Question 1

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Accepted Answer

A)  for AGI deductions. 
B)  from AGI deductions not subject to the two percent of AGI floor. 
C)  from AGI deductions subject to a two percent of AGI floor. 
D)  for AGI deductions limited to income from the business activities. 
A)  for AGI deductions. 
B)  from AGI deductions not subject to the two percent of AGI floor. 
C)  from AGI deductions subject to a two percent of AGI floor. 
D)  for AGI deductions limited to income from the business activities.

Question 2

Both the width (or range)of the tax brackets (the amount of income taxed at a particular rate)in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate)vary by filing status.

Accepted Answer

A) True 
 B)False

Question 3

If a married couple has one primary breadwinner,filing a joint return will likely result in a marriage penalty.

Accepted Answer

A) True 
 B)False

Question 4

Employee status is always better than independent contractor status for a taxpayer because the employee is responsible for paying the employee portion of the FICA taxes.

Accepted Answer

A) True 
 B)False

Question 5

Alton reported net income from his sole proprietorship of $90,000.To determine his self employment tax,he would multiply $90,000 by the self-employment tax rate.

Accepted Answer

A) True 
 B)False

Question 6

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 in the text)

Accepted Answer

A)  $0 
B)  $810 
C)  $1,080 
D)  $3,000 
A)  $0 
B)  $810 
C)  $1,080 
D)  $3,000

Question 7

In 2017,Shawn's AGI is $170,000.He earned the income evenly throughout the year.He owed $24,900 in federal income tax plus alternative minimum tax of $263,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 2017?

Accepted Answer

$6,245
Ans

Question 8

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

Accepted Answer

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

Question 9

To qualify for the earned income credit,the taxpayer must have a qualified dependent.

Accepted Answer

A) True 
 B)False

Question 10

An 80-year-old taxpayer with earned income and no dependent children could qualify for the earned income credit.

Accepted Answer

A) True 
 B)False

Question 11

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Accepted Answer

A)  The dividend will be taxed at a 15% tax rate. 
B)  The dividend will be taxed at a 20% tax rate. 
C)  The entire dividend will be taxed at either 15% or the entire dividend will be taxed at 20% depending on Harrison's marginal ordinary income tax rate. 
D)  None of the choices are correct. 
A)  The dividend will be taxed at a 15% tax rate. 
B)  The dividend will be taxed at a 20% tax rate. 
C)  The entire dividend will be taxed at either 15% or the entire dividend will be taxed at 20% depending on Harrison's marginal ordinary income tax rate. 
D)  None of the choices are correct.

Question 12

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

Accepted Answer

A)  A taxpayer with multiple eligible dependents can claim a credit for each dependent's qualifying expenses. 
B)  The credit is available for students during their first four years of postsecondary education only. 
C)  It is phased out based on the taxpayer's AGI. 
D)  A taxpayer may not claim a credit unless the taxpayer pays a dependent's qualifying educational expenses. 
A)  A taxpayer with multiple eligible dependents can claim a credit for each dependent's qualifying expenses. 
B)  The credit is available for students during their first four years of postsecondary education only. 
C)  It is phased out based on the taxpayer's AGI. 
D)  A taxpayer may not claim a credit unless the taxpayer pays a dependent's qualifying educational expenses.

Question 13

Baker earned $225,000 of salary as an employee in 2017.How much should his employer have withheld from his paycheck for FICA taxes (rounded to the nearest whole dollar amount)?

Accepted Answer

A)  $11,374 
B)  $11,149 
C)  $10,786 
D)  $17,213 
A)  $11,374 
B)  $11,149 
C)  $10,786 
D)  $17,213

Question 14

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 in the text)

Accepted Answer

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

Question 15

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year,which of the following statements regarding FICA and self-employment taxes is most accurate?

Accepted Answer

A)  The Social Security limit applies to the salary but not to the self-employment income. 
B)  The Social Security limit applies to the self-employment income but not to the salary. 
C)  Salary is first applied against the Social Security limit and then self-employment income is applied against the Social Security limit. 
D)  Self-employment income is first applied against the Social Security limit and then salary is applied against the Social Security limit. 
A)  The Social Security limit applies to the salary but not to the self-employment income. 
B)  The Social Security limit applies to the self-employment income but not to the salary. 
C)  Salary is first applied against the Social Security limit and then self-employment income is applied against the Social Security limit. 
D)  Self-employment income is first applied against the Social Security limit and then salary is applied against the Social Security limit.

