Question 1

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Accepted Answer

A)  Zero. The government does not pay interest on overpayments. 
B)  Federal short-term interest rate. 
C)  Federal long-term interest rate plus six percentage points. 
D)  Federal short-term interest rate plus three percentage points. 
A)  Zero. The government does not pay interest on overpayments. 
B)  Federal short-term interest rate. 
C)  Federal long-term interest rate plus six percentage points. 
D)  Federal short-term interest rate plus three percentage points.

Question 2

Which of the following statements regarding credits is correct?

Accepted Answer

A)  Business credits that are generated in one year but are not utilized in that year may be carried forward to future years but not back to a prior year. 
B)  Business credits that are generated in one year but are not utilized in that year expire. 
C)  Business expenses are generally refundable credits. 
D)  Business credits that are generated in one year but are not utilized in that year may be carried back to the previous year and then forward to future years. 
A)  Business credits that are generated in one year but are not utilized in that year may be carried forward to future years but not back to a prior year. 
B)  Business credits that are generated in one year but are not utilized in that year expire. 
C)  Business expenses are generally refundable credits. 
D)  Business credits that are generated in one year but are not utilized in that year may be carried back to the previous year and then forward to future years.

Question 3

The computation of the alternative minimum tax base begins with regular taxableincome. Which of the following is not part of the formula for computing the alternative minimum tax base?

Accepted Answer

A)  Add the standard deduction amount if used for regular tax. 
B)  Subtract personal exemptions. 
C)  Add back tax exempt interest from a private activity bond not issued in 2009 or 2010. 
D)  Subtract the AMT exemption amount (if any). 
A)  Add the standard deduction amount if used for regular tax. 
B)  Subtract personal exemptions. 
C)  Add back tax exempt interest from a private activity bond not issued in 2009 or 2010. 
D)  Subtract the AMT exemption amount (if any).

Question 4

Carolyn has an AGI of $38,000 (all from earned income), two qualifying children, and is fili1n0g6)as a head of household. What amount of earned income credit is she entitled to?

Accepted Answer

A)  $5,616 
B)  $3,400 
C)  $0 
D)  $4,140 
E)  $1,476 
A)  $5,616 
B)  $3,400 
C)  $0 
D)  $4,140 
E)  $1,476

Question 5

Julien and Sarah are married, file a joint return, and have two children, Kaya and Christopher. Kaya just finished her third year at college and Christopher just finished his first year of graduate school (fifth year of college). Tuition and books for the past year were $1,800 for Kaya and $5,000 for Christopher. How much can Julien and Sarah claim in educational credits if their joint AGI was$124,000 for 2017?

Accepted Answer

$2,200
Ans

Question 6

Clarissa's gross tax liability for 2017 is $1,300. She has a $1,500 nonrefundable personal tax credit,a $750 business tax credit, and a $400 refundable personal tax credit. Her employer withheld $1,000 from her pay for taxes. What is her net tax due or refund for this year?

Accepted Answer

Refund of

Question 7

Selene made $54,300 in 2017 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?

Accepted Answer

$4,154 = $

Question 8

Which of the following statements regarding the AMT exemption amounts is not true?

Accepted Answer

A)  The exemption amount is completely phased-out for high income taxpayers. 
B)  The amount of the exemption depends on the taxpayer's filing status. 
C)  Taxpayers must choose whether they will claim the exemption or itemize deductions. 
D)  None of these statements is false (all of these statements are true). 
A)  The exemption amount is completely phased-out for high income taxpayers. 
B)  The amount of the exemption depends on the taxpayer's filing status. 
C)  Taxpayers must choose whether they will claim the exemption or itemize deductions. 
D)  None of these statements is false (all of these statements are true).

Question 9

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.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  A taxpayer may claim a credit for dependent care expenses for a dependent who is 14 years old or older but only if the dependent lives in the taxpayer's home for the
Entire year. 
B)  A married couple must file jointly to claim the credit. 
C)  All else equal, a taxpayer making qualifying expenditures for three children may claim more dependent care credit than a taxpayer making (the same amount of) qualifying expenditures for two children. 
D)  None of these statements is true. 
A)  A taxpayer may claim a credit for dependent care expenses for a dependent who is 14 years old or older but only if the dependent lives in the taxpayer's home for the
Entire year. 
B)  A married couple must file jointly to claim the credit. 
C)  All else equal, a taxpayer making qualifying expenditures for three children may claim more dependent care credit than a taxpayer making (the same amount of) qualifying expenditures for two children. 
D)  None of these statements is true.

