Q1. Jane's husband died in 2001. They had one dependent child. Assuming Jane's child continues to live with her and she pays over 50% of the expenses of maintaining her home. If she does not remarry, what is the most beneficial filing status she can claim for the following years?
a. 2001
b. 2002
c. 2003
d. 2004
Q2. Determine taxable income for the following situation. Show your work (amount for exemptions is 3650 and standard deduction 11400) assuming the tax year is 2009. John and Marie are married filing a joint return. John is 38 and Marie is 37. They support John's mother, age 80 who received social security of $4,000 and dividend income of $1,900.
They had the following items of income and deductions:
Salary $82,000
Interest Income 6,000
IRA Contribution (regular) 4,000
Itemized deductions 6,200
Withholding for Federal Tax 8,500
Withholding for state tax 1,200
Dividend Income 1900
Penalty for early CD
Withdrawal 50
Q3. Jane is unmarried. She maintains a home where her brother Ralph lives. Ralph is 20 years old, not in school and earned $5000 on a part time job. Jane provides over 50% of Ralph's support. What is her filing status and how many exemptions may she claim?
Q4. a) John is 12 years old. His parents claim him as a dependent. In 2009 his only income is $1400 of interest income. How much is his taxable income?
b) Assume the same information as above except he also had a part time job and earned $2500 in wages. How much is his taxable income?
Q5. Marty is single and provided over 50% of the support for the following people in 2009:
a) Jenny, his mother, who does not live with him. She received social security of $5600 and interest income of $3100.
b) Martha, his sister. She is 18 years old, a full time student and earned $10500. She lived with Marty 6 ½ months of the year.
c) Jack, his cousin. He is 15 years old and had no income. He was a full time student. He lived with Marty for 11 months of the year.
d) Charlotte, his sister. She is 25 years old, a full time student and earned $1100 in salary. She lived with Marty the entire year.
For each person answer the following: whether Marty can claim a dependency exemption for qualifying child or qualifying relative or neither.
For each line you will answer qualifying child, qualifying relative or neither.
For each line if you did not choose qualifying child, you must explain why you rejected that category. If you did not choose qualifying relative, you must explain why you rejected that category.
Jenny___________________________________ Why?
Martha___________________________________ Why?
Jack___________________________________ Why?
Charlotte_________________________________ Why?
Q6. Indicate what type of payment a taxpayer received if they are issued the following forms.
a) W2_____________________________
b) 1099-G __________________________
c) 1099-B __________________________
d) 1099-R __________________________
Q7. What is the difference between a C corporation and an S corporation?
Q8. Fanny and Faye are sisters. They live together in a house. Also living in the house is Alan, their 10 year old brother. He has lived there for 8 months of the year. Alan's parents are deceased. Alan earned $5000 from a paper route. Faye had adjusted gross income of $15000 and Fanny had adjusted gross income of $21000. Faye provided 60% of Alan's support and Fanny provided 40% of his support. Each sister wants to claim Alan as an exemption. In this dispute, who would the IRS side with and why?
Q9. Sal has the following items of income and loss:
Salary $60000
Taxable interest 5000
Alimony received 4000
Capital losses (7000)
How much was her gross income?
Q10. Jack and Jill are married filing jointly. In 2009 Jack had salary of $10000. Jill had interest income of $1000. How much was their making work pay credit?
Q11. Fred is single with no dependents. He is 32 years old. In 2009 he had earned income of $35000. He had mortgage interest of $1200, real estate taxes on his home of $1000 and personal property tax of $120. How much was his taxable income?