Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Max is a 14-year-old dependent of his parents. During 2020, Max earned $1,800 working part-time jobs, and he received $1,500 of interest income from corporate bonds that were given to him last year. What is Max's 2020 taxable income?

Accepted Answer

$1,150This consists of gross i

Question 3

Jack paid $5,000 in daycare expenses for his five-year-old daughter so he could work. His AGI for the year was $37,500 (all earned income). What is the amount of his child and dependent care credit?

Accepted Answer

$690.
Answ

Question 4

During 2020, Montoya (age 15)received $2,200 from a corporate bond. He also received $600 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

Accepted Answer

A) $0 
B) $2,200 
C) $2,800 
D) $1,700 
A) $0 
B) $2,200 
C) $2,800 
D) $1,700

Question 5

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

Accepted Answer

A) Poseidon is a 20-year-old full-time student who does not support himself 
B) Demeter is a 23-year-old full-time student who supports herself with a job at a grocery store 
C) Zeus is 20 years old and not a student 
D) Demeter is a 23-year-old full-time student who supports herself with a job at a grocery store and Zeus is 20 years old and not a student 
E) None of the choices are correct 
A) Poseidon is a 20-year-old full-time student who does not support himself 
B) Demeter is a 23-year-old full-time student who supports herself with a job at a grocery store 
C) Zeus is 20 years old and not a student 
D) Demeter is a 23-year-old full-time student who supports herself with a job at a grocery store and Zeus is 20 years old and not a student 
E) None of the choices are correct

Question 6

Carolyn has an AGI of $39,900 (all from earned income)and two qualifying children and is filing as a head of household. What amount of earned income credit is she entitled to?(Exhibit 8-10)

Accepted Answer

A) $0 
B) $1,588 
C) $3,984 
D) $4,332 
E) $5,920 
A) $0 
B) $1,588 
C) $3,984 
D) $4,332 
E) $5,920

Question 7

In 2020, Shawn's adjusted gross income (AGI)is $170,000. He earned the income evenly throughout the year. He owed $29,890 in federal income tax and self-employment taxes of $2,590. Last year, he had a gross tax liability of $50,000. What is the minimum quarterly estimated tax payment Shawn must pay each quarter to avoid underpayment penalties for 2020?

Accepted Answer

$7,017.
An

Question 8

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

Accepted Answer

A) A married couple must file jointly to claim the credit. 
B) 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. 
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 are true. 
A) A married couple must file jointly to claim the credit. 
B) 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. 
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 are true.

Question 9

During all of 2020, Mr. and Mrs. Clay lived with their four children (all are under the age of 17). They provided over one-half of the support for each child. Mr. and Mrs. Clay file jointly for 2020. Neither is blind, and both are under age 65. They reported the following tax-related information for the year. (Use the tax rate schedules, 2020 Alternative minimum tax (AMT)exemption)
   What are the Clays' taxes payable or refund due? (Ignore the alternative minimum tax.)What are the Clays' tentative minimum tax and alternative minimum tax?

Accepted Answer

A. Tax refund is $5,330.
Answer computed

Question 10

Which of the following tax credits is fully refundable?

Accepted Answer

A) American opportunity tax credit 
B) Dependent care credit 
C) Earned income credit 
D) None of the choices are correct 
A) American opportunity tax credit 
B) Dependent care credit 
C) Earned income credit 
D) None of the choices are correct

Question 11

Assume Georgianne underpaid her estimated tax liability by $150 in the first quarter, $500 in the second 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 5 percent.

Accepted Answer

$25 ($3 + $10 + $8 +

Question 12

Jackson earned a salary of $254,000 in 2020. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Accepted Answer

$12,706.
A

Question 13

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 $128,000 for 2020?

Accepted Answer

$2,300.
An

Question 14

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

Accepted Answer

A) An extension of time to file the tax return protects a taxpayer from late payment penalties as long as the tax is paid by the extended due date of the return. 
B) The penalty rate for late filing penalties is less than the penalty rate for late payment penalties. 
C) If a taxpayer has not paid the full tax liability by the original due date of the return and the taxpayer has not filed a tax return by the due date of the return, the maximum late filing and late payment penalty will be no greater than the late filing penalty by itself. 
D) None of the choices are correct. 
A) An extension of time to file the tax return protects a taxpayer from late payment penalties as long as the tax is paid by the extended due date of the return. 
B) The penalty rate for late filing penalties is less than the penalty rate for late payment penalties. 
C) If a taxpayer has not paid the full tax liability by the original due date of the return and the taxpayer has not filed a tax return by the due date of the return, the maximum late filing and late payment penalty will be no greater than the late filing penalty by itself. 
D) None of the choices are correct.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

An individual could pay 100 percent 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 17

Hester (age 17)is claimed as a dependent by his parents, Charlton and Abigail. In 2020, Hester received $10,190 of qualified dividends, and he received $13,190 from a part-time job. What is his taxable income for 2020? (Standard deduction)

Accepted Answer

A) $23,380 
B) $22,280 
C) $10,980 
D) $9,840 
A) $23,380 
B) $22,280 
C) $10,980 
D) $9,840

Question 18

The American opportunity tax 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 19

The tax rate schedules are set up to tax lower levels of income at higher tax rates than higher levels of income.

Accepted Answer

A) True 
 B)False

Question 20

Tax rate schedules are provided for use by (relatively)higher-income taxpayers, while the tax tables are provided for use by (relatively)lower-income taxpayers.

Accepted Answer

A) True 
 B)False

Exam 8: Individual Income Tax Computation and Tax Credits

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

Max is a 14-year-old dependent of his parents. During 2020, Max earned $1,800 working part-time jobs, and he received $1,500 of interest income from corporate bonds that were given to him last year. What is Max's 2020 taxable income?

Jack paid $5,000 in daycare expenses for his five-year-old daughter so he could work. His AGI for the year was $37,500 (all earned income). What is the amount of his child and dependent care credit?

During 2020, Montoya (age 15)received $2,200 from a corporate bond. He also received $600 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

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

Carolyn has an AGI of $39,900 (all from earned income)and two qualifying children and is filing as a head of household. What amount of earned income credit is she entitled to?(Exhibit 8-10)

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

Which of the following tax credits is fully refundable?

Assume Georgianne underpaid her estimated tax liability by $150 in the first quarter, $500 in the second 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 5 percent.

Jackson earned a salary of $254,000 in 2020. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

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 before April 15.

An individual could pay 100 percent of her tax liability by the due date of her tax return and still be subject to underpayment tax penalties.

Hester (age 17)is claimed as a dependent by his parents, Charlton and Abigail. In 2020, Hester received $10,190 of qualified dividends, and he received $13,190 from a part-time job. What is his taxable income for 2020? (Standard deduction)

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

The tax rate schedules are set up to tax lower levels of income at higher tax rates than higher levels of income.

Tax rate schedules are provided for use by (relatively)higher-income taxpayers, while the tax tables are provided for use by (relatively)lower-income taxpayers.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, 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