Question 1

The earned income credit is sometimes referred to as a negative income tax.

Accepted Answer

A) True 
 B)False

Question 2

Employees are allowed to deduct a portion of the FICA taxes they pay.

Accepted Answer

A) True 
 B)False

Question 3

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 4

In certain circumstances a child with very little income may have at least a portion of their income taxed at the trust and estate tax rates.

Accepted Answer

A) True 
 B)False

Question 5

All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.

Accepted Answer

A) True 
 B)False

Question 6

Angelena files as a head of household. In 2018, she reported $52,300 of taxable income, including a $10,000 qualified dividend. What is her gross tax liability, rounded to the nearest whole dollar amount? (Use the tax rate schedules)

Accepted Answer

A)  $6,054 
B)  $4,894 
C)  $6,304 
D)  $7,241 
A)  $6,054 
B)  $4,894 
C)  $6,304 
D)  $7,241

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 9

Jamie is single. In 2018, 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)  $19,443 
B)  $18,290 
C)  $17,840 
D)  $15,000 
A)  $19,443 
B)  $18,290 
C)  $17,840 
D)  $15,000

Question 10

Hera earned $175,000 salary in 2018. Her husband, Zeus, earned $100,000 salary in 2018. Hera and Zeus file a joint tax return. How much FICA taxes will they owe in 2018?

Accepted Answer

A)  $15,922 
B)  $18,374 
C)  $19,547 
D)  $4,213 
A)  $15,922 
B)  $18,374 
C)  $19,547 
D)  $4,213

Question 11

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

Accepted Answer

A) True 
 B)False

Question 12

If both spouses of a married couple earn roughly equivalent high level of wages, the couple is likely to pay a marriage penalty due to the nature of the tax rate schedules.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements regarding late filing penalties is True?

Accepted Answer

A)  If a taxpayer fails to file a tax return, the late filing penalty will continue to grow until the taxpayer files the tax return. 
B)  The amount of the late filing penalty is the same for both fraudulent failure to file and non-fraudulent failure to file. 
C)  Taxpayers who owe no tax as of the due date of their tax returns are not subject to late filing penalties even if they file late. 
D)  None of the choices are correct. 
A)  If a taxpayer fails to file a tax return, the late filing penalty will continue to grow until the taxpayer files the tax return. 
B)  The amount of the late filing penalty is the same for both fraudulent failure to file and non-fraudulent failure to file. 
C)  Taxpayers who owe no tax as of the due date of their tax returns are not subject to late filing penalties even if they file late. 
D)  None of the choices are correct.

Question 14

Henry and Janice are married and file jointly. They have an AGI (and modified AGI) of $290,000, which includes $90,000 of salary, $170,000 of active business income, $10,000 of interest income, $15,000 of dividends, and $5,000 of long-term capital gains. What are Henry and Janice's net investment income tax liability this year, rounded to the nearest whole dollar amount?

Accepted Answer

$1,140
The tax is the 3.8% tim

Question 15

Which of the following is not one of the general tax credit categories?

Accepted Answer

A)  Nonrefundable personal. 
B)  Refundable personal. 
C)  Business. 
D)  Refundable business. 
A)  Nonrefundable personal. 
B)  Refundable personal. 
C)  Business. 
D)  Refundable business.

Question 16

The AMT exemption amount is phased-out for high income taxpayers.

Accepted Answer

A) True 
 B)False

Question 17

Johann had a gross tax liability of $22,508 in 2018, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2017. Calculate Johann's under/overpayment in each quarter for 2018 tax purposes.

Accepted Answer

Underwitheld by $189, $379, $5

Question 18

Which of the following is typical of taxpayers who are most likely affected by the AMT?

Accepted Answer

A)  Pay high mortgage interest. 
B)  Pay high state income tax. 
C)  Pay high property taxes. 
D)  Have very high capital gains. 
A)  Pay high mortgage interest. 
B)  Pay high state income tax. 
C)  Pay high property taxes. 
D)  Have very high capital gains.

Question 19

Which of the following is not an additional tax a taxpayer may have to pay?

Accepted Answer

A)  Alternative minimum tax. 
B)  Self-employment tax. 
C)  Net investment income tax. 
D)  Excess wage tax. 
A)  Alternative minimum tax. 
B)  Self-employment tax. 
C)  Net investment income tax. 
D)  Excess wage tax.

Question 20

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.

The earned income credit is sometimes referred to as a negative income tax.

Employees are allowed to deduct a portion of the FICA taxes they pay.

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

In certain circumstances a child with very little income may have at least a portion of their income taxed at the trust and estate tax rates.

All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.

Angelena files as a head of household. In 2018, she reported $52,300 of taxable income, including a $10,000 qualified dividend. What is her gross tax liability, rounded to the nearest whole dollar amount? (Use the tax rate schedules)

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

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

Jamie is single. In 2018, 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)

Hera earned $175,000 salary in 2018. Her husband, Zeus, earned $100,000 salary in 2018. Hera and Zeus file a joint tax return. How much FICA taxes will they owe in 2018?

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

If both spouses of a married couple earn roughly equivalent high level of wages, the couple is likely to pay a marriage penalty due to the nature of the tax rate schedules.

Which of the following statements regarding late filing penalties is True?

Which of the following is not one of the general tax credit categories?

The AMT exemption amount is phased-out for high income taxpayers.

Johann had a gross tax liability of $22,508 in 2018, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2017. Calculate Johann's under/overpayment in each quarter for 2018 tax purposes.

Which of the following is typical of taxpayers who are most likely affected by the AMT?

Which of the following is not an additional tax a taxpayer may have to pay?

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

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

Filters

Exam 8: Individual Income Tax Computation and Tax Credits

The earned income credit is sometimes referred to as a negative income tax.

Employees are allowed to deduct a portion of the FICA taxes they pay.

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

In certain circumstances a child with very little income may have at least a portion of their income taxed at the trust and estate tax rates.

All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.

Angelena files as a head of household. In 2018, she reported $52,300 of taxable income, including a $10,000 qualified dividend. What is her gross tax liability, rounded to the nearest whole dollar amount? (Use the tax rate schedules)

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

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

Jamie is single. In 2018, 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)

Hera earned $175,000 salary in 2018. Her husband, Zeus, earned $100,000 salary in 2018. Hera and Zeus file a joint tax return. How much FICA taxes will they owe in 2018?

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

If both spouses of a married couple earn roughly equivalent high level of wages, the couple is likely to pay a marriage penalty due to the nature of the tax rate schedules.

Which of the following statements regarding late filing penalties is True?

Which of the following is not one of the general tax credit categories?

The AMT exemption amount is phased-out for high income taxpayers.

Johann had a gross tax liability of $22,508 in 2018, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2017. Calculate Johann's under/overpayment in each quarter for 2018 tax purposes.

Which of the following is typical of taxpayers who are most likely affected by the AMT?

Which of the following is not an additional tax a taxpayer may have to pay?

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

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

Filters