Question

1) List 5 items excluded from Gross Income.

2) List 5 items included in Gross Income.

3) List the five filing statuses taxpayers may use when filing a return.

4) List the requirements to meet the Head-of-Household filing status.

5) List the components of the Individual Tax Formula (Hint: Starts with Income and ends with Tax Due (or refund)

Answer 1

1. Answer :- This list below is comprised of some of the items that you can exclude from your gross income on your tax return.

• Gain on sale of main home (up to $500,000.00 for qualifying married filers).
• Discharge of debt due to bankruptcy or insolvency.
• Social security benefits (up to 85% of benefits may be included in gross income; and 15% minimum may be excluded).
• Gifts and inheritances (generally property received as a gift, bequest or inheritance).
• Scholarships and fellowships (exempt if used for qualified educational expenses).
• Interest on series EE and I savings bonds (when used for higher education purposes).
• Life insurance proceeds (death payouts are generally tax free to beneficiary

2 Answer :- Gross income includes :-

• Compensation for services, including fees, commissions, fringe benefits, and similar items;
• Gross income derived from business;
• Gains derived from dealings inproperty;
• Interest;
• Rents;
• Royalties;
• Dividends;

3) Answer :- List the five filing statuses taxpayers may use when filing a return

There are five filing statuses:

• Single.
• Married filing jointly.
• Married filing separately.
• Head of household.
• Qualifying widow(er) with dependent child.

4) Answer;-

To file as head of household, you must:

• Pay for more than half of the household expenses.
• Be considered unmarried for the tax year, and.
• You must have a qualifying child or dependent.