Topic 3 - Tax Exemptions

1. Look at the Form 1040A you prepared for Debra Libanos. What is the amount on Form 1040A, Line 26?

A. $ 5,450.
B. $ 3,500.
C. $ 7,000. 
D. $ 8,000.

2. Look at the Form 1040A you prepared for Debra Libanos. What is the amount on Form 1040A, Line 45a?

A. $ 1,336.
B. $ 1,588.
C. $ 1,664. 
D. None of the above.

3. If you could be claimed as a dependent by another person, you cannot claim yourself but you can claim anyone else as a dependent.

True False

4. You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. The couple files a joint return. Even though your daughter is your qualifying child, you cannot take an exemption for her.

True False

5. Your son and his wife each had less than $3,000 of wages and no unearned income. Neither is required to file a tax return. Taxes were taken out of their pay, so they filed a joint return to get a refund. You meet all the other requirements to claim their exemptions. Therefore, you can claim their exemptions.

True False

6. Your child lived with you for 5 months of the year. The child lived with your former spouse for the other 7 months. You are considered the custodial parent.

True False

7. If you provided a person with lodging, you are considered to provide support equal to the fair market value of the room, apartment, house, or other shelter in which the person lives. Fair market value includes a reasonable allowance

A. For the use of furniture and appliances.
B. For heat.
C. For any utilities that are provide. 
D. All of the above.

 8. The total fair market value of a person's home that he or she owns is not considered support contributed by that person.

True False

9. You and your brother each provide 20% of your mother's support for the year. The remaining 60% of her support is provided equally by two persons who are not related to her. She does not live with them. Who can claim the exemption?

A. You and your brother can take the exemption.
B. Your brother can take the exemption. 
C. No one can take the exemption.
D. You can take the exemption.

10. Under a pre-1985 agreement, the non-custodial parent provides $1,500 for the child's support. The $1,500 was spent on things other than the support. This amount is

A. Not considered support because it was spent on other things.
B. Not considered support because it was provided by the non-custodial parent. 
C. Considered support even if it was actually spent on things other than support.
D. Not considered support because it was not over half of the total support for the child.

11. Your father lives with you and receives 25% of his support from social security, 40% from you, 24% from his brother (your uncle), and 11% from a friend. Who can take the exemption for your father?

A. Only you can take the exemption because you provided more support than the others.
B. Anyone of you can take the exemption if the others sign a statement agreeing not to take the exemption. 
C. Either you or your uncle can take the exemption if you and the others sign a statement agreeing not to take the exemption.
D. Your father takes his own exemption because he received social security benefits.

12. Pierce bought a $180 television set as a birthday present for his 10-year-old child. The television set was placed in his child's bedroom. Can Pierce include the cost of the television set in the support of his child?

A. No, because the television set was placed in the child's room.
B. No, because it was a birthday present and not support. 
C. Yes, he can include the cost of the television set in the support of his child.
D. No, because a television set is not one of the support items.

13. Krishnan paid $7,000 for a car and registered it in his name. Krishnan and his 17-year-old daughter use the car equally. Can Krishnan include the cost of the car in the support of his daughter?

A. Yes, because Krishnan had out-of-pocket expenses of operating the car for his daughter's benefit.
B. No, because Krishnan owns the car and has not legally given it to his daughter. 
C. Yes, because Krishnan bought the car merely for his daughter to use it.
D. Yes, because Krishnan and his daughter use the car equally.

14. Julia pays someone to provide child care to her 11-year-old son. Can Julia include these payments in her son's total support?

A. Yes, if Julia does not also claim a child and dependent care credit for the payments.
B. Yes, even if Julia claims a child care credit for the payments.
C. No, because providing child care is not one of the allowed support items.
D. No, because the total payments are not more than half of the total payments.

15. During the year, Elizabeth's son receives $2,200 from the government under the GI Bill. He uses this amount for his education. Elizabeth provides the rest of her son's support; another $2,000. Including the GI Bill in her son's total support, the total is $4,200 ($2,200 + $2,000). As a result,

A. Elizabeth has provided more than half of her son's support because the GI Bill money was used for education.
B. The government has not provided more than half of the support. 
C. Elizabeth has not provided more than half of her son's support.
D. None of the above.

16. Medical insurance benefits, including basic and supplemental Medicare benefits are considered part of support to meet the support test.

True False

17. You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. Your spouse is never considered your dependent. On a joint return, you can claim one exemption for yourself and one for your spouse. If you file a separate return,  You can

A. Claim an exemption for your spouse if your spouse had no gross income.
B. Claim an exemption for your spouse if your spouse is not filing a return, and was not a dependent of another taxpayer.  
C. Not claim the exemption of your spouse.
D. Both A and B are correct.

