Exam 7: Individual Income Tax Computation and Tax Credits

Linda is a qualifying widow in 2014. In 2014, she reported $75,000 of taxable income (all ordinary). What is her gross tax liability using the tax rate schedules?

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

The alternative minimum tax is the AMT base multiplied by the AMT rate.

How could an individual obtain a business tax credit?

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

Which of the following represents the correct order in which credits are applied to gross tax liability (from first to last)?

The tax rate schedules are set up to tax lower levels of income at higher tax rates than higher levels of income.

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.

Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500. Given just this information, what is her alternative minimum tax liability for the year?

Which of the following could explain why large number of taxpayers are subject to (or could become subject to) AMT?

If there is not enough gross tax liability to use the foreign tax credit, __________.

Asteria earned a $25,500 salary as an employee in 2014. How much should her employer have withheld from her paycheck for FICA taxes (rounded to the nearest whole dollar amount)?

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

Maria and Tony are married. They are preparing to file their 2014 tax return. If they were to file as single taxpayers, Maria and Tony would report $40,000 and $60,000 of taxable income, respectively. On their joint tax return, their taxable income is $100,000. How much of a marriage penalty or benefit will Maria and Tony experience in 2014?

Akiko and Hitachi (married filing jointly for 2014) are both educators. They attended a conference to further their job-related skills. Tuition for the conference was $2,000 for each person. Their AGI was $114,000. How much lifetime learning credit can they claim?

Jamie is single. In 2014, 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)?