl’s brother, this test has been confirmed in the
c c c c c c c c c c c c c c c c c
qualifying child questions. If Jonas is not one of the qualifying relatives, the remaining tests need not
c c c c c c c c c c c c c c c c c
apply since a person that is a qualifying relative by living in the taxpayer’s household is not a qualifying
c c c c c c c c c c c c c c c c c c c
person for purpose of the head of household test.
c c c c c c c c c
, 1-4 Chapter 1 – The Individual Income Tax Return c c c c c c c
The following test need only be applied if Jonas is not Karl’s brother but is a qualifying relative for reasons
c c c c c c c c c c c c c c c c c c c
other than living in Karl’s home.
c c c c c c
2. Gross income test: What is Jonas’ 2022 income? Is it less than $4,400?
c c c c c c c c c c c c
3. Support test: Does Karl provide more than one-half of Jonas’ support? c c c c c c c c c c
The other two tests (joint return and citizenship) were subject to inquiry under qualifying child.
c c c c c c c c c c c c c c
Karl should also be asked if he is unmarried at year end. (LO 1.5 and 1.6)
c c c c c c c c c c c c c c c c
19. Head of household. Maggie’s parents meet the tests to qualify as her dependents. Maggie is single.
c c c c c c c c c c c c c c c
Additionally, she provides a home for her parents. Parents are an exception to the requirement that
c c c c c c c c c c c c c c c c
dependents must live in the same household as the taxpayer to qualify the taxpayer for head of household
c c c c c c c c c c c c c c c c c c
status. (LO 1.5 and 1.6)
c c c c c
20. Single. Unmarried with no dependent. c c c c
Head of household. Single or abandoned spouse, with qualifying dependent.
c c c c c c c c c
Surviving spouse [qualified widow(er)]. Spouse died within the past 2 years and has a qualifying
c c c c c c c c c c c c c c
dependent. (LO 1.5)
c c c
21. a. Yes, his son qualifies as a dependent, meeting the tests of a qualifying relative.
c c c c c c c c c c c c c
b. No. To be a qualifying person, his son must live in the same household as Marquez, so Marquez cannot
c c c c c c c c c c c c c c c c c c
use the head of household filing status. (LO 1.5 and 1.6)
c c c c c c c c c c c
22. a. Yes $500 other dependent credit c c c
b. No (must be below $4,400 c c c c $0
gross income test) c c
c. Yes $2,000 child tax credit c c c
d. Yes $500 other dependent credit c c c
e. No $0 (LO 1.6) c c
23. $0. Exemptions were suspended for tax years 2018–2025. $2,500. The 11-year-old child qualifies for the
c c c c c c c c c c c c c c
$2,000 child tax credit (under age 17). The 17-year-old qualifies for the other dependent credit of $500.
c c c c c c c c c c c c c c c c
(LO 1.6)
c c
24. No. Because Charles is self-supporting, his parents may not claim him as a dependent. The self-support
c c c c c c c c c c c c c c c
test is applied to both children and relatives who otherwise qualify, so Charles is disqualified either way.
c c c c c c c c c c c c c c c c c
(LO 1.6)
c c
25. No. Phillip cannot be claimed as a dependent because he is not a U.S. citizen or a resident of the U.S.,
c c c c c c c c c c c c c c c c c c c c
Canada, or Mexico. (LO 1.6)
c c c c c
26. The standard deduction is a specific dollar amount that varies with filing status, age and vision, but not
c c c c c c c c c c c c c c c c c
by type of individual deduction. Total itemized deductions depend on the amount and type of items, with
c c c c c c c c c c c c c c c c c
some items having limitations based on AGI. They include medical expenses, certain taxes, certain interest
c c c c c c c c c c c c c c
expenses, charitable contributions and miscellaneous deductions.
