Question 1

The wage base for which of the following taxes is capped?

Accepted Answer

A)  Federal income 
B)  Social Security 
C)  Medicare 
D)  Alternative minimum 
A)  Federal income 
B)  Social Security 
C)  Medicare 
D)  Alternative minimum B

Question 2

During 2016, Montoya (age 15) received $2,200 from a corporate bond. He also received $600 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

Accepted Answer

A)  $0 
B)  $2,200 
C)  $2,800 
D)  $1,750 
A)  $0 
B)  $2,200 
C)  $2,800 
D)  $1,750 D

Question 3

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2016. All of the income is ordinary. What is her tax liability for the year?

Accepted Answer

$250,002, computed using the single tax rate schedule as follows:
Explanation: $120,529.75 + 39.6% × ($742,000 - $415,050)

Question 4

Rhianna and Jay are married filing jointly in 2016. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2016 tax return?

Accepted Answer

A)  $5,300 
B)  $6,000 
C)  $12,000 
D)  $4,000 
A)  $5,300 
B)  $6,000 
C)  $12,000 
D)  $4,000

Question 5

To qualify for the earned income credit, the taxpayer must have a qualified dependent.

Accepted Answer

A) True 
 B)False

Question 6

In certain circumstances a child with very little income may have at least a portion of their income taxed at the parents' marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements accurately describes the alternative minimum tax rate(s)?

Accepted Answer

A)  The top AMT marginal rate is higher than the top regular tax marginal tax rate. 
B)  The AMT rates represent a progressive tax rate structure. 
C)  The AMT rate is the same rate for all taxpayers. 
D)  None of the above. 
A)  The top AMT marginal rate is higher than the top regular tax marginal tax rate. 
B)  The AMT rates represent a progressive tax rate structure. 
C)  The AMT rate is the same rate for all taxpayers. 
D)  None of the above.

Question 8

John and Sally pay Janet (Sally's older sister) to watch John and Sally's child Dexter during the day. Janet cares for Dexter in her home. John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter.

Accepted Answer

A) True 
 B)False

Question 9

Happy, Sleepy, Grumpy, and Doc all did not make adequate estimated payments. Which of them will not owe underpayment penalties for 2016 given the following information? $$\begin{array} { | l | r | r | r | } 
\hline & \text { Tax fablity } & \text { Tax liablity } & \text { Tax liability } \
& 2016 & 2015 & \mathbf { 2 0 1 4 } \
\hline \text { Happy } &\$2,200&\$0&\$500\
\hline \text { Sleepy } & \$ 1,500 & \$500 & \$ 700 \
\hline \text { Grumpy } & \$ 1,200 & \$ 200 & \$ 0 \
\hline \text { Doc } & \$ 800 & \$ 1,100 & \$ 1,001 \
\hline
\end{array}$$

Accepted Answer

A)  Happy 
B)  Sleepy 
C)  Grumpy 
D)  Doc 
E)  Two of the above
F) None of the above 
A)  Happy 
B)  Sleepy 
C)  Grumpy 
D)  Doc 
E)  Two of the above
F) None of the above

Question 10

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year, which of the following statements regarding FICA and self-employment taxes is most accurate?

Accepted Answer

A)  The Social Security limit applies to the salary but not to the self-employment income. 
B)  The Social Security limit applies to the self-employment income but not to the salary. 
C)  Salary is first applied against the Social Security limit and then self-employment income is applied against the Social Security limit. 
D)  Self-employment income is first applied against the Social Security limit and then salary is applied against the Social Security limit. 
A)  The Social Security limit applies to the salary but not to the self-employment income. 
B)  The Social Security limit applies to the self-employment income but not to the salary. 
C)  Salary is first applied against the Social Security limit and then self-employment income is applied against the Social Security limit. 
D)  Self-employment income is first applied against the Social Security limit and then salary is applied against the Social Security limit.

Question 11

Both the width (or range) of the tax brackets (the amount of income taxed at a particular rate) in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate) vary by filing status.

Accepted Answer

A) True 
 B)False

Question 12

Henry and Janice are married and file jointly. They have an AGI (and modified AGI) of $290,000, which includes $90,000 of salary, $170,000 of active business income, $10,000 of interest income, $15,000 of dividends, and $5,000 of long-term capital gains. What are Henry and Janice's net investment income tax liability this year, rounded to the nearest whole dollar amount?

Accepted Answer

$1,140
Explanation: The tax is

Question 13

Which of the following is not one of the general tax credit categories?

Accepted Answer

A)  Nonrefundable personal 
B)  Refundable personal 
C)  Business 
D)  Refundable business 
A)  Nonrefundable personal 
B)  Refundable personal 
C)  Business 
D)  Refundable business

Question 14

Which of the following statements regarding FICA taxes is true?

Accepted Answer

A)  Low income employees are not required to pay FICA taxes. 
B)  An employee who has two different employers during the year may be entitled to a tax credit for overpaid FICA taxes. 
C)  The maximum amount of Medicare taxes an employee is required to pay is capped each year but the maximum amount of Social Security taxes is not. 
D)  The wage base limit for Social Security taxes depends on the taxpayer's filing status. 
A)  Low income employees are not required to pay FICA taxes. 
B)  An employee who has two different employers during the year may be entitled to a tax credit for overpaid FICA taxes. 
C)  The maximum amount of Medicare taxes an employee is required to pay is capped each year but the maximum amount of Social Security taxes is not. 
D)  The wage base limit for Social Security taxes depends on the taxpayer's filing status.

Question 15

Selene made $54,300 in 2016 working at the local burger joint, Moon Café. How much should her employer withhold from her paycheck for FICA taxes if the calculation is made correctly?

Accepted Answer

$4,154
Exp

Question 16

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements regarding late filing penalties is true?

Accepted Answer

A)  If a taxpayer fails to file a tax return, the late filing penalty will continue to grow until the taxpayer files the tax return. 
B)  The amount of the late filing penalty is the same for both fraudulent failure to file and non fraudulent failure to file. 
C)  Taxpayers who owe no tax as of the due date of their tax returns are not subject to late filing penalties even if they file late. 
D)  None of the above. 
A)  If a taxpayer fails to file a tax return, the late filing penalty will continue to grow until the taxpayer files the tax return. 
B)  The amount of the late filing penalty is the same for both fraudulent failure to file and non fraudulent failure to file. 
C)  Taxpayers who owe no tax as of the due date of their tax returns are not subject to late filing penalties even if they file late. 
D)  None of the above.

Question 18

The amount of expenditures eligible for the child and dependent care credit is the least of three amounts. Which of the following is not one of those amounts?

Accepted Answer

A)  The total amount of child and dependent care expenditures for the year 
B)  $3,000 for one qualifying person or $6,000 for two or more qualifying persons 
C)  The dependent's earned income for the year 
D)  The taxpayer's earned income for the year 
A)  The total amount of child and dependent care expenditures for the year 
B)  $3,000 for one qualifying person or $6,000 for two or more qualifying persons 
C)  The dependent's earned income for the year 
D)  The taxpayer's earned income for the year

Question 19

Which of the following taxpayers (all age 40) are required to file a return? $\begin{array}{|rr|r|r|r|r|r|}
\hline &&&\text {April}\
\hline \text { Sunday } & \text { Monday } & \text { Tuescday } & \text { Weanesday } & \text { Thursday } & \text { Fricay } & \text { Saturday } \
\hline & & & & & & 1 \
\hline 2 & 3 & 4 & 5 & 6 & 7 & 8 \
\hline 9 & 10 & 11 & 12 & 13 & 14 & 15 \
\hline&17 & \
&\text { National } & \
&\text { Accountants } & \
16&\text { Day } & 18&19&20&21&22 \
&\text { (Federal } & \
&\text { Holiday) } & \
\hline
\end{array}$

Accepted Answer

A)  Jenny and Jim 
B)  Allen 
C)  Timmy 
D)  None of the above 
A)  Jenny and Jim 
B)  Allen 
C)  Timmy 
D)  None of the above

Question 20

Generally, income from an active trade or business is subject to the 3.8% net investment income tax.

Accepted Answer

A) True 
 B)False

The wage base for which of the following taxes is capped?

During 2016, Montoya (age 15) received $2,200 from a corporate bond. He also received $600 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2016. All of the income is ordinary. What is her tax liability for the year?

Rhianna and Jay are married filing jointly in 2016. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2016 tax return?

To qualify for the earned income credit, the taxpayer must have a qualified dependent.

In certain circumstances a child with very little income may have at least a portion of their income taxed at the parents' marginal tax rate.

Which of the following statements accurately describes the alternative minimum tax rate(s)?

John and Sally pay Janet (Sally's older sister) to watch John and Sally's child Dexter during the day. Janet cares for Dexter in her home. John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter.

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year, which of the following statements regarding FICA and self-employment taxes is most accurate?

Both the width (or range) of the tax brackets (the amount of income taxed at a particular rate) in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate) vary by filing status.

Which of the following is not one of the general tax credit categories?

Which of the following statements regarding FICA taxes is true?

Selene made $54,300 in 2016 working at the local burger joint, Moon Café. How much should her employer withhold from her paycheck for FICA taxes if the calculation is made correctly?

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Which of the following statements regarding late filing penalties is true?

The amount of expenditures eligible for the child and dependent care credit is the least of three amounts. Which of the following is not one of those amounts?

Which of the following taxpayers (all age 40) are required to file a return? April Sunday Monday Tuescday Weanesday Thursday Fricay Saturday 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 17 National Accountants 16 Day 18 19 20 21 22 (Federal Holiday)

Generally, income from an active trade or business is subject to the 3.8% net investment income tax.

An Introduction to Tax

Tax Compliance , the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S: Corporations

Filters

Exam 8: Individual Income Tax Computation and Tax Credits

The wage base for which of the following taxes is capped?

During 2016, Montoya (age 15) received $2,200 from a corporate bond. He also received $600 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2016. All of the income is ordinary. What is her tax liability for the year?

Rhianna and Jay are married filing jointly in 2016. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2016 tax return?

To qualify for the earned income credit, the taxpayer must have a qualified dependent.

In certain circumstances a child with very little income may have at least a portion of their income taxed at the parents' marginal tax rate.

Which of the following statements accurately describes the alternative minimum tax rate(s)?

John and Sally pay Janet (Sally's older sister) to watch John and Sally's child Dexter during the day. Janet cares for Dexter in her home. John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter.

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year, which of the following statements regarding FICA and self-employment taxes is most accurate?

Both the width (or range) of the tax brackets (the amount of income taxed at a particular rate) in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate) vary by filing status.

Which of the following is not one of the general tax credit categories?

Which of the following statements regarding FICA taxes is true?

Selene made $54,300 in 2016 working at the local burger joint, Moon Café. How much should her employer withhold from her paycheck for FICA taxes if the calculation is made correctly?

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Which of the following statements regarding late filing penalties is true?

The amount of expenditures eligible for the child and dependent care credit is the least of three amounts. Which of the following is not one of those amounts?

Which of the following taxpayers (all age 40) are required to file a return? April Sunday Monday Tuescday Weanesday Thursday Fricay Saturday 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 17 National Accountants 16 Day 18 19 20 21 22 (Federal Holiday)

Generally, income from an active trade or business is subject to the 3.8% net investment income tax.

An Introduction to Tax

Tax Compliance , the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S: Corporations

Filters