18. You generally cannot claim a married person as a dependent if he or she files joint return. The joint return test does not apply if a joint return is filed by the dependent and his or her spouse

A. Merely as a claim for refund.
B. If no tax liability would exist for either spouse on separate returns.
C. To pay the of tax owed on the return.
D. Both A and B are correct.

19. The following is not one of the five tests that must be met for a child to be your qualifying child.

A. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
B. The person's gross income for the year must be less than $3,500.
C. The child must not have provided more than half of his or her own support for the year.
D. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.

20. The term "dependent" means either a qualifying child or qualifying relative. You can claim an exemption for a qualifying relative only if four tests are met. The following is NOT one of the tests that must be met for a person to be your qualifying relative.

A. Age test.
B. Member of household or relationship test.
C. Support test.
D. Not a qualifying child test.

21. You can treat a child as your qualifying relative even if the child has been kidnapped, but the following statement must be true.

A. The child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family.
B. In the year the kidnapping occurred, the child met the tests to be your qualifying relative for the part of the year before the date of the kidnapping.
C. The child is treated as your dependent only in the year he or she was kidnapped.
D. Both A and B are correct.

22. To meet the member of household or relationship test, a person must either live with you all year as a member of you household, or be related to you. The following person has to live with you all year as a member of your household to meet the member of household or relationship test.

A. Your child, stepchild or eligible foster child.
B. A foster parent.
C. Your brother, sister, half brother or sister, or your stepbrother or stepsister.
D. A brother or sister of your father or mother.

23. Juan's cousin Mikhael , 22, lived with him for all of 2008. He qualifies to be his dependent under the 'member of household or relationship test' because he was in his household all year and he provided more than 50% of his support with free rent and all. His cousin, Mikhael, was mainly going to school, but he did work part time. To meet the Gross Income Test, Mikhael's income must be

A. Less than $5,000.
B. Less than $850.
C. Less than $3,500.
D. Less than $3,200.

24. The amount you can claim as a deduction for exemptions is phased out once your adjusted gross income (AGI) goes above a certain level for your filing status. For example, George is a single man, age 39, who has two dependents. His dependents don't qualify him for the head of household filing status. George's adjusted gross income is $167,000 for tax year 2008. What is the amount George will enter on form 1040, line 42, or Form 1040A, line 26 as a deduction for his exemptions? 

A. $ 3,500.
B. $ 10,303.
C. $ 10,500.
D. $ 3,430.

25. You are trying to figure out if you can claim your sister on your return. Your family only consists of the two of you and your sister takes one bedroom in the three bedroom house. You have met the Relationship, age, residency and special tests to claim her exemption. Here is the list of fact help you figure out the support contributed for your sister:

Based on the above, how much did you contribute to your sisters support for 2008?

A. $ 9,000.
B. $ 12,000.
C. $ 11,700.
D. $ 16,700.

26. To meet this test, your child must have lived with you for more than half of the year. Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as illness or vacation. This test is the

A. Citizen or Resident Test.
B. Residency Test.
C. Relationship Test.
D. Member of household Test.

27. If a person whom you expect to claim an exemption on your return does not have a social  security number, you should apply for one. If you do not list the correct number, the exemption may be disallowed. If you child is born and died in 2008, and you do not have a SSN for the child, you may attach a copy of the child's birth certificate instead and enter "Died" in the column where SSN goes. If you dependent is an alien who does not have a SSN and does not qualify to get one, then

A. Enter "Applied for" in SSN column.
B. Send in birth certificate instead.
C. You don't qualify for any number and the exemption will be disallowed.
D. Your dependent must apply for an individual taxpayer identification number (ITIN).

28. If you want to claim an exemption for a dependent that you meet all the tests for except for the support test, because you did not provide more than half of the support of the dependent. Instead, you and others together provide more than half of the person's support. When this happens

A. You can agree that any one of you who individually provided more than 10% of the person's support, but only one of you can claim the exemption for that person.
B. Each one that of the others (that does not claim the exemption) must sign a statement agreeing not to claim the exemption.
C. The person claiming the exemption must keep the signed statements for his records.
D. All of the above.

29. In most cases, a child of divorced or separated parents will be a qualifying child on one of the parents. A child will be treated as being the qualifying relative of his or her non-custodial parent if

A. The parents are divorced or legally separated under a decree of divorce or separate maintenance.
B. The parents are separated under a written separation agreement.
C. The parents lived apart at all times during the last 6 months of the year.
D. All of the above.

30. If you have a child who was placed with you by an authorized placement agency, you may be able to claim an exemption for that child. However, if you cannot get an SSN or an ITIN for the child, you must

A. Not claim this child on  your return because he or she does not qualify for any number.
B. Get an adoption taxpayer identification number (ATIN).
C. Apply for an individual taxpayer identification number (ITIN).
D. Apply for an special social security number for adoptees at the Social Security Administration office.

Copyright © 2010 [Hera's Income Tax School]. All rights reserved.
Revised: 07/08/10