Question 1

Which of the following tax credits is fully refundable?

Accepted Answer

A) American opportunity credit 
B) Dependent care credit 
C) Earned income credit 
D) None of these 
A) American opportunity credit 
B) Dependent care credit 
C) Earned income credit 
D) None of these

Question 2

Hester (age 17) is claimed as a dependent by his parents,Charlton and Abigail.In 2013,Hester received $10,000 of qualified dividends and he received $6,000 from a part time job.What is his taxable income for 2013?

Accepted Answer

A) $16,000 
B) $15,000 
C) $9,900 
D) $9,650 
A) $16,000 
B) $15,000 
C) $9,900 
D) $9,650

Question 3

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 4

Jamie is single.In 2013,she reported $100,000 of taxable income,including a long-term capital gain of $5,000.What is her gross tax liability,rounded to the nearest whole dollar amount (use the tax rate schedules) ?

Accepted Answer

A) $22,861 
B) $21,293 
C) $20,643 
D) $15,000 
A) $22,861 
B) $21,293 
C) $20,643 
D) $15,000

Question 5

Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500.Given just this information,what is her alternative minimum tax liability for the year?

Accepted Answer

A) $0 
B) $11,500 
C) $975 
D) $12,475 
A) $0 
B) $11,500 
C) $975 
D) $12,475

Question 6

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.The cap on Social Security taxes applies to the taxpayer even if the taxpayer had more than one employer.Employers withhold on the salary they individually pay so in the aggregate if the taxpayer earns more than the Social Security wage base limit via multiple jobs,there may be more withheld than the taxpayer is required to pay. 
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.The cap on Social Security taxes applies to the taxpayer even if the taxpayer had more than one employer.Employers withhold on the salary they individually pay so in the aggregate if the taxpayer earns more than the Social Security wage base limit via multiple jobs,there may be more withheld than the taxpayer is required to pay.

Question 7

The Olympians have three children.The kiddie tax applies to unearned income received by which of the following children?

Accepted Answer

A) Poseidon is a 20-year-old full-time student who does not support himself 
B) Demeter,a 23-year-old full-time student who supports herself with a job at a grocery store 
C) Zeus is 20 years old and not a student 
D) Two of these. 
E) None of thesE.Because Poseidon is under the age of 24,a full time student,and does not support himself,his income is subject to the kiddie tax. 
A) Poseidon is a 20-year-old full-time student who does not support himself 
B) Demeter,a 23-year-old full-time student who supports herself with a job at a grocery store 
C) Zeus is 20 years old and not a student 
D) Two of these. 
E) None of thesE.Because Poseidon is under the age of 24,a full time student,and does not support himself,his income is subject to the kiddie tax.

Question 8

Which of the following statements regarding the child and dependent care credit is false?

Accepted Answer

A) Taxpayers may claim a credit for only a portion of qualifying dependent care expenditures. 
B) If a taxpayer's income is too high,she will be ineligible to claim any child and dependent care credit. 
C) A single taxpayer must have earned income to claim any child and dependent care credit. 
D) A taxpayer is not eligible to claim the dependent care credit if any dependent relative provides the care.The dependent care credit is not fully phased out no matter the taxpayer's income level. 
A) Taxpayers may claim a credit for only a portion of qualifying dependent care expenditures. 
B) If a taxpayer's income is too high,she will be ineligible to claim any child and dependent care credit. 
C) A single taxpayer must have earned income to claim any child and dependent care credit. 
D) A taxpayer is not eligible to claim the dependent care credit if any dependent relative provides the care.The dependent care credit is not fully phased out no matter the taxpayer's income level.

Question 9

Which of the following does not affect the amount of the earned income credit?

Accepted Answer

A) Filing status 
B) Amount of credit taken in previous years 
C) Number of qualifying children 
D) Taxpayer's AGI 
A) Filing status 
B) Amount of credit taken in previous years 
C) Number of qualifying children 
D) Taxpayer's AGI

Question 10

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Accepted Answer

A) The dividend will be taxed at a 15% tax rate. 
B) The dividend will be taxed at a 20% tax rate. 
C) The entire dividend will be taxed at either 15% or the entire dividend will be taxed at 20% depending on Harrison's marginal ordinary income tax rate. 
D) None of these.Depending on Harrison's marginal ordinary income tax rate,the dividend may be taxed at 0%,15%,20% orsomecombination. 
A) The dividend will be taxed at a 15% tax rate. 
B) The dividend will be taxed at a 20% tax rate. 
C) The entire dividend will be taxed at either 15% or the entire dividend will be taxed at 20% depending on Harrison's marginal ordinary income tax rate. 
D) None of these.Depending on Harrison's marginal ordinary income tax rate,the dividend may be taxed at 0%,15%,20% orsomecombination.

Question 11

The taxable income levels in the married filing jointly tax rate schedule are _______ those in the married filing separately schedule.

Accepted Answer

A) the same as 
B) double 
C) half the amount of 
D) none of these 
A) the same as 
B) double 
C) half the amount of 
D) none of these

Question 12

Which of the following statements regarding the AMT exemption amounts is not true?

