Question 1

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 these. 
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 these.

Question 2

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

Accepted Answer

A)  A married couple must file jointly to claim the credit. 
B)  A taxpayer may claim a credit for dependent care expenses for a dependent who is 14 years old or older but only if the dependent lives in the taxpayer's home for the entire year. 
C)  All else equal, a taxpayer making qualifying expenditures for three children may claim more dependent care credit than a taxpayer making (the same amount of) qualifying expenditures for two children. 
D)  None of these statements is true. 
A)  A married couple must file jointly to claim the credit. 
B)  A taxpayer may claim a credit for dependent care expenses for a dependent who is 14 years old or older but only if the dependent lives in the taxpayer's home for the entire year. 
C)  All else equal, a taxpayer making qualifying expenditures for three children may claim more dependent care credit than a taxpayer making (the same amount of) qualifying expenditures for two children. 
D)  None of these statements is true.

Question 3

Which of the following tax credits is fully refundable?

Accepted Answer

A)  American opportunity credit 
B)  Dependent care credit 
C)  Earned income credit 
D)  None of these 
A)  American opportunity credit 
B)  Dependent care credit 
C)  Earned income credit 
D)  None of these

Question 4

Which of the following best describes the manner in which self-employed taxpayers may deduct self-employment taxes?

Accepted Answer

A)  Deduct employer portion from AGI. 
B)  Deduct entire amount from AGI. 
C)  Deduct employer portion for AGI. 
D)  Deduct entire amount for AGI. 
E)  No deduction 
A)  Deduct employer portion from AGI. 
B)  Deduct entire amount from AGI. 
C)  Deduct employer portion for AGI. 
D)  Deduct entire amount for AGI. 
E)  No deduction

Question 5

Selene made $54,300 in 2014 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?

Accepted Answer

The answer of Selene made $54,300 in 2014 working at...

Question 6

Which of the following taxpayers (all age 40) are required to file a return? $$\begin{array} { | l | l | r | c | } 
\hline \text { Taxpayer } & \text { Filing Status } & \begin{array} { c } 
\text { Number } \
\text { of exemptions }
\end{array} & \begin{array} { c } 
\text { Gross } \
\text { Income }
\end{array} \
\hline \text { Jenny and Jim } & \begin{array} { l } 
\text { Married Filing } \
\text { Jointly }
\end{array} & 2 & \$ 21,000 \
\hline \text { Allen } & \text { Single } & 1 & \$ 9,200 \
\hline \text { Timmy } & \text { Head of Household } & 2 & \$ 10,800 \
\hline
\end{array}$$

Accepted Answer

A)  Jenny and Jim 
B)  Allen 
C)  Timmy 
D)  None of these 
A)  Jenny and Jim 
B)  Allen 
C)  Timmy 
D)  None of these

Question 7

Johann had a gross tax liability of $22,508 in 2014, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2013. Calculate Johann's under/overpayment in each quarter for 2014 tax purposes.

Accepted Answer

Underwitheld by $189

Question 8

Which of the following is not a true statement about the American opportunity credit (AOC) and lifetime learning credits?

Accepted Answer

A)  A taxpayer may not report both an AOC and a lifetime learning credit on the same tax return 
B)  Certain educational expenses qualify for both credits but taxpayers must claim one credit or the other for the expenditures (the taxpayer cannot claim both credits for the same expenditures) 
C)  Taxpayers may choose to either (1) deduct qualifying education expenses of an individual as for AGI deductions or claim educational credits for the individual's expenses (but not both) 
D)  The AGI phase-out threshold for phasing out the AOC is higher than the AGI phase-out threshold for the lifetime learning credit. 
A)  A taxpayer may not report both an AOC and a lifetime learning credit on the same tax return 
B)  Certain educational expenses qualify for both credits but taxpayers must claim one credit or the other for the expenditures (the taxpayer cannot claim both credits for the same expenditures) 
C)  Taxpayers may choose to either (1) deduct qualifying education expenses of an individual as for AGI deductions or claim educational credits for the individual's expenses (but not both) 
D)  The AGI phase-out threshold for phasing out the AOC is higher than the AGI phase-out threshold for the lifetime learning credit.

