Question 1

Child and dependent care expenses include amounts paid for general household services.

Accepted Answer

A) True 
 B)False

Question 2

Identify the statement below that is false.

Accepted Answer

A)  If an employer is not required to withhold income taxes from an employee's wages, the wages are not taxable to the employee. 
B)  In certain situations, income tax withholding by an employer is voluntary. 
C)  An employer must deposit with the government an amount of FICA tax that is twice the amount withheld from the employee's salary i.e., the employee's and employer's shares). 
D)  If an excess amount of FICA has been withheld for an employee because the employee has multiple jobs, the employee may claim a credit for the excess amount withheld on his or her income tax return. 
E)  None of the above statements are false. 
A)  If an employer is not required to withhold income taxes from an employee's wages, the wages are not taxable to the employee. 
B)  In certain situations, income tax withholding by an employer is voluntary. 
C)  An employer must deposit with the government an amount of FICA tax that is twice the amount withheld from the employee's salary i.e., the employee's and employer's shares). 
D)  If an excess amount of FICA has been withheld for an employee because the employee has multiple jobs, the employee may claim a credit for the excess amount withheld on his or her income tax return. 
E)  None of the above statements are false.

Question 3

Harry and Wilma are married and file a joint income tax return. On their tax return, they report $44,000 of adjusted gross income $20,000 salary earned by Harry and $24,000 salary earned by Wilma) and claim two exemptions for their dependent children. During the year, they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work. ABC Day Care Center
$3,200
Blue Ridge Housekeeping Services
2,000
Mrs) Mason Harry's mother)
1,000
Harry and Wilma may claim a credit for child and dependent care expenses of:

Accepted Answer

A)  $840. 
B)  $1,040. 
C)  $1,200. 
D)  $1,240. 
E)  None of the above. 
A)  $840. 
B)  $1,040. 
C)  $1,200. 
D)  $1,240. 
E)  None of the above.

Question 4

The base amount for the Social Security portion old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.

Accepted Answer

A) True 
 B)False

Question 5

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Accepted Answer

A) True 
 B)False

Question 6

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child under age 19) of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 7

The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

Accepted Answer

A) True 
 B)False

Question 8

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program also can qualify for the credit for child and dependent care expenses.

Accepted Answer

A) True 
 B)False

Question 9

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas i.e., inner city) to newer locations.

Accepted Answer

A) True 
 B)False

Question 10

Only married taxpayers with children are qualified to receive the earned income credit.

Accepted Answer

A) True 
 B)False

Question 11

Phil and Audrey, husband and wife, both are employed by Laurel Corporation. Phil earns $135,000 in salary in 2018, and Audrey earns $70,000. How much FICA tax must they pay for 2018?

Accepted Answer

Phil will pay $9,918.30[6.2% ×

Question 12

In terms of the withholding procedures, which statement does not reflect current rules?

Accepted Answer

A)  Penalties can be imposed for filing false information with respect to wage withholding. 
B)  An employer need not verify the number of exemptions claimed by an employee on Form W-4 Employee's Withholding Allowance Certificate). 
C)  An employee may claim fewer than the number of withholding allowances allowed, but not more. 
D)  In preparing the income tax return for the year, the employee is bound by the number of exemptions claimed for withholding purposes. 
A)  Penalties can be imposed for filing false information with respect to wage withholding. 
B)  An employer need not verify the number of exemptions claimed by an employee on Form W-4 Employee's Withholding Allowance Certificate). 
C)  An employee may claim fewer than the number of withholding allowances allowed, but not more. 
D)  In preparing the income tax return for the year, the employee is bound by the number of exemptions claimed for withholding purposes.

Question 13

Black Company paid wages of $180,000, of which $40,000 was qualified wages for the work opportunity tax credit under the general rules. Black Company's deduction for wages for the year is:

Accepted Answer

A)  $140,000. 
B)  $164,000. 
C)  $166,000. 
D)  $180,000. 
A)  $140,000. 
B)  $164,000. 
C)  $166,000. 
D)  $180,000.

Question 14

An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.

Accepted Answer

A) True 
 B)False

Question 15

Ahmad is considering making a $10,000 investment in a venture which its promoter promises will generate immediate tax benefits for him. Ahmad, who normally itemizes his deductions, is in the 28% marginal tax bracket. If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment, what treatment normally would be most beneficial to Ahmad and by how much will Ahmad's tax liability decline because of the investment?

