Exam 7: Individual Income Tax Computation and Tax Credits

Demeter is a single taxpayer.Her AGI in 2018 is $209,200.Demeter may claim a child tax credit for her daughter Persephone.What amount of child tax credit is Demeter entitled to claim after any applicable phase-out?

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Pyrrha,a 12-year-old dependent of Epimetheus and Pandora,received $8,200 of interest income in 2018.What is Pyrrha's gross tax liability for the year?

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.

John and Sally pay Janet (Sally's older sister)to watch John and Sally's child Dexter during the day.Janet cares for Dexter in her home.John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter.

For alternative minimum tax purposes,taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

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

The American opportunity credit and lifetime learning credit are available to all taxpayers regardless of their income level.

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

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

The alternative minimum tax base is typically ________ the regular income tax base.

Carolyn has an AGI of $38,000 (all from earned income),two qualifying children,and is filing as a head of household.What amount of earned income credit is she entitled to? (Exhibit 8-10)

Hestia (age 17)is claimed as a dependent by her parents,Rhea and Chronus.In 2018,Hestia received $1,000 of interest income from a corporate bond that she owns.In addition,she has earned income of $200.What is her taxable income for 2018?

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?

Tamra and Jacob are married and they file a joint tax return.Tamra received nearly five times the salary that Jacob received.Which of the following statements is true?

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?

Employees are not allowed to deduct FICA taxes they pay.

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

Miley,a single taxpayer,plans on reporting $29,700 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)

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