Exam 12: Tax Credits and Payments

Susan generated $55,000 of net earnings from the conduct of a tax preparation business that she operated during the tax-filing season.She also received wages of $60,000 from her full-time job.Compute the self-employment taxes due for 2012.

BlueCo incurs $700,000 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 $175,000.

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

During 2012, Barry (who is single and has no children) earned a salary of $13,000.He is age 30.His earned income credit for the year is:

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. Harry and Wilma may claim a credit for child and dependent care expenses of:

During the year, Green Corporation (a U.S.corporation) has U.S.-source income of $750,000 and foreign income of $500,000.The foreign-source income generates foreign income taxes of $240,000.The U.S.income tax before the foreign tax credit is $425,000.Green Corporation's foreign tax credit is:

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

For purposes of computing the credit for child and dependent care expenses, the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

Which of the following statements regarding the adoption expenses credit is not true?

If a taxpayer chooses to claim a foreign tax credit, part of the foreign income taxes paid can also be claimed as a deduction.

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Rex and Dena are married and have two children, Michelle (age 7) and Nancy (age 5).During 2012, Rex earned a salary of $24,000, received interest income of $300, and filed a joint income tax return.Dena had $0 gross income.Their earned income credit for the year is:

Which of the following correctly describes the tax credit for rehabilitation expenditures?

The American Opportunity credit is available per eligible student, while the lifetime learning credit is calculated per taxpayer.

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is age 13 or less.

The ceiling amounts and percentages for 2012 for the two portions of the self-employment tax are: Social Security portion Medicare portion

Which of the following statements is true regarding the education tax credits?

During the year, Purple Corporation (a U.S.Corporation) has U.S.-source income of $900,000 and foreign income of $300,000.The foreign-source income generates foreign income taxes of $75,000.The U.S.income tax before the foreign tax credit is $408,000.Purple Corporation's foreign tax credit is:

In describing FICA taxes, which (if any) of the following statements is incorrect?

Ahmad is considering making a $5,000 investment in a venture which its promoter promises will generate immediate tax benefits for him.Ahmad, who normally itemizes his deductions, is in the 28% marginal tax bracket.If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment, what treatment normally would be most beneficial to Ahmad and by how much will Ahmad's tax liability decline because of the investment?