Question 16

If both spouses of a married couple earn roughly equivalent 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 17

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

Accepted Answer

A)  Taxpayers may claim a credit for only a portion of qualifying dependent care expenditures. 
B)  If a taxpayer's income is too high, she will be ineligible to claim any child and dependent care credit. 
C)  A single taxpayer must have earned income to claim any child and dependent care credit. 
D)  A taxpayer is not eligible to claim the dependent care credit if any dependent relative provides the care. 
A)  Taxpayers may claim a credit for only a portion of qualifying dependent care expenditures. 
B)  If a taxpayer's income is too high, she will be ineligible to claim any child and dependent care credit. 
C)  A single taxpayer must have earned income to claim any child and dependent care credit. 
D)  A taxpayer is not eligible to claim the dependent care credit if any dependent relative provides the care.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Miley,a single taxpayer,plans on reporting $28,950 of taxable income this year (all of her income is from a part-time job).She is considering applying for a second part-time job that would give her an additional $10,000 of taxable income.By how much will the income from the second job increase her tax liability? (use the tax rate schedules in the text)

Accepted Answer

A)  $1,000 
B)  $1,500 
C)  $1,600 
D)  $2,500 
A)  $1,000 
B)  $1,500 
C)  $1,600 
D)  $2,500

Question 20

Which of the following is not true of the lifetime learning credit?

Accepted Answer

A)  It is a nonrefundable credit. 
B)  The credit can be claimed by taxpayers who have graduated from college and are taking professional training courses to improve their job skills. 
C)  A taxpayer with multiple dependents can claim a credit for each dependent's qualifying expenses. 
D)  The credit is subject to phase out based on the taxpayer's AGI. 
A)  It is a nonrefundable credit. 
B)  The credit can be claimed by taxpayers who have graduated from college and are taking professional training courses to improve their job skills. 
C)  A taxpayer with multiple dependents can claim a credit for each dependent's qualifying expenses. 
D)  The credit is subject to phase out based on the taxpayer's AGI.

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Both the width (or range)of the tax brackets (the amount of income taxed at a particular rate)in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate)vary by filing status.

If a married couple has one primary breadwinner,filing a joint return will likely result in a marriage penalty.

Employee status is always better than independent contractor status for a taxpayer because the employee is responsible for paying the employee portion of the FICA taxes.

Alton reported net income from his sole proprietorship of $90,000.To determine his self employment tax,he would multiply $90,000 by the self-employment tax rate.

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

To qualify for the earned income credit,the taxpayer must have a qualified dependent.

An 80-year-old taxpayer with earned income and no dependent children could qualify for the earned income credit.

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

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

Baker earned $225,000 of salary as an employee in 2017.How much should his employer have withheld from his paycheck for FICA taxes (rounded to the nearest whole dollar amount)?

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 in the text)

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year,which of the following statements regarding FICA and self-employment taxes is most accurate?

If both spouses of a married couple earn roughly equivalent 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 the child and dependent care credit is false?

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

Which of the following is not true of the lifetime learning credit?

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

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Exam 8: Individual Income Tax Computation and Tax Credits

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Both the width (or range)of the tax brackets (the amount of income taxed at a particular rate)in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate)vary by filing status.

If a married couple has one primary breadwinner,filing a joint return will likely result in a marriage penalty.

Employee status is always better than independent contractor status for a taxpayer because the employee is responsible for paying the employee portion of the FICA taxes.

Alton reported net income from his sole proprietorship of $90,000.To determine his self employment tax,he would multiply $90,000 by the self-employment tax rate.

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

To qualify for the earned income credit,the taxpayer must have a qualified dependent.

An 80-year-old taxpayer with earned income and no dependent children could qualify for the earned income credit.

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

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

Baker earned $225,000 of salary as an employee in 2017.How much should his employer have withheld from his paycheck for FICA taxes (rounded to the nearest whole dollar amount)?

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 in the text)

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year,which of the following statements regarding FICA and self-employment taxes is most accurate?

If both spouses of a married couple earn roughly equivalent 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 the child and dependent care credit is false?

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

Which of the following is not true of the lifetime learning credit?

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

Filters