c c c c c c
A taxpayer should claim the larger of the standard deduction or the total allowed itemized deductions to
c c c c c c c c c c c c c c c c
reduce the taxpayer’s income subject to tax as much as possible. (LO 1.7)
c c c c c c c c c c c c c
27. i. The “statutory” amount of $1,150. c c c c
ii. The earned income of the dependent plus $400
c c c c c c c
iii. The “typical” standard deduction for a taxpayer of that filing status (e.g., $12,950 for a single taxpayer
c c c c c c c c c c c c c c c c
that is under age 65 and not blind) (LO 1.7)
c c c c c c c c c c
28. A spouse in a married filing separate situation when the other spouse is itemizing; most nonresident aliens;
c c c c c c c c c c c c c c c c
an individual filing a short-year return. (LO 1.7)
c c c c c c c c
THE INDIVIDUAL INCOME TAX RETURN c c c c
Group 1 – Multiple Choice Questions
c c c c c
1. D c The income tax includes elements of social
c c c c c c 20. C Surviving spouse is preferred to head of c c c c c c
and economic policy (LO 1.1)
c c c c c household (LO 1.5)
c c c
2. C The income tax was authorized by the 16th
c c c c c c c 21. E Either Margaret or her sister (but not both) c c c c c c c
Amendment in 1913 (LO 1.1)
c c c c c may claim the mother as a dependent under
c c c c c c c c
3. C The 1040A and 1040-EZ no longer exist and
c c c c c c c
a multiple support agreement (LO 1.6)
c c c c c c
the 1120 is for corporations (LO 1.2)
c c c c c c c 22. D The daughter fails the age test to be a
c c c c c c c c c
4. D c Partnerships use Form 1065 to report c c c c c
qualifying child and she fails the gross
c c c c c c c
income tax information. A partner will
c c c c c c
income test ($4,400 in 2022) to be a
c c c c c c c c
report their share of income from a part-
c c c c c c c c
qualifying relative (LO 1.6)
c c c c
nership on a Form1040 (LO 1.2)
c c c c c c 23. D The child tax credit in 2022 is $2,000
c c c c c c c c
5. D c Capital gains and losses are reported c c c c c
(LO 1.6) c c
directly on the face of the Form 1040
c c c c c c c c 24. B The child tax credit for the 13-year-old child
c c c c c c c
(from Schedule D) (LO 1.2)
c c c c c is $2,000. The mother does not meet the
c c c c c c c c
6. D c A partnership is not generally a tax-paying
c c c c c c
support test and cannot be claimed (LO 1.6)
c c c c c c c c
entity (LO 1.2)
c c c 25. B Must be age 16 or under for child tax credit
c c c c c c c c c
7. C Student loan interest is a for AGI deduction. c c c c c c c
(LO 1.6) c c
The other responses are all itemized (from
c c c c c c c 26. A Head of household standard deduction plus c c c c c
AGI) deductions (LO 1.3)
c c c c additional standard deduction for age 65
c c c c c c
8. B The deduction for IRA contributions is a
c c c c c c
($19,400 + $1,750) (LO 1.7)
c c c c c
for AGI deduction (LO 1.3)
c c c c c 27. B Taxpayers age 65 or older are eligible
c c c c c c c
9. D c $98,000 – $13,000 (standard deduction is c c c c c
for an additional standard deduction
c c c c c
less than itemized deductions) (LO 1.3)
c c c c c c
amount (LO 1.7)
c c c
10. D c For AGI adjustments are deducted to get
c c c c c c
28. B Taxpayers that are blind are eligible for c c c c c c
to AGI (LO 1.3)
c c c c
an additional standard deduction amount
c c c c c
11. B The larger of the two may be deducted
c c c c c c c
(LO 1.7) c c
(LO 1.3)
c c
29. D Earned income plus $400 (LO 1.7)
c c c c c c c
12. A An exclusion reduces gross income (LO 1.3)
c c c c c c
30. E Standard deduction may not exceed typical c c c c c
13. B Filing thresholds generally are the same as
c c c c c c
amount (LO 1.7)
c c c
the standard deduction amount (LO 1.4)
c c c c c c 31. D Business inventory is not considered a
c c c c c c
14. D c Ben’s income would need to exceed the c c c c c c
capital asset (LO 1.8)
c c c c
standard deduction to require filing a tax
c c c c c c c 32. A Gain of $15,000 ($25,000 amount realized
c c c c c c
return (LO 1.4)
c c c less $10,000 adjusted basis) has been held
c c c c c c c
15. D c c $25,900 + $1,400 (LO 1.4) c c c c
for more than 12 months and is long-term
c c c c c c c c
(LO 1.8) c c
16. C Single dependent over 65 and blind thresh-
c c c c c c
old is $4,500 for unearned income (LO 1.4)
c c c c c c c c
33. C $10,000 = $240,000 – ($270,000 – $40,000)
c c c c c c c
(LO 1.8) c c
17. C c Joan qualifies as either single or head of
c c c c c c c
household; however, head of household
c c c c c
34. A $43,000 – $3,000. Net capital losses of up
c c c c c c c c
is more advantageous (LO 1.5)
c c c c c
to $3,000 may be deducted from ordinary
c c c c c c c
income for individual taxpayers (LO 1.8)
c c c c c c
18. D c Although Dorothy does not live with c c c c c
Glenda, since Dorothy is a parent that
c c c c c c c
35. C Line 7 is capital gain or (loss) (LO 1.9)
c c c c c c c c c c
Glenda supports, Glenda may file as head
c c c c c c c 36. B Preparers must get a signed authorization to
c c c c c c c
of household (LO 1.5)
c c c c e-file from the taxpayer. (LO 1.10)
c c c c c c
19. D c Taxpayer may file married filing jointly in c c c c c c 37. B About 90% of returns are filed electronically
c c c c c c c
year of spouse’s death (LO 1.5)
c c c c c c (LO 1.10) c c
1-1
,1-2 Chapter 1 – The Individual Income Tax Return
c c c c c c c
Group 2 – Problems
c c c
1. a. Raising revenue to operate the government.