Question 9

In 2014, John (52 years old) files as a head of household with one 18-year old dependent (qualifying) child. John is eligible to claim a $700 American opportunity credit for the year. John did not have any taxes withheld by his employer during the year and he did not make any estimated tax payments. After taking credits into account, what is the amount of John's taxes payable or refund assuming that his AGI is $26,000 (all from salary) and his taxable income is $9,000?

Accepted Answer

The answer of In 2014, John (52 years old) files...

Question 10

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 11

Which of the following statements regarding credits is correct?

Accepted Answer

A)  Business expenses are generally refundable credits 
B)  Business credits that are generated in one year but are not utilized in that year expire 
C)  Business credits that are generated in one year but are not utilized in that year may be carried forward to future years but not back to a prior year 
D)  Business credits that are generated in one year but are not utilized in that year may be carried back to the previous year and then forward to future years 
A)  Business expenses are generally refundable credits 
B)  Business credits that are generated in one year but are not utilized in that year expire 
C)  Business credits that are generated in one year but are not utilized in that year may be carried forward to future years but not back to a prior year 
D)  Business credits that are generated in one year but are not utilized in that year may be carried back to the previous year and then forward to future years

Question 12

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

Accepted Answer

A)  The top AMT marginal rate is higher than the top regular tax marginal tax rate. 
B)  The AMT rates represent a progressive tax rate structure. 
C)  The AMT rate is the same rate for all taxpayers. 
D)  None of these. 
A)  The top AMT marginal rate is higher than the top regular tax marginal tax rate. 
B)  The AMT rates represent a progressive tax rate structure. 
C)  The AMT rate is the same rate for all taxpayers. 
D)  None of these.

Question 13

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 14

During 2014, Jasmine (age 12) received $2,400 from a corporate bond. She also received $600 from a savings account established for her by her parents. Jasmine lives with her parents and she is their dependent. Assuming her parents' marginal tax rate is 28%, what is Jasmine's gross tax liability?

Accepted Answer

A)  $0 
B)  $100 
C)  $280 
D)  $380 
A)  $0 
B)  $100 
C)  $280 
D)  $380

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Rhianna and Jay are married filing jointly in 2014. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2014 tax return?

Accepted Answer

A)  $5,300 
B)  $6,000 
C)  $12,000 
D)  $4,000 
A)  $5,300 
B)  $6,000 
C)  $12,000 
D)  $4,000

Question 17

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Accepted Answer

A)  Head of Household 
B)  Qualifying Widow or Widower 
C)  Married Filing Separately 
D)  Single 
E)  All of these are taxpayer filing statuses 
A)  Head of Household 
B)  Qualifying Widow or Widower 
C)  Married Filing Separately 
D)  Single 
E)  All of these are taxpayer filing statuses

Question 18

Cassy reports a gross tax liability of $1,000. She also claims $400 of nonrefundable personal credits, $700 of refundable personal credits, and $200 of business credits. What is Cassy's tax refund or tax liability due after applying the credits?

Accepted Answer

A)  $1,000 taxes payable 
B)  $0 refund or taxes payable 
C)  $700 refund 
D)  $300 refund 
A)  $1,000 taxes payable 
B)  $0 refund or taxes payable 
C)  $700 refund 
D)  $300 refund

Question 19

Hera earned $175,000 salary in 2014. Her husband, Zeus, earned $100,000 salary in 2014. Hera and Zeus file a joint tax return. How much FICA taxes will they owe in 2014?

