Question 1

The use of the earned income credit could result in a taxpayer receiving a refund even though he or she has not paid any income taxes.

Accepted Answer

A) True 
 B)False  True

Question 2

Daddy Warbucks is in the process of adopting Annie from a New York orphanage. He pays $5,000 in 2012, $7,000 in 2013, and $4,500 in 2014. Daddy Warbucks' AGI for 2014 is $165,000.
​
a. How much is the adoption credit that Daddy Warbucks may claim for 2014 if the adoption becomes final in 2014?
b. How much is the adoption credit that Daddy Warbucks may claim for 2014 if the adoption becomes final in 2015?
c. How much is the adoption credit that Daddy Warbucks may claim for 2014 if the adoption falls through and is never finalized?

Accepted Answer

a. $8,190. ($7,000 + $4,500), limited to ($13,190 - $5,000, claimed in 2013)
b. $7,000, the amount paid in 2013.
c. $7,000, the amount paid in 2013.

Question 3

The child and dependent care provisions:

Accepted Answer

A) Apply only to children under age 15. 
B) Are available only to single parents. 
C) Are available for spouses incapable of self-care. 
D) Are allowed only for taxpayers earning less than $43,000. 
A) Apply only to children under age 15. 
B) Are available only to single parents. 
C) Are available for spouses incapable of self-care. 
D) Are allowed only for taxpayers earning less than $43,000. C

Question 4

Rachel and Rob are married and living together in California. Their income is:
a. If Rachel files a separate return, how much income should she report?
b. If Rob and Rachel live in Texas, what should Rachel report as income?

Accepted Answer

a. 50% of Rob's salary, $60,000, plus 50

Question 5

Steve goes to Tri-State University and pays $40,000 in tuition. Steve works a part-time job to pay for his schooling and has an AGI of $17,000. How much is his American Opportunity Credit?

Accepted Answer

A) $2,000 
B) $2,500 
C) $4,000 
D) $1,000 
E) He does not qualify for the American Opportunity Credit. 
A) $2,000 
B) $2,500 
C) $4,000 
D) $1,000 
E) He does not qualify for the American Opportunity Credit.

Question 6

An individual may claim both a credit and an exclusion from income in connection with the adoption of an eligible child, but may not claim both a credit and an exclusion for the same expense.

Accepted Answer

A) True 
 B)False

Question 7

Lee and Pat are married taxpayers living in Louisiana. Lee earns wages of $40,000 and has $5,000 of dividend income from separate property. Lee and Pat have interest income from community property of $10,000. If Lee and Pat file separate income tax returns, what amount of income must be included on Lee's separate tax return?

Accepted Answer

A) $50,000 
B) $30,000 
C) $27,500 
D) $25,000 
E) None of the above 
A) $50,000 
B) $30,000 
C) $27,500 
D) $25,000 
E) None of the above

Question 8

A taxpayer with earned income of $50,000 is not eligible to claim the credit for child and dependent care expenses.

Accepted Answer

A) True 
 B)False

Question 9

A tax credit is allowed for qualified adoption expenses paid by taxpayers:

Accepted Answer

A) And an additional credit is allowed for qualified adoption expenses paid for by taxpayers' employers. 
B) And an income exclusion is allowed for qualified adoption expenses paid for by taxpayers' employers. 
C) And is available each year qualifying expenses are incurred. 
D) And is not subject to a phase-out based on adjusted gross income. 
A) And an additional credit is allowed for qualified adoption expenses paid for by taxpayers' employers. 
B) And an income exclusion is allowed for qualified adoption expenses paid for by taxpayers' employers. 
C) And is available each year qualifying expenses are incurred. 
D) And is not subject to a phase-out based on adjusted gross income.

Question 10

Robert and Mary file a joint tax return for 2014, with adjusted gross income of $30,000. Robert and Mary earned income of $20,000 and $12,000 respectively, during 2014. In order for Mary to be gainfully employed, they pay the following child care expenses for their 4-year-old son, John: What is the amount of the child and dependent care credit they should report on their tax return for 2014?

Accepted Answer

A) $270 
B) $459 
C) $650 
D) $729 
E) None of the above 
A) $270 
B) $459 
C) $650 
D) $729 
E) None of the above

Question 11

Taxpayers are required to wait until they file their tax return to receive the premium tax credit. ​

Accepted Answer

A) True 
 B)False

Question 12

Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?

Accepted Answer

$1,000, or $5,000 × 20%. Geri's earned i

Question 13

Which of the common deductions below are allowed for regular tax purposes but not for AMT purposes?

Accepted Answer

A) The interest deduction for up to $100,000 of home equity debt which is not used to purchase or improve part of a principal residence 
B) Cash charitable contributions 
C) Moving expenses 
D) IRAs 
A) The interest deduction for up to $100,000 of home equity debt which is not used to purchase or improve part of a principal residence 
B) Cash charitable contributions 
C) Moving expenses 
D) IRAs

Question 14

Which of the following types of income is not subject to the "kiddie tax?"