c c c c c
b. Furthering economic goals such as reducing unemployment. c c c c c c
c. Furthering social goals such as encouraging contributions to charities. (LO 1.1)
c c c c c c c c c c
2. a. Form 1040 c
b. Schedule B c
c. Schedule D c
d. Schedule A c
e. Schedule 2 c
f. Schedule E c
g. Schedule 3 c
h. Schedule C c
i. Schedule 1 (LO 1.2) c c c
3. a. $36,300 = $42,000 + $300 – $6,000. c c c c c c
b. $25,900, the greater of itemized deductions or the standard deduction of $25,900.
c c c c c c c c c c c
c. $10,400 = $36,300 – $25,900. (LO 1.3) c c c c c c
4. a. $25,000.
b. $12,950, the greater of total itemized deductions or the standard deduction amount.
c c c c c c c c c c c
c. $12,050 = $25,000 – $12,950. (LO 1.3) c c c c c c
5. a. $53,800 = $54,000 + $2,800 – $3,000 ($7,000 capital loss limited to $3,000).
c c c c c c c c c c c c
b. $12,950
c. $40,850 = $53,800 – $12,950. (LO 1.3 and 1.8)
c c c c c c c c
6. a. $47,500 = $48,000 + $2,500 – $3,000.c c c c c c
b. $25,900, the greater of itemized deductions or the standard deduction of $25,900.
c c c c c c c c c c c
c. $21,600 = $47,500 – $25,900. c c c c
d. $2,184 (Tax Table) (LO 1.3, 1.5, and 1.7)
c c c c c c c
7. Adjusted gross income c $18,000 c
Less:
c Itemized deductions
c c –2,400 c cc
Taxable income c $15,600
Marco’s tax liability from the Tax Table is $1,670. Note: because they are married and filing separately and Mar-
c c c c c c c c c c c c c c c c c c
co’s spouse Tatiana itemizes her deductions, Marco must also itemize his deductions, even though the itemized
c c c c c c c c c c c c c c c c
deductions total is less than the standard deduction he would be otherwise entitled to. (LO 1.3, 1.5, and 1.7)
c c c c c c c c c c c c c c c c c c c
8. Adjusted gross income ($13,200 + $1,450)
c $14,650 c c c c c
Less: Standard deduction
c –12,950 c c
Taxable income c $ 1,700 c
(LO 1.3, 1.5, and 1.7)
c c c c
(Note: See Chapter 6 for the tax credit computation for dependent college students under age 24.)
c c c c c c c c c c c c c c c
9. a. $34,050 = $47,000 – $12,950. c c c c
b. Tax tables. Taxpayers with income up to $100,000 must use the tax tables.
c c c c c c c c c c c c
c. $3,884. (LO 1.3, 1.5, and 1.7) c c c c c
10. a. $66,000 = $50,000 + $8,000 + $5,000 + $3,000.
c c c c c c c c
b. $63,500 = $66,000 – $2,500. c c c c
c. $27,000, the greater of itemized deductions or the standard deduction of $25,900.
c c c c c c c c c c c
d. $36,500 = $63,500 – $27,000. c c c c
e. $3,972 (LO 1.3, 1.5, and 1.7) c c c c c
, Solutions for Questions and Problems – Chapter 1 c c c c c c c 1-3
11. a. $89,400 = $85,400 + $4,000. c c c c
b. $0.