Accepted Answer

A)  $21,263 
B)  $17,667 
C)  $13,454 
D)  $4,213 
A)  $21,263 
B)  $17,667 
C)  $13,454 
D)  $4,213

Question 20

Hester (age 17) is claimed as a dependent by his parents, Charlton and Abigail. In 2014, Hester received $10,000 of qualified dividends and he received $6,000 from a part time job. What is his taxable income for 2014?

Accepted Answer

A)  $16,000 
B)  $15,000 
C)  $9,800 
D)  $9,650 
A)  $16,000 
B)  $15,000 
C)  $9,800 
D)  $9,650

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

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

Which of the following tax credits is fully refundable?

Which of the following best describes the manner in which self-employed taxpayers may deduct self-employment taxes?

Selene made $54,300 in 2014 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 taxpayers (all age 40) are required to file a return? Taxpayer Filing Status Number of exemptions Gross Income Jenny and Jim Married Filing Jointly 2 \ 21,000 Allen Single 1 \ 9,200 Timmy Head of Household 2 \ 10,800

Johann had a gross tax liability of $22,508 in 2014, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2013. Calculate Johann's under/overpayment in each quarter for 2014 tax purposes.

Which of the following is not a true statement about the American opportunity credit (AOC) and lifetime learning credits?

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.

Which of the following statements regarding credits is correct?

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

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

During 2014, Jasmine (age 12) received $2,400 from a corporate bond. She also received $600 from a savings account established for her by her parents. Jasmine lives with her parents and she is their dependent. Assuming her parents' marginal tax rate is 28%, what is Jasmine's gross tax liability?

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

Rhianna and Jay are married filing jointly in 2014. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2014 tax return?

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Cassy reports a gross tax liability of $1,000. She also claims $400 of nonrefundable personal credits, $700 of refundable personal credits, and $200 of business credits. What is Cassy's tax refund or tax liability due after applying the credits?

Hera earned $175,000 salary in 2014. Her husband, Zeus, earned $100,000 salary in 2014. Hera and Zeus file a joint tax return. How much FICA taxes will they owe in 2014?

Hester (age 17) is claimed as a dependent by his parents, Charlton and Abigail. In 2014, Hester received $10,000 of qualified dividends and he received $6,000 from a part time job. What is his taxable income for 2014?

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

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters

Exam 7: Individual Income Tax Computation and Tax Credits

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

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

Which of the following tax credits is fully refundable?

Which of the following best describes the manner in which self-employed taxpayers may deduct self-employment taxes?

Selene made $54,300 in 2014 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 taxpayers (all age 40) are required to file a return? Taxpayer Filing Status Number of exemptions Gross Income Jenny and Jim Married Filing Jointly 2 \ 21,000 Allen Single 1 \ 9,200 Timmy Head of Household 2 \ 10,800

Johann had a gross tax liability of $22,508 in 2014, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2013. Calculate Johann's under/overpayment in each quarter for 2014 tax purposes.

Which of the following is not a true statement about the American opportunity credit (AOC) and lifetime learning credits?

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.

Which of the following statements regarding credits is correct?

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

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

During 2014, Jasmine (age 12) received $2,400 from a corporate bond. She also received $600 from a savings account established for her by her parents. Jasmine lives with her parents and she is their dependent. Assuming her parents' marginal tax rate is 28%, what is Jasmine's gross tax liability?

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

Rhianna and Jay are married filing jointly in 2014. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2014 tax return?

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Cassy reports a gross tax liability of $1,000. She also claims $400 of nonrefundable personal credits, $700 of refundable personal credits, and $200 of business credits. What is Cassy's tax refund or tax liability due after applying the credits?

Hera earned $175,000 salary in 2014. Her husband, Zeus, earned $100,000 salary in 2014. Hera and Zeus file a joint tax return. How much FICA taxes will they owe in 2014?

Hester (age 17) is claimed as a dependent by his parents, Charlton and Abigail. In 2014, Hester received $10,000 of qualified dividends and he received $6,000 from a part time job. What is his taxable income for 2014?

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

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters