Exam 7: Tax Credits

The use of the earned income credit could result in a taxpayer receiving a refund even though he or she has not paid any income taxes.

Keith has a 2018 tax liability of $2,250 before taking into account his American Opportunity tax credit.He paid $2,600 in qualifying expenses, was a full-time student, was not claimed as a dependent on his parents' return, and his American Opportunity tax credit was not subject to phase-out.What is the amount of his American Opportunity tax credit allowed?

Alice is a single taxpayer with no dependents that has AGI of $11,200 in 2018.Alice is required to carry minimum essential coverage in 2018.

Taxpayer Q has net taxable income of $30,000 from Country Y which imposes a 40 percent income tax.In addition to the income from Country Y, taxpayer Q has net taxable income from US sources of $120,000, and US tax liability, before the foreign tax credit, of $30,290.What is the amount of Q's foreign tax credit?

Jeff is a stay-at-home father who earns $600 from odd jobs and takes care of his daughter.His wife, Michelle, is the bread-winner and brings in $60,000 of income a year.In addition to the care provided by Jeff, Michelle pays $4,500 in child care.In the current year, how much are Jeff and Michelle's qualifying expenses for the child and dependent care credit?

After raising two children, Anh, a single 48-year-old, decided to go to college to earn her first college degree.She spent two years in community college and earned an associate's degree.In 2018, she is enrolled half-time at State University to earn a Bachelor's degree in Accounting and also works part-time.Anh is eligible for the American Opportunities tax credit.

Vicky is a single, 21-year-old, full-time student who purchased health care through the state health care exchange for the full year.Her part-time job pays her $12,000 in 2018.She files her own tax return but is claimed as a dependent by her parents.Vicky is eligible for the premium tax credit.

Avery is a single, 26-year-old graduate student at State University with no children.She is a US citizen with a valid Social Security number.Her only income is from a part-time job on campus from which she earned wages of $6,000.Avery qualifies for the earned income credit.

The foreign tax credit applies only to foreign corporations.

A tax credit is allowed for qualified adoption expenses paid by taxpayers:

In 2018, the child tax credit available to married taxpayers filing jointly is phased out, beginning at:

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Why is there an earned income credit in the law?

A taxpayer with earned income of $50,000 is not eligible to claim the credit for child and dependent care expenses.