Question 1

Which of the following is not true of the lifetime learning credit?

Accepted Answer

A)  It is a nonrefundable credit.
B)  The credit can be claimed by taxpayers who have graduated from college and are taking professional training courses to improve their job skills.
C)  A taxpayer with multiple dependents can claim a credit for each dependent's qualifying expenses.
D)  The credit is subject to phase-out based on the taxpayer's AGI.E) B) and C)
F) A) and B)

Question 2

The alternative minimum tax is the AMT base multiplied by the AMT rate.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements concerning tax credits is true?

Accepted Answer

A)  The tax benefit a taxpayer receives from a credit depends on the taxpayer's marginal tax rate.
B)  Refundable tax credits are limited to a taxpayer's gross tax liability.
C)  Tax credits are generally more beneficial than tax deductions.
D)  None of these are true statements.E) A) and B)
F) All of the above

Question 4

For alternative minimum tax purposes,taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Accepted Answer

A) True 
 B)False

Question 5

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

Accepted Answer

A) True 
 B)False

Question 6

Keith and Nicole are married filing jointly,with two daughters who qualify as dependents.Their gross income for 2019 is $25,500.Are they required to file a tax return? How do you know this without memorizing the gross income thresholds? In 2019,the standard deduction for taxpayers filing a joint return is $24,400.

Accepted Answer

Yes,Keith and Nicole are required to fil...

Question 7

Johann had a gross tax liability of $22,508 in 2019,but his employer only withheld taxes of $19,500.Johann's gross tax liability was $21,000 in 2018.Calculate Johann's under/overpayment in each quarter for 2019 tax purposes.

Accepted Answer

Underwithheld by $189,$379,$56...

Question 8

Trudy is Jocelyn's friend.Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work.During the year,Jocelyn paid Trudy $4,000 to care for her son.What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,000? (Exhibit 8-9)

Accepted Answer

A)  $0
B)  $810
C)  $1,080
D)  $3,000E) All of the above
F) B) and C)

Question 9

Employees are allowed to deduct a portion of the FICA taxes they pay.

Accepted Answer

A) True 
 B)False

Question 10

The wage base for which of the following taxes is capped?

Accepted Answer

A)  Federal income
B)  Social Security
C)  Medicare
D)  Alternative minimumE) None of the above
F) C) and D)

Question 11

Why would a taxpayer file a tax return if not required to do so?

Accepted Answer

A)  to remain in favor with the IRS
B)  to claim a refund of taxes paid
C)  all taxpayers are required to file returns
D)  in order to claim the standard deductionE) A) and C)
F) A) and B)

Question 12

Parents may claim a $2,000 child tax credit for a dependent child who is 22 years of age at the end of the year if the child is a full-time student.

Accepted Answer

A) True 
 B)False

Question 13

Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.

Accepted Answer

A) True 
 B)False

Question 14

The American opportunity credit and lifetime learning credit are available to all taxpayers regardless of their income level.

Accepted Answer

A) True 
 B)False

Question 15

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Accepted Answer

A)  The dividend will be taxed at a 15 percent tax rate.
B)  The dividend will be taxed at a 20 percent tax rate.
C)  The entire dividend will be taxed at 15 percent or the entire dividend will be taxed at 20 percent,depending on Harrison's marginal ordinary income tax rate.
D)  None of the choices are correct.E) B) and D)
F) A) and D)

Question 16

Jocelyn,a single taxpayer,had $742,000 of taxable income in 2019.All of the income is ordinary.What is her tax liability for the year? (Use Tax rate schedules.)

Accepted Answer

$239,528,computed using the si...

Question 17

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year,which of the following statements regarding FICA and self-employment taxes is most accurate?

Accepted Answer

A)  The Social Security limit applies to the salary but not to the self-employment income.
B)  The Social Security limit applies to the self-employment income but not to the salary.
C)  Salary is first applied against the Social Security limit and then self-employment income is applied against the Social Security limit.
D)  Self-employment income is first applied against the Social Security limit and then salary is applied against the Social Security limit.E) A) and D)
F) C) and D)

Question 18

Sam is 30 years old.In 2019,he reported an AGI of $12,000,all from his job as a server at the local café.He is single and has no dependents.What amount of earned income credit may he claim in 2019? Use Exhibit 8-10

Accepted Answer

$273.Answe...

Question 19

Which of the following statements regarding credits is correct?

Accepted Answer

A)  Business expenses are generally refundable credits.
B)  Business credits that are generated in one year but are not utilized in that year expire.
C)  Business credits that are generated in one year but are not utilized in that year may be carried forward to future years but not back to a prior year.
D)  Business credits that are generated in one year but are not utilized in that year may be carried back to the previous year and then forward to future years.E) All of the above
F) A) and C)

Question 20

Miley,a single taxpayer,plans on reporting $30,475 of taxable income this year (all of her income is from a part-time job) .She is considering applying for a second part-time job that would give her an additional $10,000 of taxable income.By how much will the income from the second job increase her tax liability? (Use the Tax rate schedules.)