c. $63,500 = $89,400 – $25,900 (standard deduction). (LO 1.3, 1.5, 1.6, and 1.7)
c c c c c c c c c c c c
12. Taxable income is: $28,050 = $41,000 – $12,950. Tax liability from the tax tables not the tax rate schedules:
c c c c c c c c c c c c c c c c c c
$3,164. (LO 1.3, 1.5, and 1.7)
c c c c c
13. Yes. Since Griffin owes Social Security taxes on the unreported tips (greater than $400), he must file an
c c c c c c c c c c c c c c c c
income tax return. (LO 1.4)
c c c c c
14. a. No. Income is less than the $19,400 standard deduction. Although not required to file, Helen is likely
c c c c c c c c c c c c c c c
to be eligible for refundable credits and should.
c c c c c c c c
b. Yes. Unearned income was more than $1,150. Also, gross income is more than the larger of $1,150
c c c c c c c c c c c c c c c
or $1,950 (earned income of $1,550 plus $400).
c c c c c c c c
c. No. Their income is under the $27,300 standard deduction [$25,900 + $1,400 (over 65 years old)].
c c c c c c c c c c c c c c
d. Yes. Gross income is greater than $25,900, the 2022 standard deduction.
c c c c c c c c c
e. Yes. His earnings exceeded the $400 limit for self-employed persons.
c c c c c c c c
(Note: All answers can be found in the figures in LO 1.4.)
c c c c c c c c c c c c
15. a. Allen $2,396. $34,600 – $12,950 = $21,650 c c c c c
b. Boyd $2,702. $37,175 – $12,950 = $24,225 c c c c c
c. Caldwell $4,008. $62,710 – $25,900 = $36,810 c c c c c
d. Dell $3,322. $49,513 – $19,400 = $30,113 c c c c c
e. Evans $5,391. $57,397 – $12,950 = $44,447 (LO 1.5) c c c c c c c
16. a. D The mother is a qualifying person for head of household. c c c c c c c c c
b. A The significant other is not a qualifying person as this individual is not one of the relatives
c c c c c c c c c c c c c c c c
that can be considered a qualifying person for head of household.
c c c c c c c c c c c
c. A The brother does not qualify as a dependent (support test). c c c c c c c c c
d. B or C MFJ can be claimed in the year of the spouse’s death and is probably preferable.
c c c c c c c c c c c c c c c c
e. A, D or E. Surviving spouse is likely to be preferable but single or head of household are also possible.
c c c c c c c c c c c c c c c c c c c
(LO 1.5 and 1.6) c c c c
17. a. Because their income exceeds $100,000, the tax rate schedules must be used.
c c c c c c c c c c c
b. $14,554 = $9,615 + 22% x ($106,000 – $83,550). (LO 1.5)
c c c c c c c c c c
18. Jonas could qualify as either a qualifying child or qualifying relative. The qualifying child tests should be
c c c c c c c c c c c c c c c c
applied first:
c c
1. Relationship test: Confirm Jonas’ relationship to Karl. c c c c c c
2. Domicile test: Where did Jonas live during the tax year? Was it more than one-half of the year with Karl?
c c c c c c c c c c c c c c c c c c c
3. Age test: What is Jonas’ age and is he a full-time student?
c c c c c c c c c c c
4. Joint return test: What type of tax return does Jonas file (if any)? If MFJ, is this only to obtain a refund?
c c c c c c c c c c c c c c c c c c c c c
5. Citizenship test: Is Jonas a US citizen or a tax resident of the US, Canada, or Mexico?
c c c c c c c c c c c c c c c c
6. Support test: How much of Jonas’ support is provided by Jonas? Is it more than one-half?
c c c c c c c c c c c c c c c
If Jonas is a qualifying child, then he need not meet the citizenship test to be a qualifying person for head
c c c c c c c c c c c c c c c c c c c c
of household filing status. If Jonas is not a qualifying child, he might be a qualifying relative which would
c c c c c c c c c c c c c c c c c c c
prompt the following questions:
c c c c
1. Relationship or member of household test: If Jonas is Karl’s brother, this test has been confirmed in the
c c c c c c c c c c c c c c c c c
qualifying child questions. If Jonas is not one of the qualifying relatives, the remaining tests need not
c c c c c c c c c c c c c c c c c
apply since a person that is a qualifying relative by living in the taxpayer’s household is not a qualifying
c c c c c c c c c c c c c c c c c c c
person for purpose of the head of household test.
