Tax Learn Smart

* The U.S. tax laws are based on the all-inclusive concept where gross income includes all realized income from “whatever source derived.”

* Income that is taxed in the current year according to the tax rate schedule is referred to as ordinary income.

* How does a taxpayer determine which filing status to use?

* Whether or not the taxpayer has dependents

* Whether or not the taxpayer is married at the end of the year

* Put the following items in the order in which they are found in the individual income tax formula.

* Gross Income

* Minus for AGI deductions

* Equals adjusted gross income

* Minus from AGI deductions

* Equals taxable income

* Which of the choices below is NOT one of the tests that must be met to qualify as a qualifying relative? Age (the tests are gross income, relationship, and support)

* In order to meet the Support test, the taxpayer must pay more than half of the living expenses for the qualifying relative.

* When can the married filing jointly or married filing separately filing status be used?

* When on spouse died during the year and the surviving spouse has not remarried

* When the taxpayers are married as of the last day of the tax year

* Rank the filing status according to which is the most favorable for taxpayers.

* Married filing jointly

* Head of the household

* Single

* A tax deduction is subtracted from an individual’s taxable income.

* If a taxpayer is unmarried at the end of the year, which of the following filing statuses could possibly be used by the individual?

* Qualifying widow or widower

* Single

* Head of the Household

* Which of the following individuals would NOT meet the relationship test for being a qualifying relative of the taxpayer through a qualifying family relationship? Cousin

* The gross income test requires that a qualifying relative’s gross income for the year be...