Exam 14: The Individual Tax Formula

Mr. and Mrs. Borem spent $1,435 for child care for their two dependent children, who are two and four years old. Mr. Borem's earned income was $55,870, Mrs. Borem had no earned income, and the AGI on their joint return was $66,210. Calculate their dependent care credit.

Which of the following statements regarding the calculation of regular tax liability is false?

Which of the following statements regarding the calculation of taxable income is false?

Mr. and Mrs. Casey have two dependent children, ages 3 and 6. The Caseys spent $10,300 for child care this year. Mrs. Casey is employed full-time as an attorney. Mr. Casey is an unpublished novelist who has yet to earn any money from his writing. The Caseys are eligible for a dependent care credit.

Ms. Kilo's regular income tax before credits on her Form 1040 is $45,890, and she has a $5,700 minimum tax credit from a previous year. Which of the following statements is true?

Mr. and Mrs. Arlette spent $5,900 for child care for their 12-year-old daughter. Mr. Arlette's earned income was $178,000, Mrs. Arlette's earned income was $33,100, and the AGI on their joint return was $225,200. Calculate their dependent care credit.

Eileen, a single individual, had $125,000 taxable income. Compute her income tax assuming that: a. Taxable income includes no capital gains. b. Taxable income includes $14,000 capital gain eligible for the 15% preferential rate.

Mr. and Mrs. Harvey's tax liability before credits was $1,675. Their income tax withholding was $1,050, and they are entitled to a $1,189 earned income credit. Which of the following statements is true?

Mr. and Mrs. Anderson file a joint return. They provide more than 50% of the financial support of their two children, Dana, age 26, and John, age 17. Both children live in the Andersons' home. Dana earned $7,100 from a part-time job, while John earned no income this year. Which of the following statements is true?

Mr. and Mrs. Jelk file a joint return. They provide 65% of the financial support for David, the 14-year old son of a friend who died three years ago. David lives in the home of his aunt Sarah, who provides 35% of his financial support. Which of the following statements is true?

Mr. and Mrs. Upton's marginal tax rate on their joint return is 33%. This year, their itemized deductions totaled $13,400, and their standard deduction (MFJ) was $11,900. Compute their incremental tax savings from their itemized deductions.

Mrs. Raines died on June 2, 2011. Mr. Raines has not remarried and has no children or other dependents. What is his filing status for 2011 and 2012?

An extension of the time to file an individual tax return also extends the time to pay any balance of tax due with the return.

Mr. and Mrs. Lansing, who file a joint tax return, have four dependent children under age 17. Which of the following statements is false?

An individual's taxable income equals adjusted gross income less the exemption amount.

Which of the following statements regarding a qualifying child is false?

Mr. Marshall was employed by IMP Inc. until October, when he accepted a new position with Turine Inc. Mr. Marshall earned $129,000 compensation from IMP and $36,000 compensation from Turine. Which of the following statements is false?

Mr. and Mrs. Queen provide 90% of the financial support for Mrs. Queen's mother, Doreen, who lives in the couples' home. Doreen's only income this year is a $7,500 taxable pension from her former employer. Mr. and Mrs. Queen can't claim Doreen as a dependent this year.

Mrs. Lincoln was employed by GGH Inc. until October, when he accepted a new position with Murdock Inc. Mrs. Lincoln earned $145,000 compensation from GGH and $36,000 compensation from Murdock. Which of the following statements is false?

The unextended due date for the individual tax return (Form 1040) is the 15^th day of the third month following the close of the taxable year.