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Exam 7: Individual Income Tax Computation and Tax Credits

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Question 51

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Akiko and Hitachi (married filing jointly for 2018)are both educators.They attended a conference to further their job-related skills.Tuition for the conference was $2,000 for each person.Their AGI was $120,000.How much lifetime learning credit can they claim?

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Question 52

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Assuming the kiddie tax applies,what amount of a child's income is subject to the kiddie tax?

A) All of it.
B) All of the unearned income.
C) The net unearned income.
D) Taxable income less the standard deduction.

E) B) and D)
F) A) and B)

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Question 53

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Self-employed taxpayers are allowed to deduct the full amount of the self-employment taxes they pay.

In 2018,Maia (who files as a head of household) reported regular taxable income of $115,000.She itemized her deductions,deducting $8,000 in charitable contributions and $3,000 in state income taxes.What is Maia's alternative minimum taxable income?

Rhianna and Jay are married filing jointly in 2018.They have six children under age 17 for whom they may claim the child tax credit.Their AGI was $419,400.What amount of child tax credit may they claim on their 2018 tax return?

Due to the alternative minimum tax rate structure, a taxpayer with a large amount of long-term capital gains may be susceptible to the alternative minimum tax.

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.

Both the width (or range)of the tax brackets (the amount of income taxed at a particular rate)in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate)vary by filing status.

During all of 2018,Mr.and Mrs.Clay lived with their four children (all are under the age of 17).They provided over one-half of the support for each child.Mr.and Mrs.Clay file jointly for 2018.Neither is blind,and both are under age 65.They reported the following tax-related information for the year: (Use the tax rate schedules) $\begin{array} { l r } \text { Salary incorne } & \$ 125,000 \\\text { Prize from local radio station } & 1,500 \\\text { Medical expenses (no health insurance) } & 4,000 \\\text { Real estate taxes } & 4,200 \\\text { Alirnory paid by Mr. Clay (divorced in 2015) } & 12,000 \\\text { State incorne taxes withheld in } 2018 & 1,800 \\\text { State income taxes paid with } 2018 \text { tax return (return was filed in April, } & \\\text { 2019) } & 1,500 \\\text { Federal incorne tax withholdine } & 7,500 \\\text { Qualified horne mortgage interest (acquisition debt of } \$ 300,000 \text { ) } & 15,000 \\\text { Charitable contributions } & 4,000\end{array}$ A.What is the Clays' taxes payable or (refund due)(ignore the alternative minimum tax)? B.What is the Clays' tentative minimum tax and alternative minimum tax?

An 80-year-old taxpayer with earned income and no dependent children could qualify for the earned income credit.

If both spouses of a married couple earn roughly equivalent high level of wages,the couple is likely to pay a marriage penalty due to the nature of the tax rate schedules.

Apollo is single and his AMT base is $100,250.This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability).What is Apollo's tentative minimum tax?

An individual could pay 100% of her tax liability by the due date of her tax return and still be subject to underpayment tax penalties.

Which of the following suggests that a working taxpayer is an independent contractor rather than an employee?

Selene made $54,300 in 2018 working at the local burger joint,Moon Café.How much should her employer withhold from her paycheck for FICA taxes if the calculation is made correctly?

Depending on the year,the original (unextended)due date for an individual's tax return may be after April 15.

Looking at the following partial calendar for April,when will individual tax returns be due? $\begin{array}{rrrrrr}&&&\text { April }\\\text { Sunday}&\text { Monday}&\text { Tuesday }&\text { Wednesday }&\text { Thursday }&\text { Friday}&\text { Saturday}\\&&&&&&1\\2 & 3 & 4 & 5 & 6 & 7&8 \\9 & 10 & 11 & 12 & 13 & 14&15\\16&17 \text { National }\\&\text { Accountants Day }\\&\text { (Federal Holiday) }&18&19&20&21&22\\\end{array}$

Atlas earned $17,300 from his sole proprietorship in 2018.This was his only source of income.How much in self-employment taxes will Atlas be able to deduct?

Long-term capital gains are taxed at the stated AMT rate for purposes of the alternative minimum tax.

Which of the following statements regarding the child and dependent care credit is true?