Question 1

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. C

Question 2

Harmony was self-employed for the first half of 2016, earning $18,000 of Schedule C (business) net income. During the second half of the year, she began working as an employee and earned $38,000 in salary. What amount of self-employment taxes is Harmony required to pay?

Free

(Short Answer)

4.7/5

(71)

Question 2

Correct Answer:

Verified

$2,543
Explanation: Answer computed as follows:

Accepted Answer

$2,543
Explanation: Answer computed as follows:

Question 3

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?

Accepted Answer

A) Happy 
B) Sleepy 
C) Grumpy 
D) Doc 
E) Two of the above 
A) Happy 
B) Sleepy 
C) Grumpy 
D) Doc 
E) Two of the above E

Question 4

Due to the alternative minimum tax rate structure, timing tax planning strategies are not effective under the alternative minimum tax system.

Accepted Answer

A) True 
 B)False

Question 5

For married couples, the Social Security wage base limitation applies separately to each spouse.

Accepted Answer

A) True 
 B)False

Question 6

Lexa worked as an employee during the first half of the year earning $65,000 of salary. Lexa's employer withheld $4,030 of Social Security tax, $943 of Medicare tax, and $0 of .9 percent additional Medicare tax. In the second half of the year, she was self-employed and she reported $180,000 of self-employment income on her Schedule
C.What amount of self-employment taxes is Lexa required to pay?

Accepted Answer

$11,736.
Explanation

Question 7

Asteria earned a $25,500 salary as an employee in 2016. How much should her employer have withheld from her paycheck for FICA taxes? (rounded to the nearest whole dollar amount)

Accepted Answer

A) $370 
B) $1,581 
C) $1,951 
D) $3,902 
A) $370 
B) $1,581 
C) $1,951 
D) $3,902

Question 8

For alternative minimum tax purposes, taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not true of the American opportunity credit?

Accepted Answer

A) A taxpayer with multiple eligible dependents can claim a credit for each dependent's qualifying expenses 
B) The credit is available for students during their first four years of postsecondary education only 
C) It is phased out based on the taxpayer's AGI 
D) A taxpayer may not claim a credit unless the taxpayer pays a dependent's qualifying educational expenses 
A) A taxpayer with multiple eligible dependents can claim a credit for each dependent's qualifying expenses 
B) The credit is available for students during their first four years of postsecondary education only 
C) It is phased out based on the taxpayer's AGI 
D) A taxpayer may not claim a credit unless the taxpayer pays a dependent's qualifying educational expenses

Question 10

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 11

The child tax credit is subject to phase-out based on the taxpayer's AGI.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Sheryl's AGI is $250,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts? (assume she makes the required payments each quarter)

Accepted Answer

A) $46,861 
B) $48,722 
C) $51,547 
D) $53,594 
A) $46,861 
B) $48,722 
C) $51,547 
D) $53,594

Question 14

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 15

Sam is 30 years old. In 2016, he reported an AGI of $12,000, all from his job as a server at the local café. He is single and has no dependents. What amount of earned income credit may he claim in 2016?

Accepted Answer

$221
Expla

Question 16

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.AMT rates are 26% and 28% (higher rate for higher incomes).This represents a progressive tax rate structure. 
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.AMT rates are 26% and 28% (higher rate for higher incomes).This represents a progressive tax rate structure.

Question 17

Which of the following is not a true statement about the American opportunity credit (AOC) and lifetime learning credits?

Accepted Answer

A) A taxpayer may not report both an AOC and a lifetime learning credit on the same tax return 
B) Certain educational expenses qualify for both credits but taxpayers must claim one credit or the other for the expenditures (the taxpayer cannot claim both credits for the same expenditures) 
C) Taxpayers may choose to either (1) deduct qualifying education expenses of an individual as for AGI deductions or claim educational credits for the individual's expenses (but not both) 
D) The AGI phase-out threshold for phasing out the AOC is higher than the AGI phase-out threshold for the lifetime learning credit 
A) A taxpayer may not report both an AOC and a lifetime learning credit on the same tax return 
B) Certain educational expenses qualify for both credits but taxpayers must claim one credit or the other for the expenditures (the taxpayer cannot claim both credits for the same expenditures) 
C) Taxpayers may choose to either (1) deduct qualifying education expenses of an individual as for AGI deductions or claim educational credits for the individual's expenses (but not both) 
D) The AGI phase-out threshold for phasing out the AOC is higher than the AGI phase-out threshold for the lifetime learning credit

Question 18

Which of the following items is not added back to regular taxable income in computing alternative minimum taxable income?

Accepted Answer

A) Home mortgage interest expense 
B) Real property taxes 
C) Tax exempt interest from a private activity bond issued in 2007 
D) Miscellaneous itemized deductions in excess of the 2% floor 
A) Home mortgage interest expense 
B) Real property taxes 
C) Tax exempt interest from a private activity bond issued in 2007 
D) Miscellaneous itemized deductions in excess of the 2% floor

Question 19

Long-term capital gains, dividends, and taxable interest income are all taxed at preferential rates.

Accepted Answer

A) True 
 B)False

Question 20

Assume Georgianne underpaid her estimated tax liability by $150 in the first quarter, $500 in the second quarter, $400 in the third quarter, and $200 in the fourth quarter. Calculate her underpayment penalty for the year, assuming the federal short-term interest rate is five percent.

Accepted Answer

$25 ($3 + $10 + $8 +

Exam 8: Individual Income Tax Computation and Tax Credits

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

Harmony was self-employed for the first half of 2016, earning $18,000 of Schedule C (business) net income. During the second half of the year, she began working as an employee and earned $38,000 in salary. What amount of self-employment taxes is Harmony required to pay?

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?

Due to the alternative minimum tax rate structure, timing tax planning strategies are not effective under the alternative minimum tax system.

For married couples, the Social Security wage base limitation applies separately to each spouse.

Asteria earned a $25,500 salary as an employee in 2016. How much should her employer have withheld from her paycheck for FICA taxes? (rounded to the nearest whole dollar amount)

For alternative minimum tax purposes, taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Which of the following is not true of the American opportunity credit?

Which of the following statements regarding FICA taxes is true?

The child tax credit is subject to phase-out based on the taxpayer's AGI.

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.

Sheryl's AGI is $250,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts? (assume she makes the required payments each quarter)

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?

Sam is 30 years old. In 2016, he reported an AGI of $12,000, all from his job as a server at the local café. He is single and has no dependents. What amount of earned income credit may he claim in 2016?

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

Which of the following is not a true statement about the American opportunity credit (AOC) and lifetime learning credits?

Which of the following items is not added back to regular taxable income in computing alternative minimum taxable income?

Long-term capital gains, dividends, and taxable interest income are all taxed at preferential rates.

Assume Georgianne underpaid her estimated tax liability by $150 in the first quarter, $500 in the second quarter, $400 in the third quarter, and $200 in the fourth quarter. Calculate her underpayment penalty for the year, assuming the federal short-term interest rate is five percent.

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 Deductions

Investments

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters