Chapter 3 Federal Taxation
Week 2 Homework chapter3
5-Lucas invests in foreign stocks and bonds in an attempt to reduce his taxes. This is not an effective approach because of possible double taxation. The US offers a foreign tax credit, but retirement accounts are not eligible since they are not taxed in the US. Furthermore the rates vary between countries and a little homework needs to be done before investing in this venue.
10-Abigail is a widow who is age 80 and blind and is claimed as dependant by her grandson. * Yes Abigail can file a federal income tax return depending on her income. * When filing her own return, Abigail’s standard deduction will be limited to the greater of $950 (2012) or the sum of her earned income plus $300. However if this exceeds the standard deduction she will be limited to the basic standard deduction. She will be allowed the additional deductions for being over 65 and blind.
13-Patsy maintains a household that includes her son (30) and her cousin (28). She can claim her cousin by not her son. Her son does not qualify because of the ‘Age Test’ a qualifying child must be under 19 (24 if a student).
15- Caden could not claim Lily as his dependant on his 2011 income tax return because she was still his spouse.
24- In connection with the application of the “kiddie tax” comment on these: If the child generates only earned income, and if that income does not exceed half his/her support then the kiddie tax can apply If the child’s modest amount of unearned income does not exceed $1900.
30- Compute the taxable income for 2012 for Aiden on the basis of the following
5-Lucas invests in foreign stocks and bonds in an attempt to reduce his taxes. This is not an effective approach because of possible double taxation. The US offers a foreign tax credit, but retirement accounts are not eligible since they are not taxed in the US. Furthermore the rates vary between countries and a little homework needs to be done before investing in this venue.
10-Abigail is a widow who is age 80 and blind and is claimed as dependant by her grandson. * Yes Abigail can file a federal income tax return depending on her income. * When filing her own return, Abigail’s standard deduction will be limited to the greater of $950 (2012) or the sum of her earned income plus $300. However if this exceeds the standard deduction she will be limited to the basic standard deduction. She will be allowed the additional deductions for being over 65 and blind.
13-Patsy maintains a household that includes her son (30) and her cousin (28). She can claim her cousin by not her son. Her son does not qualify because of the ‘Age Test’ a qualifying child must be under 19 (24 if a student).
15- Caden could not claim Lily as his dependant on his 2011 income tax return because she was still his spouse.
24- In connection with the application of the “kiddie tax” comment on these: If the child generates only earned income, and if that income does not exceed half his/her support then the kiddie tax can apply If the child’s modest amount of unearned income does not exceed $1900.
30- Compute the taxable income for 2012 for Aiden on the basis of the following