Question 1

Which of the following itemized deductions may not be deducted in computing the individual alternative minimum tax?

Accepted Answer

A) Qualified home mortgage interest 
B) State income taxes 
C) Medical expenses (limited to 10 percent of AGI) 
D) Charitable deductions 
E) All of the above 
A) Qualified home mortgage interest 
B) State income taxes 
C) Medical expenses (limited to 10 percent of AGI) 
D) Charitable deductions 
E) All of the above

Question 2

For the 2014 tax year, Sally, who is divorced, reported the following items of income: She maintains a household for herself and her 1-year-old son who qualifies as her dependent. What is the earned income credit available to her for 2014, using the tables?

Accepted Answer

A) $1,029 
B) $1,369 
C) $2,389 
D) $2,593 
E) None of the above 
A) $1,029 
B) $1,369 
C) $2,389 
D) $2,593 
E) None of the above

Question 3

a. Norm and Linda are married, file a joint return, and have one 5-year-old child. Their adjusted gross income is $136,000. What is their child credit for the current year?
b. If Norm and Linda had a 3-year-old as well as the 5-year-old and an 18-year-old from Linda's first marriage, what would their child credit be for the current year?
b. above, how many qualifying children do Norm and Linda have? Explain.
c. In

Accepted Answer

a. $0. They are above the phase-out limi

Question 4

Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $20,000 in 2014. What is their allowable child care credit?

Accepted Answer

A) $1,920 
B) $2,240 
C) $2,000 
D) $6,000 
E) $7,000 
A) $1,920 
B) $2,240 
C) $2,000 
D) $6,000 
E) $7,000

Question 5

In calculating the individual AMT, the individual alternative minimum tax liability may not exceed the regular tax liability of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 6

Most states are community property states.

Accepted Answer

A) True 
 B)False

Question 7

Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

Accepted Answer

A) The husband and wife must live apart for the entire year. 
B) The husband and wife must live apart for more than half the year. 
C) The husband and wife must be in the process of filing for a divorce. 
D) Only one of the spouses can be working and earning an income. 
E) None of the above. 
A) The husband and wife must live apart for the entire year. 
B) The husband and wife must live apart for more than half the year. 
C) The husband and wife must be in the process of filing for a divorce. 
D) Only one of the spouses can be working and earning an income. 
E) None of the above.

Question 8

Curly and Rita are married, file a joint return, and have two dependent children, ages 11 and 13. Their AGI is $117,000. By how much is their child credit reduced in 2014?

Accepted Answer

A) $0 
B) $300 
C) $350 
D) $700 
E) $7,000 
A) $0 
B) $300 
C) $350 
D) $700 
E) $7,000

Question 9

Salary earned by minors may be taxed at their parents' tax rate.

Accepted Answer

A) True 
 B)False

Question 10

Although the Alternative Minimum Tax (AMT) is meant to prevent high-income taxpayers from using tax shelters to avoid paying tax, why might married taxpayers with several children and jobs resulting in high unreimbursed employee business expenses find themselves paying AMT?

Accepted Answer

To compute the AMT, deductions for perso

Question 11

Which of the following is not an adjustment or tax preference item for 2014 for purposes of the individual alternative minimum tax (AMT)?

Accepted Answer

A) State income tax refunds 
B) Certain passive losses 
C) Miscellaneous itemized deductions 
D) Cash charitable contributions 
E) All of the above are adjustment or tax preference items for AMT. 
A) State income tax refunds 
B) Certain passive losses 
C) Miscellaneous itemized deductions 
D) Cash charitable contributions 
E) All of the above are adjustment or tax preference items for AMT.

Question 12

In 2014, the child tax credit available to married taxpayers filing jointly is phased out, beginning at:

Accepted Answer

A) $55,000 
B) $75,000 
C) $95,000 
D) $110,000 
A) $55,000 
B) $75,000 
C) $95,000 
D) $110,000

Question 13

Jeff is a stay-at-home father who earns $500 from odd jobs and takes care of his daughter. His wife, Michelle, is the bread-winner and brings in $60,000 of income a year. In addition to the care provided by Jeff, Michelle pays $4,500 in child care.
In the current year, how much are Jeff and Michelle's qualifying expenses for the child care credit?

Accepted Answer

$500. The qualifying expenses

Question 14

The alternative minimum tax must be paid only if the tentative minimum tax exceeds a taxpayer's regular tax liability.

Accepted Answer

A) True 
 B)False

Question 15

Maxine is a 29-year-old single mother. Her tax liability before credits is $1,000 and her earned income credit is $2,500. How much earned income credit will be refunded to Maxine? Explain.

Accepted Answer

$1,500. The full earned income

Question 16

Sheila and Jerry are married taxpayers with $600 of foreign tax withholding from the dividends in a mutual fund. They have enough foreign income from the mutual fund to claim the full $600 as a foreign tax credit. They are in the highest tax bracket, 35 percent, and they itemize deductions. Should they claim the foreign tax credit on the Form 1040 or a deduction for foreign taxes on their Schedule A? Why?

