Exam 8: Individual Income Tax Computation and Tax Credits

Kaelyn's mother, Judy, looks after Kaelyn's four-year-old twins so Kaelyn can go to work (she drops off and picks up the twins from Judy's home every day). Since Judy is a relative, Kaelyn made sure, for tax purposes, to pay her mother the going rate for child care ($6,300 for the year). What is the amount of Kaelyn's child and dependent care credit if her AGI for the year was $36,000? (Exhibit 8-9)

Which of the following statements regarding credits is correct?

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

Jerusha is married and she files a separate tax return in 2018. She claimed the standard deduction for regular tax purposes ($12,000). She had no other adjustments. Her regular taxable income was $67,800. What is Jerusha's AMTI?

Hera wants to reduce her income tax liability by shifting some of her income to her 10-year-old daughter (a dependent), Athena. Last year, Hera gifted corporate bonds to Athena. This year, Athena received $1,550 in interest income from the bonds. What amount of tax will Athena pay on the interest income?

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.

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

Which of the following tax credits is fully refundable?

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? (Exhibit 8-9)

Johann had a gross tax liability of $22,508 in 2018, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2017. Calculate Johann's under/overpayment in each quarter for 2018 tax purposes.

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

The earned income credit is sometimes referred to as a negative income tax.

The alternative minimum tax base is typically ________ the regular income tax base.

Jamie is single. In 2018, 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)

Asteria earned a $25,500 salary as an employee in 2018. How much should her employer have withheld from her paycheck for FICA taxes? (Rounded to the nearest whole dollar amount).

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

Baker is single and earned $225,000 of salary as an employee in 2018. How much should his employer have withheld from his paycheck for FICA taxes (rounded to the nearest whole dollar amount)?

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 child and dependent care credit is true?