Question 1

For alternative minimum tax purposes,taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements regarding credits is correct?

Accepted Answer

A) Business expenses are generally refundable credits. 
B) Business credits that are generated in one year but are not utilized in that year expire. 
C) Business credits that are generated in one year but are not utilized in that year may be carried forward to future years but not back to a prior year. 
D) Business credits that are generated in one year but are not utilized in that year may be carried back to the previous year and then forward to future years.

Question 3

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Accepted Answer

A) The dividend will be taxed at a 15 percent tax rate. 
B) The dividend will be taxed at a 20 percent tax rate. 
C) The entire dividend will be taxed at 15 percent or the entire dividend will be taxed at 20 percent,depending on Harrison's marginal ordinary income tax rate. 
D) None of the choices are correct.

Question 4

Which of the following is not true of the lifetime learning credit?

Accepted Answer

A) It is a nonrefundable credit. 
B) The credit can be claimed by taxpayers who have graduated from college and are taking professional training courses to improve their job skills. 
C) A taxpayer with multiple dependents can claim a credit for each dependent's qualifying expenses. 
D) The credit is subject to phase-out based on the taxpayer's AGI.

Question 5

Miley,a single taxpayer,plans on reporting $30,475 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

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Why would a taxpayer file a tax return if not required to do so?

Accepted Answer

A) to remain in favor with the IRS 
B) to claim a refund of taxes paid 
C) all taxpayers are required to file returns 
D) in order to claim the standard deduction

Question 8

The American opportunity credit and lifetime learning credit are available to all taxpayers regardless of their income level.

Accepted Answer

A) True 
 B)False

Question 9

Johann had a gross tax liability of $22,508 in 2019,but his employer only withheld taxes of $19,500.Johann's gross tax liability was $21,000 in 2018.Calculate Johann's under/overpayment in each quarter for 2019 tax purposes.

Accepted Answer

The answer of Johann had a gross tax liability of...

Question 10

Jocelyn,a single taxpayer,had $742,000 of taxable income in 2019.All of the income is ordinary.What is her tax liability for the year? (Use Tax rate schedules.)

Accepted Answer

The answer of Jocelyn,a single taxpayer,had $742,000 of taxable income...

Question 11

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

Accepted Answer

A) Federal income 
B) Social Security 
C) Medicare 
D) Alternative minimum

Question 12

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)

Accepted Answer

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

Question 13

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 14

Sam is 30 years old.In 2019,he reported an AGI of $12,000,all from his job as a server at the local café.He is single and has no dependents.What amount of earned income credit may he claim in 2019? Use Exhibit 8-10

Accepted Answer

The answer of Sam is 30 years old.In 2019,he reported...

Question 15

Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.

Accepted Answer

A) True 
 B)False

Question 16

Keith and Nicole are married filing jointly,with two daughters who qualify as dependents.Their gross income for 2019 is $25,500.Are they required to file a tax return? How do you know this without memorizing the gross income thresholds? In 2019,the standard deduction for taxpayers filing a joint return is $24,400.

Accepted Answer

The answer of Keith and Nicole are married filing jointly,with...

Question 17

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 18

The alternative minimum tax is the AMT base multiplied by the AMT rate.

Accepted Answer

A) True 
 B)False

Question 19

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year,which of the following statements regarding FICA and self-employment taxes is most accurate?

Accepted Answer

A) The Social Security limit applies to the salary but not to the self-employment income. 
B) The Social Security limit applies to the self-employment income but not to the salary. 
C) Salary is first applied against the Social Security limit and then self-employment income is applied against the Social Security limit. 
D) Self-employment income is first applied against the Social Security limit and then salary is applied against the Social Security limit.

Question 20

Which of the following statements concerning tax credits is true?

Accepted Answer

A) The tax benefit a taxpayer receives from a credit depends on the taxpayer's marginal tax rate. 
B) Refundable tax credits are limited to a taxpayer's gross tax liability. 
C) Tax credits are generally more beneficial than tax deductions. 
D) None of these are true statements.

Exam 8: Individual Income Tax Computation and Tax Credits

For alternative minimum tax purposes,taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Which of the following statements regarding credits is correct?

Harrison received a qualified dividend.Without knowing any additional facts,which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Which of the following is not true of the lifetime learning credit?

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

Why would a taxpayer file a tax return if not required to do so?

The American opportunity credit and lifetime learning credit are available to all taxpayers regardless of their income level.

Johann had a gross tax liability of $22,508 in 2019,but his employer only withheld taxes of $19,500.Johann's gross tax liability was $21,000 in 2018.Calculate Johann's under/overpayment in each quarter for 2019 tax purposes.

Jocelyn,a single taxpayer,had $742,000 of taxable income in 2019.All of the income is ordinary.What is her tax liability for the year? (Use Tax rate schedules.)

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

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)

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.

Sam is 30 years old.In 2019,he reported an AGI of $12,000,all from his job as a server at the local café.He is single and has no dependents.What amount of earned income credit may he claim in 2019? Use Exhibit 8-10

Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.

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

The alternative minimum tax is the AMT base multiplied by the AMT rate.

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year,which of the following statements regarding FICA and self-employment taxes is most accurate?

Which of the following statements concerning tax credits is true?