Accepted Answer

A)  $0, take neither the itemized deduction nor the tax credit. 
B)  $2,500, take the tax credit. 
C)  $2,800, take the itemized deduction. 
D)  Both options produce the same benefit. 
E)  None of the above. 
A)  $0, take neither the itemized deduction nor the tax credit. 
B)  $2,500, take the tax credit. 
C)  $2,800, take the itemized deduction. 
D)  Both options produce the same benefit. 
E)  None of the above.

Question 16

Which, if any, of the following correctly describes the research activities credit?

Accepted Answer

A)  The research activities credit is the greater of the incremental research credit, the basic research credit, or the energy research credit. 
B)  If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures. 
C)  The credit is not available for research conducted outside the United States. 
D)  All corporations qualify for the basic research credit. 
E)  None of the above is correct. 
A)  The research activities credit is the greater of the incremental research credit, the basic research credit, or the energy research credit. 
B)  If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures. 
C)  The credit is not available for research conducted outside the United States. 
D)  All corporations qualify for the basic research credit. 
E)  None of the above is correct.

Question 17

Bradley has two college-age children, Clint, a freshman at State University, and Abigail, a junior at Northwest University. Both Clint and Abigail are full-time students. Clint's expenses during the 2018 fall semester are as follows: $2,400 tuition, $250 books and course materials, and $1,600 room and board. Abigail's expenses for the 2018 calendar year are as follows: $10,200 tuition, $1,200 books and course materials, and $3,600 room and board. Tuition and the applicable room and board costs are paid at the beginning of each semester.
Bradley is married, files a joint tax return, claims both children as dependents, and reports a combined AGI with his wife Allie of $114,000 for 2018. Determine Bradley's available education tax credit for 2018.

Accepted Answer

In 2018, both Clint and Abigail qualify

Question 18

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Accepted Answer

A) True 
 B)False

Question 19

Bob and Sally are married, file a joint tax return, report AGI of $118,000, and have two children. Del is beginning her freshman year at State College during Fall 2018, and Owen is beginning his senior year at Southwest University during Fall 2018. Owen completed his junior year during the Spring semester of 2017 i.e., he took a "leave of absence" during the 2017-2018 school year). Both Del and Owen are claimed as dependents on their parents' tax return. Del's qualifying tuition expenses and fees total $5,000 for the Fall semester, while Owen's qualifying tuition expenses were $6,100 for the Fall 2018 semester. Del's room and board costs were $3,200 for the Fall semester. Owen did not incur room and board costs, as he lived with his aunt and uncle during the year.
Full payment is made for the tuition and related expenses for both children at the beginning of each semester. In addition to the children's college expenses, Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist. Bob attended the seminars during July and August 2018.
Compute the available education tax credits for Bob and Sally for 2018.

Accepted Answer

A)  $3,100 
B)  $5,000 
C)  $5,480 
D)  $5,600 
A)  $3,100 
B)  $5,000 
C)  $5,480 
D)  $5,600

Question 20

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

Accepted Answer

A) True 
 B)False

Child and dependent care expenses include amounts paid for general household services.

Identify the statement below that is false.

The base amount for the Social Security portion old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child under age 19) of the taxpayer.

The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program also can qualify for the credit for child and dependent care expenses.

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas i.e., inner city) to newer locations.

Only married taxpayers with children are qualified to receive the earned income credit.

Phil and Audrey, husband and wife, both are employed by Laurel Corporation. Phil earns $135,000 in salary in 2018, and Audrey earns $70,000. How much FICA tax must they pay for 2018?

In terms of the withholding procedures, which statement does not reflect current rules?

Black Company paid wages of $180,000, of which $40,000 was qualified wages for the work opportunity tax credit under the general rules. Black Company's deduction for wages for the year is:

An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.

Which, if any, of the following correctly describes the research activities credit?

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Filters

Exam 13: Tax Credits and Payment Procedures

Child and dependent care expenses include amounts paid for general household services.

Identify the statement below that is false.

The base amount for the Social Security portion old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child under age 19) of the taxpayer.

The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program also can qualify for the credit for child and dependent care expenses.

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas i.e., inner city) to newer locations.

Only married taxpayers with children are qualified to receive the earned income credit.

Phil and Audrey, husband and wife, both are employed by Laurel Corporation. Phil earns $135,000 in salary in 2018, and Audrey earns $70,000. How much FICA tax must they pay for 2018?

In terms of the withholding procedures, which statement does not reflect current rules?

Black Company paid wages of $180,000, of which $40,000 was qualified wages for the work opportunity tax credit under the general rules. Black Company's deduction for wages for the year is:

An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.

Which, if any, of the following correctly describes the research activities credit?

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Filters