Question 1

Demeter is a single taxpayer.Her AGI in 2018 is $209,200.Demeter may claim a child tax credit for her daughter Persephone.What amount of child tax credit is Demeter entitled to claim after any applicable phase-out?

Accepted Answer

The answer of Demeter is a single taxpayer.Her AGI in...

Question 2

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 3

Pyrrha,a 12-year-old dependent of Epimetheus and Pandora,received $8,200 of interest income in 2018.What is Pyrrha's gross tax liability for the year?

Accepted Answer

The answer of Pyrrha,a 12-year-old dependent of Epimetheus and Pandora,received...

Question 4

Tax rate schedules are provided for use by (relatively)higher income taxpayers while the tax tables are provided for use by (relatively)lower income taxpayers.

Accepted Answer

A) True 
 B)False

Question 5

John and Sally pay Janet (Sally's older sister)to watch John and Sally's child Dexter during the day.Janet cares for Dexter in her home.John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Quantitatively,what is the relationship between the AGI phase-out thresholds for the child tax credit?

Accepted Answer

A) Head of household/Single = Married Filing Separately = Married Filing Jointly. 
B) Head of household/Single  Married Filing Jointly. 
D) Head of household/Single > Married Filing Separately < Married Filing Jointly.

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

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 10

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

Accepted Answer

A) Poseidon is a 20-year-old full-time student who does not support himself. 
B) Demeter,a 23-year-old full-time student who supports herself with a job at a grocery store. 
C) Zeus is 20 years old and not a student. 
D) "Demeter,a 23-year-old full-time student who supports herself with a job at a grocery store" and "Zeus is 20 years old and not a student". 
E) None of the choices are correct.

Question 11

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

Accepted Answer

A) smaller than 
B) about the same as 
C) larger than 
D) exactly the same as

Question 12

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

Question 13

Hestia (age 17)is claimed as a dependent by her parents,Rhea and Chronus.In 2018,Hestia received $1,000 of interest income from a corporate bond that she owns.In addition,she has earned income of $200.What is her taxable income for 2018?

Accepted Answer

A) $0 
B) $150 
C) $650 
D) $1,200

Question 14

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 15

Tamra and Jacob are married and they file a joint tax return.Tamra received nearly five times the salary that Jacob received.Which of the following statements is true?

Accepted Answer

A) Tamra and Jacob likely pay no tax marriage penalty nor receive a tax marriage benefit. 
B) Tamra and Jacob likely pay a tax marriage penalty. 
C) Tamra and Jacob likely receive a tax marriage benefit. 
D) Tamra and Jacob likely will pay a tax marriage penalty and receive a tax marriage benefit.

Question 16

Lexa,a single taxpayer,worked as an employee during the first half of the year earning $65,000 of salary.Lexa's employer withheld $4,030 of Social Security tax,$943 of Medicare tax,and $0 of additional Medicare tax.In the second half of the year,she was self-employed and she reported $180,000 of self-employment income on her Schedule C.What amount of self-employment taxes and  additional Medicare tax is Lexa required to pay on her self-employment income?

Accepted Answer

The answer of Lexa,a single taxpayer,worked as an employee during...

Question 17

Employees are not allowed to deduct FICA taxes they pay.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is typical of taxpayers who are most likely affected by the AMT?

Accepted Answer

A) Pay high mortgage interest. 
B) Pay high state income tax. 
C) Pay high property taxes. 
D) Have very high capital gains.

Question 19

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

Question 20

All else equal,a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Exam 7: Individual Income Tax Computation and Tax Credits

Demeter is a single taxpayer.Her AGI in 2018 is $209,200.Demeter may claim a child tax credit for her daughter Persephone.What amount of child tax credit is Demeter entitled to claim after any applicable phase-out?

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Pyrrha,a 12-year-old dependent of Epimetheus and Pandora,received $8,200 of interest income in 2018.What is Pyrrha's gross tax liability for the year?

Tax rate schedules are provided for use by (relatively)higher income taxpayers while the tax tables are provided for use by (relatively)lower income taxpayers.

John and Sally pay Janet (Sally's older sister)to watch John and Sally's child Dexter during the day.Janet cares for Dexter in her home.John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter.

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

Quantitatively,what is the relationship between the AGI phase-out thresholds for the child tax credit?

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

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

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

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

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)

Hestia (age 17) is claimed as a dependent by her parents,Rhea and Chronus.In 2018,Hestia received $1,000 of interest income from a corporate bond that she owns.In addition,she has earned income of $200.What is her taxable income for 2018?

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?

Tamra and Jacob are married and they file a joint tax return.Tamra received nearly five times the salary that Jacob received.Which of the following statements is true?

Employees are not allowed to deduct FICA taxes they pay.

Which of the following is typical of taxpayers who are most likely affected by the AMT?

All else equal,a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.