Question

For each statement, indicate if it is either TRUE or FALSE and for multiple choice questions, choose the best answer for each question. All questions are required. 1. Under the Federal income tax formula for individuals, a choice must be made between claiming deductions Under the Federal income tax formula for individuals, the determination of adjusted gross income (AGI) precedes that of taxable income (TI). 2. 3. Under the income tax formula, a taxpayer must choose between deductions for AGl and the standard deduction. 4. The filing status of a taxpayer (e.g, single, head of household) must be identified before the applicable standard deduction is determined. 5. Claude's d eductions from AGI exceed the standard deduction allowed for the current year. Under these circumstances, Claude cannot claim the standard deduction. Dan and Donna are husband and wife and file separate returns for the year. If Dan itemizes his deductions from AGI, Donna cannot claim the standard deduction. .

Answer 1

The calculation of federal income tax for individuals involves deducting the standard or itemized deductions from the AGI to determine the taxable income. Taxpayers must choose between itemized and standard deductions, and one spouse's decision to itemize affects the other's ability to claim the standard deduction on separate returns.

Step-by-step explanation:

When considering federal income tax for individuals, we bear in mind that taxable income is calculated after determining the adjusted gross income (AGI). The AGI is essentially your income from various sources minus specific deductions before standard or itemized deductions are applied. The next step is to subtract either the standard deduction or itemized deductions (whichever is higher and applicable) to arrive at your taxable income.

The selection between claiming itemized deductions or the standard deduction is a critical choice taxpayers must make. If a taxpayer's itemized deductions exceed the standard deduction, as in the case of Claude, they cannot claim the standard deduction. Furthermore, the filing status, such as single or head of household, significantly influences the amount of the standard deduction one is eligible for.

If one spouse itemizes deductions on a separate return, the other spouse cannot take the standard deduction. This means that if Dan decides to itemize his deductions, Donna will not be able to claim the standard deduction on her separate return.