Accepted Answer

A) The amount of the exemption depends on the taxpayer's filing status. 
B) The exemption amount is completely phased-out for high income taxpayers. 
C) Taxpayers must choose whether they will claim the exemption or itemize deductions. 
D) None of these statements is false (all of these statements are true) .Taxpayers claim the exemption if their income is not too high.The exemption has nothing to do with itemized deductions. 
A) The amount of the exemption depends on the taxpayer's filing status. 
B) The exemption amount is completely phased-out for high income taxpayers. 
C) Taxpayers must choose whether they will claim the exemption or itemize deductions. 
D) None of these statements is false (all of these statements are true) .Taxpayers claim the exemption if their income is not too high.The exemption has nothing to do with itemized deductions.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Alton reported net income from his sole proprietorship of $90,000.To determine his self employment tax,he would multiply $90,000 by the self-employment tax rate.

Accepted Answer

A) True 
 B)False

Question 15

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

For alternative minimum tax purposes,taxpayers are required to add back the regular tax standard deduction amount for their filing status whether or not they itemized deductions for regular tax purposes.

Accepted Answer

A) True 
 B)False

Question 18

The lifetime learning credit can be used toward the cost of any course of instruction to acquire or improve a taxpayer's job skills,no matter the age of the taxpayer.

Accepted Answer

A) True 
 B)False

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

Which of the following could explain why large number of taxpayers are subject to (or could become subject to) AMT?

Accepted Answer

A) Regular tax rates have decreased since the AMT was enacted 
B) The AMT exemption amount is indexed to increase with inflation 
C) Property values are decreasing 
D) The personal and dependency exemption amounts are not increasing as fast as the AMT exemption is decreasing 
A) Regular tax rates have decreased since the AMT was enacted 
B) The AMT exemption amount is indexed to increase with inflation 
C) Property values are decreasing 
D) The personal and dependency exemption amounts are not increasing as fast as the AMT exemption is decreasing

Which of the following tax credits is fully refundable?

Hester (age 17) is claimed as a dependent by his parents,Charlton and Abigail.In 2013,Hester received $10,000 of qualified dividends and he received $6,000 from a part time job.What is his taxable income for 2013?

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

Jamie is single.In 2013,she reported $100,000 of taxable income,including a long-term capital gain of $5,000.What is her gross tax liability,rounded to the nearest whole dollar amount (use the tax rate schedules) ?

Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500.Given just this information,what is her alternative minimum tax liability for the year?

Which of the following statements regarding FICA taxes is true?

The Olympians have three children.The kiddie tax applies to unearned income received by which of the following children?

Which of the following statements regarding the child and dependent care credit is false?

Which of the following does not affect the amount of the earned income credit?

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

The taxable income levels in the married filing jointly tax rate schedule are _______ those in the married filing separately schedule.

Which of the following statements regarding the AMT exemption amounts is not true?

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

Alton reported net income from his sole proprietorship of $90,000.To determine his self employment tax,he would multiply $90,000 by the self-employment tax rate.

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

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

For alternative minimum tax purposes,taxpayers are required to add back the regular tax standard deduction amount for their filing status whether or not they itemized deductions for regular tax purposes.

The lifetime learning credit can be used toward the cost of any course of instruction to acquire or improve a taxpayer's job skills,no matter the age of the taxpayer.

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

Which of the following could explain why large number of taxpayers are subject to (or could become subject to) AMT?

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Tax Overview

Gross Income and Exclusions

Individual Deductions

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters

Exam 7: Individual Income Tax Computation and Tax Credits

Which of the following tax credits is fully refundable?

Hester (age 17) is claimed as a dependent by his parents,Charlton and Abigail.In 2013,Hester received $10,000 of qualified dividends and he received $6,000 from a part time job.What is his taxable income for 2013?

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

Jamie is single.In 2013,she reported $100,000 of taxable income,including a long-term capital gain of $5,000.What is her gross tax liability,rounded to the nearest whole dollar amount (use the tax rate schedules) ?

Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500.Given just this information,what is her alternative minimum tax liability for the year?

Which of the following statements regarding FICA taxes is true?

The Olympians have three children.The kiddie tax applies to unearned income received by which of the following children?

Which of the following statements regarding the child and dependent care credit is false?

Which of the following does not affect the amount of the earned income credit?

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

The taxable income levels in the married filing jointly tax rate schedule are _______ those in the married filing separately schedule.

Which of the following statements regarding the AMT exemption amounts is not true?

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

Alton reported net income from his sole proprietorship of $90,000.To determine his self employment tax,he would multiply $90,000 by the self-employment tax rate.

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

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

For alternative minimum tax purposes,taxpayers are required to add back the regular tax standard deduction amount for their filing status whether or not they itemized deductions for regular tax purposes.

The lifetime learning credit can be used toward the cost of any course of instruction to acquire or improve a taxpayer's job skills,no matter the age of the taxpayer.

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

Which of the following could explain why large number of taxpayers are subject to (or could become subject to) AMT?

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Tax Overview

Gross Income and Exclusions

Individual Deductions

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters