Exam 8: Individual Income Tax Computation and Tax Credits

When applying credits against a taxpayer's gross tax liability, nonrefundable personal credits are applied first, then business credits, and finally refundable personal credits.

The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children?

If an employer withholds taxes from an employee, in general, when are these taxes treated as paid to the IRS?

The child tax credit is subject to phase-out based on the taxpayer's AGI.

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 in the text)

Which of the following statements regarding the child tax credit is false?

Katlyn reported $300 of net income from her sole proprietorship. She is not required to pay self-employment tax.

All else equal, a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.

Which of the following statements regarding the earned income credit is true?

Which of the following statements regarding FICA taxes is true?

For married couples, the .9 percent additional Medicare tax is based on the couple's combined wages.

Which of the following statements regarding late filing penalties and/or late payment penalties is true?

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

All capital gains are taxed at preferential rates.

Tamra and Jacob are married and they file a joint tax return. Tamra received nearly five times the salary that Jacob received. Which of the following statements is true?

Which of the following statements about estimated tax payments and underpayment penalties is true for individual taxpayers?

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

Wolfina's twins, Romulus and Remus, finished their first year of school at an accredited university in 2017. She paid $10,000 in qualified educational expenses for Romulus and $2,000 of qualifying expenses for Remus. Wolfina is a head of household with an AGI of $85,000. What amount of American opportunity credit may she claim?

How could an individual obtain a business tax credit?

Assume Georgianne underpaid her estimated tax liability by $150 in the first quarter, $500 in thesecond quarter, $400 in the third quarter, and $200 in the fourth quarter. Calculate her underpayment penalty for the year, assuming the federal short-term interest rate is five percent.