Tax Subject 4 - Tax Rules for Dependents

1. Whether a dependent has to file a return generally depends on

A. The amount of the dependent's earned and unearned income.
B. Whether the dependent is married.
C. Whether the dependent is age 65 or older, or is blind.
D. Any of the above.

2. If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has ________ of gross income (earned and/or unearned).

A. $5 or more.
B. $5,700 or more.
C. $5,800 or more.
D. At least $1.

3. Helena is 17. Her father claims an exemption for her on his income tax return. She worked part time and earned $6,100 in wages. She did not have any unearned income. Helena

A. Does not need to file a return.
B. Must file a return because her earned income and total income is more than $5,950.
C. Must file a return because her total income is more than $5.
D. Must file a return because her total income is more than $950.

4. A single dependent who has only unearned income under 65 years old and is not blind must file a return if the total is more than

A. $950.
B. $5,700.
C. $5.
D. $7,900

5. Mark is 17 and single. His parents can claim an exemption for him on their income tax return. He received $990 of taxable interest and dividend income. He did not work during the year. He must file a return because

A. His earned income is more than $950.
B. His unearned income and total income is more than $950.
C. His income is more than $5.
D. None of the above because his total income is not more than $2,350.

6. A parent of a child under age ______ may be able to elect to include the child's interest and dividend income on the parent's return.

A. 19.
B. 24 if a full-time student.
C. Either A or B above.
D. 14

7. Harry is 19, not blind, and a full-time college student. He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. He received $250 taxable interest income and earned income of $2,445 from a part-time job. He has to file a return.

True False

8. Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return.

True False

9. A dependent must file a tax return if he or she owes

A. Alternative minimum tax.
B. Social security and Medicare taxes on tips not reported to his or her employer.
C. Social security and Medicare taxes on wages received from an employer who did not withhold these taxes.
D. Any of the above.

10. A dependent must file a tax return if he or she

A. Had income tax withheld from his or her income.
B. Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.
C. Had net earnings from self-employment of at least $200.
D. Any of the above.

11. Even if a dependent is not obligated to file a return he or she

A. Can file only if his or her parents will not claim an exemption for him or her.
B. Had income tax withheld from his or her income.
C. Does not qualify for the earned income credit, additional child tax credit, health coverage tax credit or other credits.
D. Is not due a refund.

12. If a child cannot file his or her own return for any reason, such as age,

A. The child's parent or guardian is responsible for filing a return on his or her behalf.
B. The child should send the return unsigned.
C. The child should not file the return.
D. None of the above.

13. For federal income tax purposes, the income a child received for his or her personal services is the child's, even if the parent is entitled to and receives that income. The following is a correct statement.

A. If the child does not pay the tax due on the income, the child is not liable for the tax.
B. Deductions for payments that are made out of a child's earnings are the parent's if the payments are made by the parent.
C. If the child does not pay the tax on the income, the parent may be liable for the tax.
D. Payments you make on your child's behalf out of a child's earnings can be deducted only on your return.

14. The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to

A. $950.
B. The individual's earned income plus $300, but not more than the standard deduction amount.
C. The larger of A and B above.
D. the smaller of A and B above.

15. Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. If the employee claims exemption from withholding on Form W-4, the employer will not withhold

A. Social security tax.
B. Federal income tax.
C. Medicare tax.
D. Any of the above.

16. An employee can claim exemption from withholding for 2012 only if

A. For 2012, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability.
B. For 2013, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability.
C. He or she meets both A and B above.
D. The employee's total income will be more than $950.

17. An employee who is a dependent ordinarily can claim exemption from withholding if

A. The employee's total income will be more than $1,000, the minimum standard deduction for 2013.
B. The employee's unearned income will be more than $350.
C. Both A and B above.
D. None of the above.

18. A person who can be claimed as a dependent on another taxpayer's return can claim his or her own exemption if the other taxpayer does not actually claim the exemption.

True False

19. The standard deduction for a married dependent filing a separate return whose spouse itemizes deductions is

A. $950.
B. Zero.
C. $300.
D. $5,700.

20. To claim exemption from withholding, an employee must enter "Exempt" in the space provided on Form W-4, line 7. An exemption from withholding is good for only one year. To continue the exemption, an employee must file a new Form W-4 by

A. February 15 of each year.
B. March 15 of each year.
C. April 15 of each year.
D. December 31 of each year.

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