Question 1

Generally, income from an active trade or business is subject to the 3.8% net investment income tax.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Miley, a single taxpayer, plans on reporting $29,700 of taxable income this year (all of her income is from a part-time job). She is considering applying for a second part-time job that would give her an additional $10,000 of taxable income. By how much will the income from the second job increase her tax liability? (Use the tax rate schedules)

Accepted Answer

A)  $1,000 
B)  $1,200 
C)  $1,300 
D)  $2,400 
A)  $1,000 
B)  $1,200 
C)  $1,300 
D)  $2,400

Question 4

Which of the following taxpayers (all age 40) are required to file a return?

Accepted Answer

A)  Jenny and Jim. 
B)  Allen. 
C)  Timmy. 
D)  None of the choices are correct. 
A)  Jenny and Jim. 
B)  Allen. 
C)  Timmy. 
D)  None of the choices are correct.

Question 5

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Accepted Answer

A)  Head of Household. 
B)  Qualifying Widow or Widower. 
C)  Married Filing Separately. 
D)  Single. 
E)  All of the these are taxpayer filing statuses 
A)  Head of Household. 
B)  Qualifying Widow or Widower. 
C)  Married Filing Separately. 
D)  Single. 
E)  All of the these are taxpayer filing statuses

Question 6

Taxpayers are not allowed to deduct the standard deduction for alternative minimum tax purposes.

Accepted Answer

A) True 
 B)False

Question 7

Due to the alternative minimum tax rate structure, a taxpayer with a large amount of long-term capital gains may be susceptible to the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements regarding the child tax credit is false?

Accepted Answer

A)  The child for whom the credit is claimed must be under the age of 15 at the end of the year. 
B)  The credit is subject to phase-out based on the taxpayer's AGI. 
C)  The full credit for a child who qualifies is $2,000. 
D)  The child for whom the full credit is claimed must meet the definition of a qualifying child. 
A)  The child for whom the credit is claimed must be under the age of 15 at the end of the year. 
B)  The credit is subject to phase-out based on the taxpayer's AGI. 
C)  The full credit for a child who qualifies is $2,000. 
D)  The child for whom the full credit is claimed must meet the definition of a qualifying child.

Question 9

Rhianna and Jay are married filing jointly in 2018. They have six children under age 17 for whom they may claim the child tax credit. Their AGI was $419,400. What amount of child tax credit may they claim on their 2018 tax return?

Accepted Answer

A)  $12,000 
B)  $11,050 
C)  $11,000 
D)  $6,000 
A)  $12,000 
B)  $11,050 
C)  $11,000 
D)  $6,000

Question 10

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 11

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2018. All of the income is ordinary. What is her tax liability for the year? (Use Tax Rate Schedule.)

Accepted Answer

$240,230, computed using the s

Question 12

Which of the following statements about estimated tax payments and underpayment penalties is true for individual taxpayers?

Accepted Answer

A)  Taxpayers who have paid their full tax liability by the original tax return due date are protected from underpayment penalties. 
B)  Taxpayers who have paid their full tax liability by the extended tax return due date are protected from underpayment penalties. 
C)  Taxpayers who have uneven income streams can pay estimated tax quarterly in uneven amounts and not be susceptible to underpayment penalties. 
D)  Taxpayers who have paid their required amount of estimated tax, even though not on time, are protected from underpayment penalties. 
A)  Taxpayers who have paid their full tax liability by the original tax return due date are protected from underpayment penalties. 
B)  Taxpayers who have paid their full tax liability by the extended tax return due date are protected from underpayment penalties. 
C)  Taxpayers who have uneven income streams can pay estimated tax quarterly in uneven amounts and not be susceptible to underpayment penalties. 
D)  Taxpayers who have paid their required amount of estimated tax, even though not on time, are protected from underpayment penalties.

Question 13

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? (Exhibit 8-10)

Accepted Answer

A)  $0 
B)  $1,643 
C)  $3,461 
D)  $4,073 
E)  $5,716 
A)  $0 
B)  $1,643 
C)  $3,461 
D)  $4,073 
E)  $5,716

Question 14

Paul and Melissa plan on filing jointly in 2018. For the year, the couple reported taxable income of $130,000. What is their gross tax liability? (Use Tax Rate Schedule.)

Accepted Answer

$20,479, computed as

Question 15

Parents may claim a $2,000 child tax credit for a dependent child who is 22 years of age at the end of the year if the child is a full-time student.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Which of the following best describes the manner in which self-employed taxpayers may deduct self-employment taxes?

Accepted Answer

A)  Deduct employer portion from AGI. 
B)  Deduct entire amount from AGI. 
C)  Deduct employer portion for AGI. 
D)  Deduct entire amount for AGI. 
E)  No deduction. 
A)  Deduct employer portion from AGI. 
B)  Deduct entire amount from AGI. 
C)  Deduct employer portion for AGI. 
D)  Deduct entire amount for AGI. 
E)  No deduction.

Question 18

In 2018, Shawn's AGI is $170,000. He earned the income evenly throughout the year. He owed $29,890 in federal income tax and self-employment taxes of $2,590. Last year, he had a gross tax liability of $50,000. What is the minimum quarterly estimated tax payment Shawn must pay each quarter to avoid underpayment penalties for 2018?

Accepted Answer

$7,308.
An

Question 19

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

Accepted Answer

A) True 
 B)False

Question 20

Atlas earned $17,300 from his sole proprietorship in 2018. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

Accepted Answer

$1,222
Answer comput

Exam 8: Individual Income Tax Computation and Tax Credits

Generally, income from an active trade or business is subject to the 3.8% net investment income tax.

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

Which of the following taxpayers (all age 40) are required to file a return?

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Taxpayers are not allowed to deduct the standard deduction for alternative minimum tax purposes.

Due to the alternative minimum tax rate structure, a taxpayer with a large amount of long-term capital gains may be susceptible to the alternative minimum tax.

Which of the following statements regarding the child tax credit is false?

Rhianna and Jay are married filing jointly in 2018. They have six children under age 17 for whom they may claim the child tax credit. Their AGI was $419,400. What amount of child tax credit may they claim on their 2018 tax return?

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?

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2018. All of the income is ordinary. What is her tax liability for the year? (Use Tax Rate Schedule.)

Which of the following statements about estimated tax payments and underpayment penalties is true for individual taxpayers?

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? (Exhibit 8-10)

Paul and Melissa plan on filing jointly in 2018. For the year, the couple reported taxable income of $130,000. What is their gross tax liability? (Use Tax Rate Schedule.)

Parents may claim a $2,000 child tax credit for a dependent child who is 22 years of age at the end of the year if the child is a full-time student.

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

Which of the following best describes the manner in which self-employed taxpayers may deduct self-employment taxes?

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

Atlas earned $17,300 from his sole proprietorship in 2018. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, 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