Exam 13: Tax Credits and Payment Procedures

In 2015,Juan and Juanita incur $9,800 in legal and adoption fees directly related to the adoption of an infant son born in a nearby state.Over the next year,they incur another $4,500 of adoption expenses.The adoption becomes final in 2016.Which of the following choices properly reflects the amounts and years in which the adoption expenses credit is available. 2015 2016

Harry and Wilma are married and file a joint income tax return.On their tax return,they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wilma)and claim two exemptions for their dependent children.During the year,they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work. ABC Day Care Center $3,200 Blue Ridge Housekeeping Services 2,000 mrs.Mason (Harry's mother) 1,000 ​ Harry and Wilma may claim a credit for child and dependent care expenses of:

The earned income credit,a form of a negative income tax,is a refundable credit.

The education tax credits (i.e. ,the American Opportunity credit and the lifetime learning credit)are available to help defray the cost of higher education regardless of the income level of the taxpayer.

Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.

Phil and Audrey,husband and wife,both are employed by Laurel Corporation.Phil earns $125,000 in salary in 2016,and Audrey earns $70,000.How much FICA tax must they pay for 2016?

BlueCo incurs $900,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.The credit for employer-provided child care available to BlueCo this year is $225,000.

Roger is considering making a $6,000 investment in a venture that its promoter promises will generate immediate tax benefits for him.Roger,who does not anticipate itemizing his deductions,is in the 30% marginal income tax bracket.If the investment is of a type that produces a tax credit of 40% of the amount of the expenditure,by how much will Roger's tax liability decline because of the investment?

George and Jill are husband and wife,ages 67 and 65 respectively.During the year,they receive Social Security benefits of $4,000 and have adjusted gross income of $11,000.Assuming they file a joint return,their tax credit for the elderly,before considering any possible limitation due to their tax liability,is:

Only self-employed individuals are required to make estimated tax payments.

An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the following form:

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

The earned income credit is available only if the taxpayer has at least one qualifying child in the household.

Only married taxpayers with children are qualified to receive the earned income credit.

Which,if any,of the following correctly describes the research activities credit?

Which,if any,of the following correctly describes the earned income credit?

During the year,Purple Corporation (a U.S.Corporation)has U.S.-source income of $1,800,000 and foreign income of $600,000.The foreign-source income generates foreign income taxes of $150,000.The U.S.income tax before the foreign tax credit is $816,000.Purple Corporation's foreign tax credit is:

Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.Assuming Cardinal claims the credit for employer-provided child care this year,its basis in the newly constructed facility is $640,000.

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

Discuss the treatment of unused general business credits.