Question 1

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 2

Angelena files as a head of household.In 2013,she reported $50,000 of taxable income,including a $10,000 qualified dividend.What is her gross tax liability,rounded to the nearest whole dollar amount (use the tax rate schedules) ?

Accepted Answer

A) $5,363 
B) $5,573 
C) $7,500 
D) $6,863 
A) $5,363 
B) $5,573 
C) $7,500 
D) $6,863

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Regular taxable income is the starting point for determining the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 5

Depending on the year,the original (unextended) due date for an individual's tax return may be before April 15.

Accepted Answer

A) True 
 B)False

Question 6

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Accepted Answer

A) Federal short-term interest rate. 
B) Federal short-term interest rate plus three percentage points. 
C) Federal long-term interest rate plus six percentage points. 
D) Zero.The government does not pay interest on overpayments.The penalty rate is the federal short-term interest rate plus 3 percentage points. 
A) Federal short-term interest rate. 
B) Federal short-term interest rate plus three percentage points. 
C) Federal long-term interest rate plus six percentage points. 
D) Zero.The government does not pay interest on overpayments.The penalty rate is the federal short-term interest rate plus 3 percentage points.

Question 7

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Keith and Nicole are married filing joint with two daughters who qualify as dependents.Their gross income for 2013 is $21,000.Are they required to file a tax return? How do you know this without memorizing the gross income thresholds? In 2013,the standard deduction for taxpayers filing a joint return is $12,200 and the personal exemption is $3,900.

Accepted Answer

Yes,Keith

Question 10

Employee status is always better than independent contractor status for a taxpayer because the employee is responsible for paying the employee portion of the FICA taxes.

Accepted Answer

A) True 
 B)False

Question 11

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 these. 
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 these.

Question 12

The AMT exemption amount is phased-out for high income taxpayers.

Accepted Answer

A) True 
 B)False

Question 13

Trudy is Jocelyn's friend.Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work.During the year,Jocelyn paid Trudy $4,000 to care for her son.What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,000?

Accepted Answer

A) $0 
B) $810 
C) $1,080 
D) $3,000 
A) $0 
B) $810 
C) $1,080 
D) $3,000

Question 14

Carolyn has an AGI of $38,000 (all from earned income) ,two qualifying children,and is filing as a head of household.What amount of earned income credit is she entitled to?

Accepted Answer

A) $0 
B) $1,061 
C) $3,860 
D) $4,311 
E) $5,372 
A) $0 
B) $1,061 
C) $3,860 
D) $4,311 
E) $5,372

Question 15

Cassy reports a gross tax liability of $1,000.She also claims $400 of nonrefundable personal credits,$700 of refundable personal credits,and $200 of business credits.What is Cassy's tax refund or tax liability due after applying the credits?

Accepted Answer

A) $1,000 taxes payable 
B) $0 refund or taxes payable 
C) $700 refund 
D) $300 refund 
A) $1,000 taxes payable 
B) $0 refund or taxes payable 
C) $700 refund 
D) $300 refund

Question 16

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

Question 17

Employees are allowed to deduct a portion of the FICA taxes they pay.

Accepted Answer

A) True 
 B)False

Question 18

Employees are not allowed to deduct FICA taxes they pay.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements regarding the earned income credit is true?

Accepted Answer

A) It is a nonrefundable credit 
B) It is possible that a taxpayer with more earned income may receive more credit than a taxpayer with less earned income 
C) A 70-year-old taxpayer with no dependents can qualify for the credit in certain circumstances 
D) A taxpayer whose only source of income is interest from corporate bonds is eligible for the credit 
A) It is a nonrefundable credit 
B) It is possible that a taxpayer with more earned income may receive more credit than a taxpayer with less earned income 
C) A 70-year-old taxpayer with no dependents can qualify for the credit in certain circumstances 
D) A taxpayer whose only source of income is interest from corporate bonds is eligible for the credit

Question 20

In 2013,Maia (who files as a head of household) reported regular taxable income of $115,000.She itemized her deductions,deducting $8,000 in charitable contributions and $3,000 in state income taxes.She claimed exemptions for herself and her son,Hermes, ($3,900 each) .What is Maia's alternative minimum taxable income?

Accepted Answer

A) $118,000 
B) $126,000 
C) $133,800 
D) $125,800 
A) $118,000 
B) $126,000 
C) $133,800 
D) $125,800

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

Angelena files as a head of household.In 2013,she reported $50,000 of taxable income,including a $10,000 qualified dividend.What is her gross tax liability,rounded to the nearest whole dollar amount (use the tax rate schedules) ?

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

Regular taxable income is the starting point for determining the alternative minimum tax.

Depending on the year,the original (unextended) due date for an individual's tax return may be before April 15.

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

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

Employee status is always better than independent contractor status for a taxpayer because the employee is responsible for paying the employee portion of the FICA taxes.

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

The AMT exemption amount is phased-out for high income taxpayers.

Trudy is Jocelyn's friend.Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work.During the year,Jocelyn paid Trudy $4,000 to care for her son.What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,000?

Carolyn has an AGI of $38,000 (all from earned income) ,two qualifying children,and is filing as a head of household.What amount of earned income credit is she entitled to?

Cassy reports a gross tax liability of $1,000.She also claims $400 of nonrefundable personal credits,$700 of refundable personal credits,and $200 of business credits.What is Cassy's tax refund or tax liability due after applying the credits?

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

Employees are allowed to deduct a portion of the FICA taxes they pay.

Employees are not allowed to deduct FICA taxes they pay.

Which of the following statements regarding the earned income credit is true?

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

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Exam 7: Individual Income Tax Computation and Tax Credits

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

Angelena files as a head of household.In 2013,she reported $50,000 of taxable income,including a $10,000 qualified dividend.What is her gross tax liability,rounded to the nearest whole dollar amount (use the tax rate schedules) ?

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

Regular taxable income is the starting point for determining the alternative minimum tax.

Depending on the year,the original (unextended) due date for an individual's tax return may be before April 15.

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

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

Employee status is always better than independent contractor status for a taxpayer because the employee is responsible for paying the employee portion of the FICA taxes.

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

The AMT exemption amount is phased-out for high income taxpayers.

Trudy is Jocelyn's friend.Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work.During the year,Jocelyn paid Trudy $4,000 to care for her son.What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,000?

Carolyn has an AGI of $38,000 (all from earned income) ,two qualifying children,and is filing as a head of household.What amount of earned income credit is she entitled to?

Cassy reports a gross tax liability of $1,000.She also claims $400 of nonrefundable personal credits,$700 of refundable personal credits,and $200 of business credits.What is Cassy's tax refund or tax liability due after applying the credits?

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

Employees are allowed to deduct a portion of the FICA taxes they pay.

Employees are not allowed to deduct FICA taxes they pay.

Which of the following statements regarding the earned income credit is true?

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