Exam 8: Individual Income Tax Computation and Tax Credits

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

Allen Green is a single taxpayer with an AGI (and modified AGI) of $210,000, which includes $170,000 of salary, $25,000 of interest income, $10,000 of dividends, and $5,000 of long-term capital gains. What is Allen's net investment income tax liability this year, rounded to the nearest whole dollar amount?

Quantitatively, what is the relationship between the AGI phase-out thresholds for the child tax credit?

For married couples, the Social Security wage base limitation applies separately to each spouse.

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Lexa, a single taxpayer, worked as an employee during the first half of the year earning $65,000 of salary. Lexa's employer withheld $4,030 of Social Security tax, $943 of Medicare tax, and $0 of additional Medicare tax. In the second half of the year, she was self-employed and she reported $180,000 of self-employment income on her Schedule C. What amount of self-employment taxes and  additional Medicare tax is Lexa required to pay on her self-employment income?

Selene made $54,300 in 2018 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 is not True of the extension to file an individual tax return?

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

Looking at the following partial calendar for April, when will individual tax returns be due?

Which of the following is not True of the American opportunity credit?

The child and dependent care credit entitles qualifying taxpayers to a credit equal to the full amount of qualified expenses.

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

During 2018, 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?

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)

Kaelyn's mother, Judy, looks after Kaelyn's four-year-old twins so Kaelyn can go to work (she drops off and picks up the twins from Judy's home every day). Since Judy is a relative, Kaelyn made sure, for tax purposes, to pay her mother the going rate for child care ($6,300 for the year). What is the amount of Kaelyn's child and dependent care credit if her AGI for the year was $36,000? (Exhibit 8-9)

Paul and Melissa plan on filing jointly in 2018. For the year, the couple reported taxable income of $130,000. What is their gross tax liability? (Use Tax Rate Schedule.)

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

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

Jackson earned a salary of $254,000 in 2018. What amount of FICA taxes should Jackson's employer withhold from his paycheck?