SEE Individual Test Bank

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  1. When the law requires withholding on a payment of U.S. source income to a nonresident alien, the payor must generally withhold at what rate?
    • The answer is 30%.
    • Most types of U.S. source income received by a foreign person are subject to U.S. tax at a rate of 30%. A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States.
  2. What do you not include as income in a rental agreement?
    Do not include a security deposit as income if it is to be returned to the tenant at the end of the lease. If part or all of the security deposit is kept during any year because the tenant does not live up to the terms of the lease, include the amount kept as income in that year. If tenant will use their security deposit as a final payment of rent, it is advance rent. The property owner should include it as income when received.
  3. What is included in gross income when calculating the gross income for a potential dependent?
    Gross income is all income in the form of money, property, and services that is not exempt from tax. Social Security benefits (in this example) and municipal bond interest are not taxable and not included in gross income for this test. Gross receipts from rental property are gross income. Do not deduct taxes, repairs, etc., to determine the gross income from rental property.
  4. Fedor is a nonresident alien. Which filing status can he use on his Form 1040NR-EZ?
    A nonresident alien filing Form 1040NR-EZ can only claim Single nonresident alien or Married nonresident alien as the filing status
  5. What is the gross income threshold for the elderly?
    The gross income threshold determines when filing a return is necessary. It is the sum of the standard deduction and personal exemption amounts for each filing status. It is not necessary to file a return if gross income is less than the allowable deductions. The minimum income amount for filing for a single individual 65 or older in 2011 is $10,950. A dependent taxpayer over age 65 with over $3,850 in unearned income is required to file a return.
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SEE Individual Test Bank
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