Accepted Answer

A)  $1,000
B)  $1,200
C)  $1,300
D)  $2,400E) A) and D)
F) None of the above

Exam 8: Individual Income Tax Computation and Tax Credits

Correct Answer
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Trudy is Jocelyn's friend.Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work.During the year,Jocelyn paid Trudy $4,000 to care for her son.What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,000? (Exhibit 8-9)

Correct Answer
verified

Which of the following statements concerning tax credits is true?

Correct Answer
verified

Jocelyn,a single taxpayer,had $742,000 of taxable income in 2019.All of the income is ordinary.What is her tax liability for the year? (Use Tax rate schedules.)

Correct Answer
verified
$239,528,computed using the si...
View Answer

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year,which of the following statements regarding FICA and self-employment taxes is most accurate?

Correct Answer
verified

Why would a taxpayer file a tax return if not required to do so?

Correct Answer
verified

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Correct Answer
verified

Sam is 30 years old.In 2019,he reported an AGI of $12,000,all from his job as a server at the local café.He is single and has no dependents.What amount of earned income credit may he claim in 2019? Use Exhibit 8-10

Correct Answer
verified
$273.Answe...
View Answer

Parents may claim a $2,000 child tax credit for a dependent child who is 22 years of age at the end of the year if the child is a full-time student.

Correct Answer
verified

Which of the following statements regarding credits is correct?

Correct Answer
verified

For alternative minimum tax purposes,taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Correct Answer
verified

Correct Answer
verified
Yes,Keith and Nicole are required to fil...
View Answer

Johann had a gross tax liability of $22,508 in 2019,but his employer only withheld taxes of $19,500.Johann's gross tax liability was $21,000 in 2018.Calculate Johann's under/overpayment in each quarter for 2019 tax purposes.

Correct Answer
verified
Underwithheld by $189,$379,$56...
View Answer

The alternative minimum tax is the AMT base multiplied by the AMT rate.

Correct Answer
verified

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

Correct Answer
verified

The wage base for which of the following taxes is capped?

Correct Answer
verified

Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.

Correct Answer
verified

Which of the following is not true of the lifetime learning credit?

Correct Answer
verified

The American opportunity credit and lifetime learning credit are available to all taxpayers regardless of their income level.

Correct Answer
verified

Employees are allowed to deduct a portion of the FICA taxes they pay.

Correct Answer
verified

Exam 8: Individual Income Tax Computation and Tax Credits

Correct AnswerverifiedShow Answer

Trudy is Jocelyn's friend.Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work.During the year,Jocelyn paid Trudy $4,000 to care for her son.What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,000? (Exhibit 8-9)

Correct AnswerverifiedShow Answer

Which of the following statements concerning tax credits is true?

Correct AnswerverifiedShow Answer

Jocelyn,a single taxpayer,had $742,000 of taxable income in 2019.All of the income is ordinary.What is her tax liability for the year? (Use Tax rate schedules.)

Correct Answerverified$239,528,computed using the si...View AnswerShow Answer

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year,which of the following statements regarding FICA and self-employment taxes is most accurate?

Correct AnswerverifiedShow Answer

Why would a taxpayer file a tax return if not required to do so?

Correct AnswerverifiedShow Answer

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Correct AnswerverifiedShow Answer

Sam is 30 years old.In 2019,he reported an AGI of $12,000,all from his job as a server at the local café.He is single and has no dependents.What amount of earned income credit may he claim in 2019? Use Exhibit 8-10

Correct Answerverified$273.Answe...View AnswerShow Answer

Parents may claim a $2,000 child tax credit for a dependent child who is 22 years of age at the end of the year if the child is a full-time student.

Correct AnswerverifiedShow Answer

Which of the following statements regarding credits is correct?

Correct AnswerverifiedShow Answer

For alternative minimum tax purposes,taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedYes,Keith and Nicole are required to fil...View AnswerShow Answer

Johann had a gross tax liability of $22,508 in 2019,but his employer only withheld taxes of $19,500.Johann's gross tax liability was $21,000 in 2018.Calculate Johann's under/overpayment in each quarter for 2019 tax purposes.

Correct AnswerverifiedUnderwithheld by $189,$379,$56...View AnswerShow Answer

The alternative minimum tax is the AMT base multiplied by the AMT rate.

Correct AnswerverifiedShow Answer

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

Correct AnswerverifiedShow Answer

The wage base for which of the following taxes is capped?

Correct AnswerverifiedShow Answer

Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.

Correct AnswerverifiedShow Answer

Which of the following is not true of the lifetime learning credit?

Correct AnswerverifiedShow Answer

The American opportunity credit and lifetime learning credit are available to all taxpayers regardless of their income level.

Correct AnswerverifiedShow Answer

Employees are allowed to deduct a portion of the FICA taxes they pay.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
$239,528,computed using the si...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
$273.Answe...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
Yes,Keith and Nicole are required to fil...
View Answer

Correct Answer
verified
Underwithheld by $189,$379,$56...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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