Exam 8: Individual Income Tax Computation and Tax Credits

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

Which of the following statements regarding credits is correct?

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?

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

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.)

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

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

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

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.

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.)

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

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)

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.

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

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

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.

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

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

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?

Which of the following statements concerning tax credits is true?