Accepted Answer

A) Interest income 
B) Dividend income 
C) Salary income 
D) Capital gains on stock sales 
E) All of the above are subject to the "kiddie tax" 
A) Interest income 
B) Dividend income 
C) Salary income 
D) Capital gains on stock sales 
E) All of the above are subject to the "kiddie tax"

Question 15

John graduates from high school in 2014 and enrolls in a private college in the fall. His parents pay $10,000 for his tuition and fees.
a. Assuming John's parents have AGI of $46,000, what is the American Opportunity credit they can claim for John? Explain.
b. Assuming John's parents have AGI of $175,000, what is the American Opportunity credit they can claim for John? Explain.

Accepted Answer

a. $2,500. John's parents qualify for th

Question 16

Richard has $30,000 of income from a country that imposes a 40-percent income tax and $30,000 of income from a country that imposes a 34- percent income tax. In addition to the foreign income, he has taxable income from U.S. sources of $120,000 and a U.S. tax liability, before credits, of $45,575. The amount of Richard's foreign tax credit is:

Accepted Answer

[($30,000 + $30,000) / $180,00

Question 17

Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives:
​
a. Marion pays $4,000 a year in day care costs. Her salary is $32,000.
b. Marion pays $8,000 a year in day care costs. Her salary is $80,000.

Accepted Answer

a. $780, 26% of $3,0

Question 18

Taxpayer Q has net taxable income of $30,000 from Country Y which imposes a 40 percent income tax. In addition to the income from Country Y, taxpayer Q has net taxable income from U.S. sources of $120,000, and U.S. tax liability, before the foreign tax credit, of $41,750. What is the amount of Q's foreign tax credit?

Accepted Answer

A) $2,400 
B) $8,350 
C) $12,000 
D) $30,000 
E) None of the above 
A) $2,400 
B) $8,350 
C) $12,000 
D) $30,000 
E) None of the above

Question 19

In all community property states, income from community property is community income.

Accepted Answer

A) True 
 B)False

Question 20

Bob and Carol file their tax returns using the married filing jointly status. Their AGI is $132,500. They have two children, ages 11 and 7. How much child tax credit can Bob and Carol claim for their two children?

Accepted Answer

A) $0 
B) $850 
C) $875 
D) $1,150 
E) None of the above is correct. 
A) $0 
B) $850 
C) $875 
D) $1,150 
E) None of the above is correct.

The use of the earned income credit could result in a taxpayer receiving a refund even though he or she has not paid any income taxes.

The child and dependent care provisions:

Rachel and Rob are married and living together in California. Their income is: a. If Rachel files a separate return, how much income should she report? b. If Rob and Rachel live in Texas, what should Rachel report as income?

Steve goes to Tri-State University and pays $40,000 in tuition. Steve works a part-time job to pay for his schooling and has an AGI of $17,000. How much is his American Opportunity Credit?

An individual may claim both a credit and an exclusion from income in connection with the adoption of an eligible child, but may not claim both a credit and an exclusion for the same expense.

A taxpayer with earned income of $50,000 is not eligible to claim the credit for child and dependent care expenses.

A tax credit is allowed for qualified adoption expenses paid by taxpayers:

Taxpayers are required to wait until they file their tax return to receive the premium tax credit.

Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?

Which of the common deductions below are allowed for regular tax purposes but not for AMT purposes?

Which of the following types of income is not subject to the "kiddie tax?"

Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives: a. Marion pays $4,000 a year in day care costs. Her salary is $32,000. b. Marion pays $8,000 a year in day care costs. Her salary is $80,000.

In all community property states, income from community property is community income.

Bob and Carol file their tax returns using the married filing jointly status. Their AGI is $132,500. They have two children, ages 11 and 7. How much child tax credit can Bob and Carol claim for their two children?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 6: Credits and Special Taxes

The use of the earned income credit could result in a taxpayer receiving a refund even though he or she has not paid any income taxes.

The child and dependent care provisions:

Rachel and Rob are married and living together in California. Their income is: a. If Rachel files a separate return, how much income should she report? b. If Rob and Rachel live in Texas, what should Rachel report as income?

Steve goes to Tri-State University and pays $40,000 in tuition. Steve works a part-time job to pay for his schooling and has an AGI of $17,000. How much is his American Opportunity Credit?

An individual may claim both a credit and an exclusion from income in connection with the adoption of an eligible child, but may not claim both a credit and an exclusion for the same expense.

A taxpayer with earned income of $50,000 is not eligible to claim the credit for child and dependent care expenses.

A tax credit is allowed for qualified adoption expenses paid by taxpayers:

Taxpayers are required to wait until they file their tax return to receive the premium tax credit. ​

Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?

Which of the common deductions below are allowed for regular tax purposes but not for AMT purposes?

Which of the following types of income is not subject to the "kiddie tax?"

Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives: ​ a. Marion pays $4,000 a year in day care costs. Her salary is $32,000. b. Marion pays $8,000 a year in day care costs. Her salary is $80,000.

In all community property states, income from community property is community income.

Bob and Carol file their tax returns using the married filing jointly status. Their AGI is $132,500. They have two children, ages 11 and 7. How much child tax credit can Bob and Carol claim for their two children?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Taxpayers are required to wait until they file their tax return to receive the premium tax credit.

Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives: a. Marion pays $4,000 a year in day care costs. Her salary is $32,000. b. Marion pays $8,000 a year in day care costs. Her salary is $80,000.