Question

1. Wanda is a single parent (divorced). She has a 5-year-old daughter. She receives the following items of income during the year: • Wages - $33,000 • Child support – 9,600 • Workers compensation - $14,000 • Commissions - $8,000 • Interest - $300 • Gift from her grandfather - $10,000 What is the amount of income Wanda will need to report on her tax return for the year? Select one: a. $33,000 b. $51,300 c. $50,900    d. $41,300

2. Sydney’s employer provides his employees with an insurance policy that pays sick benefits if the employee is out of work due to illness for longer than a specified period. His employer pays 70% of the premiums and Sydney pays the remaining 30%. When Sydney was out of work, he was paid $4,500 in sick pay from the policy. How much if any, of the sick pay received, is taxable to Sydney?

Select one:

a. $4,500

b. $3,150

c. $ 0

d. $1,350

3. Jan and Sam have all of their 2018 tax documents ready to bring to George to prepare their return. These documents include a W-2 for Jan ($52,300), a W-2 for Sam ($48,700), a state tax refund of $475, canceled debt income of $1,800 for Jan, and state lottery winnings of $2,000. They never itemize deductions. What will be their total on Form 1040, line 7?

Select one:

a. $105.275

b. $104,800

c. $103,275

d. $103,000

4. Which of the following scenarios would require the taxpayer to file Schedule B along with Form 1040?

Select one:

a. The taxpayer receives $1,100 of regular interest

b. The taxpayer receives $1,150 of nontaxable interest.

c. The taxpayer receives $1,600 of regular interest.

d. The taxpayer receives Form 1099-INT

5. Frank legally divorced his wife last year. His ex-wife has joint ownership of their home and sole custody of their two children. As part of the divorce decree (dated June 1, 2018), Frank was ordered to continue to pay the full mortgage payments as well as cash payments to his ex-wife. Frank was also ordered to pay child support for the children. Frank pays the following amounts:

•          Alimony in the amount of $1,300 cash per month

•          Mortgage payments in the amount of $1,800 per month

•          Child support in the amount of $800 per month

How much can Frank deduct as alimony?

Select one:

a. $26,400

b. $46,800

c. $37,200

d. $36,000

Answer 1

Answer -

Step - ( 1 ) - Information Given -

Wanda is a single parent (divorced). She has a 5-year-old daughter.

She receives the following items of income during the year -

• Wages = $33000
• Child support = $9600
• Workers compensation = $14000
• Commissions = $8000
• Interest = $300
• Gift from her grandfather = $10000

.

Step - ( 2 ) - Analysis -

Calculation of Wanda's income for the year -

Particulars	Reason / Remarks	Amount ($)
Wages	-	33000
Child support	Not taxable, because Child support payments are neither deductible by the payer nor taxable income to the payee.	0
Workers compensation	Not taxable as per Federal income tax law	0
Commissions	Taxable income	8000
Interest	Taxable income	300
Gift from her grandfather	Not taxable as per Federal income tax law	0
Wanda's income for the year		41300

.

Step - ( 3 ) - Conclusion -

Therefore, Option - (d), is Correct, because Wanda will need to report $41300 as income on her tax return for the year.