Exam 14: The Individual Tax Formula

The highest individual marginal rate for regular tax purposes is 37%,while the highest individual marginal rate for alternative minimum tax (AMT)purposes is only 28%.

Mr.and Mrs.Arlette spent $5,900 for child care for their 12-year-old daughter.Mr.Arlette's earned income was $178,000,Mrs.Arlette's earned income was $33,100,and the AGI on their joint return was $225,200.Calculate their dependent care credit.

Mr.and Mrs.King's regular tax liability on their joint return was $479,580.Which of the following statements is true?

Marie,an unmarried taxpayer,is 26 years old.This year,Marie earned $50,000 gross income.Her itemized deductions totaled $5,100.Marie maintained a home for her 12-year-old sister who qualifies as Marie's dependent.Compute Marie's taxable income.

Which of the following statements regarding the calculation of regular tax liability is false?

Mr.and Mrs.Bennett file a joint tax return.Determine if each of the following unmarried individuals is either a qualifying child or a qualifying relative. a.Son Alex,age 22,lives in his parents' home and works fulltime as a tax accountant.Alex is self-supporting except for the fact that he does not pay rent to his parents. b.Daughter Samantha,age 20,is a full-time college student.Samantha lives in a dormitory during the school year,but her parents' home is her permanent residence and they provide 100% of her financial support. c.Mr.Bennett's brother Max is 42 years old and mentally handicapped.Max lives in a privately operated group home,and Mr.and Mrs.Bennett provide 100% of his financial support.Max has no gross income. d.Mrs.Bennett's mother,Vera,age 67,lives in a retirement community.Mr.and Mrs.Bennett provide about 75% of her financial support.Vera earned $5,000 this year as a part-time receptionist.

Individual taxpayers can obtain an automatic extension of time to file a calendar year Form 1040 until October 15 of the following year.

Julie,an unmarried individual,lives in a home with her 13-year-old dependent son,Oscar.This year,Julie had the following tax information: Standard Deduction Table. Compute Julie's adjusted gross income (AGI)and taxable income.

Mr.and Mrs.Steel,who file a joint return,have $513,200 taxable income in 2019.Compute their regular tax liability.

Mr.and Mrs.Jelk file a joint return.They provide 65% of the financial support for David,the 14-year old son of a friend who died three years ago.David lives in the home of his aunt Sarah,who provides 35% of his financial support.Which of the following statements is true?

Mrs.Starling worked for Abbot Inc.from January 1 through September 19.Her salary from Abbot for this period totaled $150,000.Mrs.Starling worked for JJT Inc.from October 1 through December 31.Her salary from JJT for this period totaled $38,000.JJT is not required to withhold Social Security tax from Mrs.Starling's salary because Abbot Inc.already withheld the maximum tax for the year.

Which of the following statements concerning the individual alternative minimum tax (AMT)is true?

Based on the 2017 tax rates,an individual is indifferent between filing as a single taxpayer or a head of household if he has $8,700 or less of taxable income.

Which of the following statements regarding a qualifying child is false?

Ms.Dolan,a divorced individual,invited her elderly uncle,Martin,to move into her home in January of this year.Martin's only income item was $2,390 of taxable interest on a savings account.Ms.Dolan provides over 90% of her uncle's financial support.What is Ms.Dolan's filing status for the year?

A taxpayer with a non-child dependent may be eligible for the full $2,000 child tax credit provided the taxpayer's AGI does not exceed the phase-out thresholds.

Which of the following situations result in a marriage penalty for federal income tax purposes?

The QBI deduction always has the impact of lowering AGI.

Which of the following statements is false?

Adjusted gross income equals total income less itemized deductions.