Question 12

Jackson earned a salary of $254,000 in 2017. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Accepted Answer

$12,055
An

Question 13

Johann had a gross tax liability of $22,508 in 2017, but his employer only withheld taxes of$19,500. Johann's gross tax liability was $21,000 in 2016. Calculate Johann's under/overpayment in each quarter for 2017 tax purposes.

Accepted Answer

Underwitheld by $189, $379, $5

Question 14

The late payment penalty is based on the amount of tax owed and the number of days that the tax is not paid. The maximum amount of the penalty is unlimited.

Accepted Answer

A) True 
 B)False

Question 15

Jamie is single. In 2017, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount? (use the tax rate schedules)

Accepted Answer

A)  $20,982 
B)  $15,000 
C)  $20,332 
D)  $19,582 
A)  $20,982 
B)  $15,000 
C)  $20,332 
D)  $19,582

Question 16

If there is not enough gross tax liability to use the foreign tax credit,

Accepted Answer

A)  it is carried back 3 years or forward 5 years 
B)  it is carried back 2 years or forward 20 years 
C)  it expires unused 
D)  it is carried back 1 year or forward 10 years 
A)  it is carried back 3 years or forward 5 years 
B)  it is carried back 2 years or forward 20 years 
C)  it expires unused 
D)  it is carried back 1 year or forward 10 years

Question 17

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.

Accepted Answer

A) True 
 B)False

Question 18

Maria and Tony are married. They are preparing to file their 2017 tax return. If they were to file as single taxpayers, Maria and Tony would report $10,000 and $70,000 of taxable income, respectively. On their joint tax return, their taxable income is $80,000. How much of a marriage penalty or benefit will Maria and Tony experience in 2017? (Use Tax Rate Schedule.)

Accepted Answer

Filing jointly will result in a "marriag

Question 19

Which of the following items is not added back to regular taxable income in computing alternative minimum taxable income?

Accepted Answer

A)  Real property taxes. 
B)  Home mortgage interest expense. 
C)  Miscellaneous itemized deductions in excess of the 2% floor. 
D)  Tax exempt interest from a private activity bond issued in 2007. 
A)  Real property taxes. 
B)  Home mortgage interest expense. 
C)  Miscellaneous itemized deductions in excess of the 2% floor. 
D)  Tax exempt interest from a private activity bond issued in 2007.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 8: Individual Income Tax Computation and Tax Credits

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Which of the following statements regarding credits is correct?

The computation of the alternative minimum tax base begins with regular taxableincome. Which of the following is not part of the formula for computing the alternative minimum tax base?

Carolyn has an AGI of $38,000 (all from earned income), two qualifying children, and is fili1n0g6)as a head of household. What amount of earned income credit is she entitled to?

Clarissa's gross tax liability for 2017 is $1,300. She has a $1,500 nonrefundable personal tax credit,a $750 business tax credit, and a $400 refundable personal tax credit. Her employer withheld $1,000 from her pay for taxes. What is her net tax due or refund for this year?

Selene made $54,300 in 2017 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?

Which of the following statements regarding the AMT exemption amounts is not true?

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.

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

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

Jackson earned a salary of $254,000 in 2017. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Johann had a gross tax liability of $22,508 in 2017, but his employer only withheld taxes of$19,500. Johann's gross tax liability was $21,000 in 2016. Calculate Johann's under/overpayment in each quarter for 2017 tax purposes.

The late payment penalty is based on the amount of tax owed and the number of days that the tax is not paid. The maximum amount of the penalty is unlimited.

Jamie is single. In 2017, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount? (use the tax rate schedules)

If there is not enough gross tax liability to use the foreign tax credit,

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.

Which of the following items is not added back to regular taxable income in computing alternative minimum taxable income?

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters