Exam 7: Individual Income Tax Computation and Tax Credits

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.

Harmony is single and was self-employed for the first half of 2018,earning $18,000 of Schedule C (business)net income.During the second half of the year,she began working as an employee and earned $38,000 in salary.What amount of self-employment taxes is Harmony required to pay?

How could an individual obtain a business tax credit?

Which of the following is not a barrier to income shifting among family members?

Asteria earned a $25,500 salary as an employee in 2018.How much should her employer have withheld from her paycheck for FICA taxes? (Rounded to the nearest whole dollar amount).

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

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.

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

Stephanie and Mitch are married and they file a joint tax return.Mitch received a slightly higher salary than Stephanie did during the year. They both make very high salaries.Which of the following statements is true?

If an employer withholds taxes from an employee,in general,when are these taxes treated as paid to the IRS?

In 2018,Athena reported $39,600 of taxable income.Of this,$34,600 came from her work at the local library and the remaining $5,000 was from capital gains to be taxed at preferential rates.Compute her tax liability for 2018 as a single taxpayer.Use Tax Rate Schedule.)

Which of the following statements accurately describes the alternative minimum tax rate(s)?

Keith and Nicole are married filing joint with two daughters who qualify as dependents.Their gross income for 2018 is $25,500.Are they required to file a tax return? How do you know this without memorizing the gross income thresholds? In 2018,the standard deduction for taxpayers filing a joint return is $24,000.

Baker is single and earned $225,000 of salary as an employee in 2018.How much should his employer have withheld from his paycheck for FICA taxes (rounded to the nearest whole dollar amount)?

Montague (age 15)is claimed as a dependent by his parents Matt and Mary.In 2018,Montague received $5,000 of qualified dividends and he received $800 from a part time job.What is his taxable income for 2018?

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?

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 five percent.

Harmony reports a regular tax liability of $15,000 and tentative minimum tax of $17,000.Given just this information,what is her alternative minimum tax liability for the year?

Linda is a qualifying widow in 2018.In 2018,she reports $80,000 of taxable income (all ordinary).What is her gross tax liability using the tax rate schedules? (Tax rate schedule)