Accepted Answer

Sheila and Jerry should claim the $600 a

Question 17

The earned income credit:

Accepted Answer

A) Must be calculated on earned income as well as adjusted gross income in some cases. 
B) Can not exceed the amount of the tax liability. 
C) Is available only if the taxpayer has qualifying children. 
D) Is available to married taxpayers who file separate returns. 
A) Must be calculated on earned income as well as adjusted gross income in some cases. 
B) Can not exceed the amount of the tax liability. 
C) Is available only if the taxpayer has qualifying children. 
D) Is available to married taxpayers who file separate returns.

Question 18

The child tax credit is not available for children ages 17 and older.

Accepted Answer

A) True 
 B)False

Question 19

In 2014, Alex has income from wages of $16,000, adjusted gross income of $18,000, and tax liability of $300 before the earned income credit. What is the amount of Alex's earned income credit for 2014, assuming his 5-year-old dependent son lived with him for the full year?

Accepted Answer

A) $0 
B) $1,000 
C) $3,274 
D) $3,305 
E) None of the above 
A) $0 
B) $1,000 
C) $3,274 
D) $3,305 
E) None of the above

Question 20

Jenny adopts a Vietnamese orphan. The adoption takes three years, two trips to Vietnam, and becomes final in 2014. She pays $10,000 in 2012, $5,000 in 2013, and $5,000 in 2014 of qualified adoption expenses. She has AGI of $150,000.
a. What is the adoption credit Jenny can claim in 2014?
b. How much credit could she claim if the adoption falls through and is never finalized?

Accepted Answer

a. Jenny can claim the maximum credit of

Which of the following itemized deductions may not be deducted in computing the individual alternative minimum tax?

For the 2014 tax year, Sally, who is divorced, reported the following items of income: She maintains a household for herself and her 1-year-old son who qualifies as her dependent. What is the earned income credit available to her for 2014, using the tables?

Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $20,000 in 2014. What is their allowable child care credit?

In calculating the individual AMT, the individual alternative minimum tax liability may not exceed the regular tax liability of the taxpayer.

Most states are community property states.

Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

Curly and Rita are married, file a joint return, and have two dependent children, ages 11 and 13. Their AGI is $117,000. By how much is their child credit reduced in 2014?

Salary earned by minors may be taxed at their parents' tax rate.

Although the Alternative Minimum Tax (AMT) is meant to prevent high-income taxpayers from using tax shelters to avoid paying tax, why might married taxpayers with several children and jobs resulting in high unreimbursed employee business expenses find themselves paying AMT?

Which of the following is not an adjustment or tax preference item for 2014 for purposes of the individual alternative minimum tax (AMT)?

In 2014, the child tax credit available to married taxpayers filing jointly is phased out, beginning at:

The alternative minimum tax must be paid only if the tentative minimum tax exceeds a taxpayer's regular tax liability.

Maxine is a 29-year-old single mother. Her tax liability before credits is $1,000 and her earned income credit is $2,500. How much earned income credit will be refunded to Maxine? Explain.

The earned income credit:

The child tax credit is not available for children ages 17 and older.

In 2014, Alex has income from wages of $16,000, adjusted gross income of $18,000, and tax liability of $300 before the earned income credit. What is the amount of Alex's earned income credit for 2014, assuming his 5-year-old dependent son lived with him for the full year?

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

Which of the following itemized deductions may not be deducted in computing the individual alternative minimum tax?

For the 2014 tax year, Sally, who is divorced, reported the following items of income: She maintains a household for herself and her 1-year-old son who qualifies as her dependent. What is the earned income credit available to her for 2014, using the tables?

Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $20,000 in 2014. What is their allowable child care credit?

In calculating the individual AMT, the individual alternative minimum tax liability may not exceed the regular tax liability of the taxpayer.

Most states are community property states.

Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

Curly and Rita are married, file a joint return, and have two dependent children, ages 11 and 13. Their AGI is $117,000. By how much is their child credit reduced in 2014?

Salary earned by minors may be taxed at their parents' tax rate.

Although the Alternative Minimum Tax (AMT) is meant to prevent high-income taxpayers from using tax shelters to avoid paying tax, why might married taxpayers with several children and jobs resulting in high unreimbursed employee business expenses find themselves paying AMT?

Which of the following is not an adjustment or tax preference item for 2014 for purposes of the individual alternative minimum tax (AMT)?

In 2014, the child tax credit available to married taxpayers filing jointly is phased out, beginning at:

The alternative minimum tax must be paid only if the tentative minimum tax exceeds a taxpayer's regular tax liability.

Maxine is a 29-year-old single mother. Her tax liability before credits is $1,000 and her earned income credit is $2,500. How much earned income credit will be refunded to Maxine? Explain.

The earned income credit:

The child tax credit is not available for children ages 17 and older.

In 2014, Alex has income from wages of $16,000, adjusted gross income of $18,000, and tax liability of $300 before the earned income credit. What is the amount of Alex's earned income credit for 2014, assuming his 5-year-old dependent son lived with him for the full year?

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