Exam 7: Tax Credits

The child tax credit is $2,000 per qualifying child unless it is phased out due to higher levels of parental income.

Jasmine is a single marketing manager with a college degree. She continually updates her marketing knowledge and gets fresh ideas by taking classes at the local community college. This year she spent $1,500 on course tuition and fees. If Jasmine has AGI of $60,000, how much lifetime learning credit can she claim on her tax return? Explain.

Taxpayer Q has net taxable income of $30,000 from Country Y which imposes a 40 percent income tax. In addition to the income from Country Y, taxpayer Q has net taxable income from US sources of $120,000, and US tax liability, before the foreign tax credit, of $30,290. What is the amount of Q's foreign tax credit?

Alice is a single taxpayer with no dependents that has AGI of $11,200 in 2019. Alice is required to carry minimum essential coverage in 2019 or else pay additional tax (individual shared responsibility).

The foreign tax credit applies only to foreign corporations.

Which one of the following taxpayers qualify for the earned income credit in 2019?

Maxine is a 29-year-old single mother. Her tax liability before any credits is $1,000 and her only credit is the earned income credit of $2,500. What is the amount of Maxine's refund? Explain.

Jim has foreign income. He earns $26,000 from Country A which taxes the income at a 20 percent rate. He also has income from Country B of $18,000. Country B taxes the $18,000 at a 10 percent rate. His US taxable income is $90,000, which includes the foreign income. His US income tax on all sources of income before credits is $19,000. What is his foreign tax credit?

The child tax credit is not available for children ages 17 and older.

To qualify for the additional child tax credit:

Which of the following tax credits is not available for the 2019 tax year?

Denise is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2019 is $81,500. Denise's child tax credit for 2019 is:

Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?

Daddy Warbucks is in the process of adopting Annie from a New York orphanage. He pays $7,000 in 2018, and $7,500 in 2019. Daddy Warbucks' AGI for 2019 is $165,000. ​ a. How much is the adoption credit that Daddy Warbucks may claim for 2019 if the adoption becomes final in 2019? b. How much is the adoption credit that Daddy Warbucks may claim for 2019 if the adoption becomes final in 2020? c. How much is the adoption credit that Daddy Warbucks may claim for 2019 if the adoption falls through and is never finalized?

Keith has a 2019 tax liability of $2,250 before taking into account his American Opportunity tax credit. He paid $2,600 in qualifying expenses, was a full-time student, was not claimed as a dependent on his parents' return, and his American Opportunity tax credit was not subject to phase-out. What is the amount of his American Opportunity tax credit allowed?

Bob and Carol file their tax returns using the married filing jointly status. Their AGI is $132,500. They have two children, ages 11 and 7. How much child tax credit can Bob and Carol claim for their two children?

Jeff is a stay-at-home father who earns $600 from odd jobs and takes care of his daughter. His wife, Michelle, is the bread-winner and brings in $60,000 of income a year. In addition to the care provided by Jeff, Michelle pays $4,500 in child care. In the current year, how much are Jeff and Michelle's qualifying expenses for the child and dependent care credit?

After raising two children, Anh, a single 48-year-old, decided to go to college to earn her first college degree. She spent two years in community college and earned an associate's degree. In 2019, she is enrolled half-time at State University to earn a Bachelor's degree in Accounting and also works part-time. Anh is eligible for the American Opportunities tax credit.

Taxpayers are required to wait until they file their tax return to receive the premium tax credit.

In 2019, Alex has income from wages of $16,000, adjusted gross income of $18,000, and tax liability of $300 before the earned income credit. What is the amount of Alex's earned income credit for 2019, assuming he is single and his 5-year-old dependent son lives with him for the full year?