c c c c c c c c c
, 1-4 Chapter 1 – The Individual Income Tax Return c c c c c c c
The following test need only be applied if Jonas is not Karl’s brother but is a qualifying relative for reasons
c c c c c c c c c c c c c c c c c c c
other than living in Karl’s home.
c c c c c c
2. Gross income test: What is Jonas’ 2022 income? Is it less than $4,400?
c c c c c c c c c c c c
3. Support test: Does Karl provide more than one-half of Jonas’ support? c c c c c c c c c c
The other two tests (joint return and citizenship) were subject to inquiry under qualifying child.
c c c c c c c c c c c c c c
Karl should also be asked if he is unmarried at year end. (LO 1.5 and 1.6)
c c c c c c c c c c c c c c c c
19. Head of household. Maggie’s parents meet the tests to qualify as her dependents. Maggie is single.
c c c c c c c c c c c c c c c
Additionally, she provides a home for her parents. Parents are an exception to the requirement that
c c c c c c c c c c c c c c c c
dependents must live in the same household as the taxpayer to qualify the taxpayer for head of household
c c c c c c c c c c c c c c c c c c
status. (LO 1.5 and 1.6)
c c c c c
20. Single. Unmarried with no dependent. c c c c
Head of household. Single or abandoned spouse, with qualifying dependent.
c c c c c c c c c
Surviving spouse [qualified widow(er)]. Spouse died within the past 2 years and has a qualifying
c c c c c c c c c c c c c c
dependent. (LO 1.5)
c c c
21. a. Yes, his son qualifies as a dependent, meeting the tests of a qualifying relative.
c c c c c c c c c c c c c
b. No. To be a qualifying person, his son must live in the same household as Marquez, so Marquez cannot
c c c c c c c c c c c c c c c c c c
use the head of household filing status. (LO 1.5 and 1.6)
c c c c c c c c c c c
22. a. Yes $500 other dependent credit c c c
b. No (must be below $4,400 c c c c $0
gross income test) c c
c. Yes $2,000 child tax credit c c c
d. Yes $500 other dependent credit c c c
e. No $0 (LO 1.6) c c
23. $0. Exemptions were suspended for tax years 2018–2025. $2,500. The 11-year-old child qualifies for the
c c c c c c c c c c c c c c
$2,000 child tax credit (under age 17). The 17-year-old qualifies for the other dependent credit of $500.
c c c c c c c c c c c c c c c c
(LO 1.6)
c c
24. No. Because Charles is self-supporting, his parents may not claim him as a dependent. The self-support
c c c c c c c c c c c c c c c
test is applied to both children and relatives who otherwise qualify, so Charles is disqualified either way.
c c c c c c c c c c c c c c c c c
(LO 1.6)
c c
25. No. Phillip cannot be claimed as a dependent because he is not a U.S. citizen or a resident of the U.S.,
c c c c c c c c c c c c c c c c c c c c
Canada, or Mexico. (LO 1.6)
c c c c c
26. The standard deduction is a specific dollar amount that varies with filing status, age and vision, but not
c c c c c c c c c c c c c c c c c
by type of individual deduction. Total itemized deductions depend on the amount and type of items, with
c c c c c c c c c c c c c c c c c
some items having limitations based on AGI. They include medical expenses, certain taxes, certain interest
c c c c c c c c c c c c c c
expenses, charitable contributions and miscellaneous deductions.
c c c c c c
A taxpayer should claim the larger of the standard deduction or the total allowed itemized deductions to
c c c c c c c c c c c c c c c c
reduce the taxpayer’s income subject to tax as much as possible. (LO 1.7)
c c c c c c c c c c c c c
27. i. The “statutory” amount of $1,150. c c c c
ii. The earned income of the dependent plus $400
c c c c c c c
iii. The “typical” standard deduction for a taxpayer of that filing status (e.g., $12,950 for a single taxpayer
c c c c c c c c c c c c c c c c
that is under age 65 and not blind) (LO 1.7)
c c c c c c c c c c
28. A spouse in a married filing separate situation when the other spouse is itemizing; most nonresident aliens;
c c c c c c c c c c c c c c c c
an individual filing a short-year return. (LO 1.7)
c c c c c c c c
