Indicate which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual.
Form or Schedule
1. Bank interest income of $1,600 received by a taxpayer who itemizes deductions
2 Salary of $70,000 for a taxpayer who itemizes deductions
3. Income from a sole proprietorship business
4. Income from rental property
5 Dividends of $2,000 received by a taxpayer who does not itemize deductions
6. Charitable contribution deduction for an individual who itemizes deductions
Single individual with no dependents whose only income is $18,000 (all from wages) and who does not itemize deductions
7. Interest Income for an individual that itemizes deductions
Bill is a single taxpayer. In 2007, his salary is $28,500 and he has interest income of $1,500. In addition, he has deductions for adjusted gross income of $2,100 and $6,250 of itemized deductions. If Bill claims one exemption for this year, calculate the following amounts:
1. Gross income
$ __ 28500___
2. Adjusted gross income
$ __ 30000___
3. Standard deduction or itemized deduction amount
4. Taxable income
$ ___ 21650____
Indicate by a check mark whether the following taxpayers are required to file a return for 2007 in each of the following independent situations:
1. Taxpayer (age 45) is single with income of $8,300.
2. Husband (age 67) and wife (age 64) with income of $18,000, filing a joint return.
3. Taxpayer is a college student with salary from a part-time job of $6,000. She is claimed as a dependent by her parents.
4. Taxpayer has net earnings from self-employment of $4,000.
5. Taxpayers are married with income of $15,900 and file a joint return. They expect a refund of $600 from excess withholding.
6. Taxpayer is a waiter and has unreported tips of $450.
7. Taxpayer is a qualifying widow (age 65) with a dependent son (age 18) and income of $15,800.
8. Taxpayer has income of $4,500 and is single. His age is 45 and he received advanced earned income credit payments.
Indicate the filing status (or statuses) in each of the following independent cases, using this legend:
A – Single
D – Head of household
B – Married, filing a joint return
E – Qualifying widow(er)
C – Married, filing separate returns
1. The taxpayers are married on December 31 of the tax year.
2. The taxpayer is single, with a dependent child living in her home.
3. The taxpayer is unmarried and is living with his girlfriend.
4. The taxpayer is married and his spouse left in midyear and has
disappeared. The taxpayer has no dependents.
5. The unmarried taxpayer supports her dependent mother, who
lives in her own home.
6. The taxpayer’s wife died last year. His 15-year-old dependent
son lives with him.
Indicate in each of the following independent situations the number of exemptions the taxpayer(s) should claim on their 2007 income tax return. If a test is not mentioned, you should consider that it is met.
—2—1. Abel is 72 years old and married. His wife is 64 and meets the test for blindness. How many exemptions should they claim on a joint return?
—1—2. Betty and Bob are married and have a 4-year-old son. During the year Betty gave birth to a baby girl. How many exemptions should Betty and Bob claim on a joint return?
—0—3. Charlie supports his 26-year-old brother, who is a full-time student. His brother’s gross income is $4,500 from a part-time job. How many exemptions should Charlie claim on his return?
—2—4. Donna and her sister support their mother and provide 60 percent of her support. If Donna provides 25 percent of her mother’s support and her sister signs a multiple support agreement giving Donna the exemption, how many exemptions should Donna claim on her return?
—2—5. Frank is single and supports his son and his son’s wife, both of whom lived with him for the entire year. The son (age 20) and his wife (age 19) file a joint return to get a refund, reporting $2,500 ($2,000 earned by the son) in gross income. Both the son and daughter-in-law are full-time students. How many exemptions should Frank claim on his return?
—0—6. Gary is single and pays $5,000 towards his 20-year-old daughter’s college expenses. The remainder of her support is provided by a $9,500 tuition scholarship. The daughter is a full-time student. How many exemptions should Gary claim on his return?
—7—7. Helen is 50 years old and supports her 72-year-old mother, who is blind and has no income. How many exemptions should Helen claim on her return?
Indicate in each of the following independent situations the amount of the standard deduction the taxpayers should claim on their 2007 income tax returns.
________5350____—1. Adam is 45 years old, in good health, and single.
_________11750_______ 2. Bill and Betty are married and file a joint return. Bill is 66 years old, and Betty is 60.
___________6650______ 3. Charlie is 70, single, and blind.
_________7850________ 4. Debbie qualifies for head of household filing status, is 35 years old, and is in good health.
_________6000_________5. Elizabeth is 9 years old, and her only income is $3,600 of interest on a savings account. She is claimed as a dependent on her parents’ tax return.
__________10700_________6. Frank and Freida are married with two dependent children. They file a joint return, are in good health, and both of them are under 65 years of age.
Indicate whether each of the items listed below should be included in gross income or excluded from gross income in 2007.
1. Prizes and awards
2. Embezzled funds
3. Child support payments
7. Welfare payments
9. Jury duty fees
11. Life insurance proceeds paid at death
12. Hobby income
14. Partnership income
15. Casualty insurance proceeds
16. G.I. Bill benefits
17. Scholarships for room and board
18. Mileage allowance
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