Question 1

Nick and Nicole are both 68 years old and file a joint return.They have AGI of $15,000 and receive nontaxable Social Security payments of $4,200 during the current year.What is the amount of the tax credit for the elderly?

Accepted Answer

The answer of Nick and Nicole are both 68 years...

Question 2

Marvin and Pamela are married,file a joint return,and have two children,ages 9 and 11.Their combined AGI is $65,000.Marvin's earned income is $40,000; Pamela's is $25,000.They incur $6,500 of child care expenses to enable them to be employed during the current year.Their child and dependent care credit is

Accepted Answer

A)  $1,200. 
B)  $1,300. 
C)  $1,800. 
D)  $6,000.

Question 3

Claire accepts a new job.She will have access to health insurance coverage through her employer.The employer's policy meets the criteria for affordable minimum essential coverage.Claire prefers to purchase her own insurance policy through the state or federal exchange so she can retain access to her doctor.Assuming Claire's income is within the parameters specified,she will be eligible for the health insurance premium assistance credit.

Accepted Answer

A) True 
 B)False

Question 4

If an employee has more than one employer during the year,all employers must withhold federal income taxes but only one employer must withhold FICA tax.

Accepted Answer

A) True 
 B)False

Question 5

Assume you plan to volunteer at a Volunteer Income Tax Assistance (VITA) program for low income taxpayers and wish to prepare so you can help your clients achieve the maximum tax savings.Briefly discuss tax credits with which you should become familiar.

Accepted Answer

The answer of Assume you plan to volunteer at a...

Question 6

A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,450 in 2017.Disqualified income includes all the following except

Accepted Answer

A)  net capital gains. 
B)  tax-exempt interest. 
C)  net rental income. 
D)  self-employment income.

Question 7

Bob's income can vary widely from year-to-year because much of his compensation comes from sales commissions and bonuses.It generally is in the $200,000 to $300,000 range.To minimize the risk of underpayment penalties for estimated tax,he should pay in,through payroll withholding and estimated tax payments,100% of the prior year tax liability.

Accepted Answer

A) True 
 B)False

Question 8

George and Meredith who are married,have a regular tax liability of $22,728 based on regular taxable income of $125,000.This year they generated tax preferences of $25,000,and positive adjustments attributable to limitations on itemized deductions of $18,700.In determining regular taxable income,they had claimed $12,150 of personal and dependency exemptions for themselves and their 20-year-old dependent daughter.What is George and Meredith's alternative minimum tax for 2017?

Accepted Answer

The answer of George and Meredith who are married,have a...

Question 9

In the fall of 2017,Gina went back to school to earn a master of taxation degree.She incurred $7,000 of qualified educational expenses and her modified AGI for the year was $58,000.Her Lifetime Learning Credit is

Accepted Answer

A)  $2,500. 
B)  $1,400. 
C)  $280. 
D)  $1,120.

Question 10

Tyler and Molly,who are married filing jointly with $210,000 of AGI in 2017,incurred the following expenses in their efforts to adopt a child:
  
The adoption was finalized in 2017.What is the amount of the allowable adoption credit in 2017?

Accepted Answer

The answer of Tyler and Molly,who are married filing jointly...

Question 11

An individual with AGI equal to or less than $150,000 in the prior year may generally avoid penalties for underpayment of estimated tax in each of the following cases with the exception of

Accepted Answer

A)  estimated tax is less than $1,500. 
B)  90% of the tax due for the current year is paid. 
C)  90% of the tax due for the current year is paid when computed on an annualized basis. 
D)  100% of the actual tax liability for the prior year is paid.

Question 12

In calculating a taxpayer's AMT,adjustments for timing differences will be made for all of the following assets except for

Accepted Answer

A)  incentive stock options. 
B)  an office building placed in service in 2015. 
C)  machinery placed in service in 2016 (bonus depreciation is not applicable). 
D)  All of the above will require a timing adjustment for AMT.

Question 13

Research expenses eligible for the research credit include costs that are incident to the development or improvement of a product or component.

Accepted Answer

A) True 
 B)False

Question 14

Indie Corporation purchases a building for use in its business at a cost of $100,000.The building was built in 1900 and is a certified historic structure.Indie spends $150,000 on qualifying renovations certified as consistent with the buildings character.Indie will earn a rehabilitation (historic) tax credit of

Accepted Answer

A)  $15,000. 
B)  $30,000. 
C)  $25,000. 
D)  $50,000.

Question 15

The child and dependent care credit is partially refundable.

Accepted Answer

A) True 
 B)False

Question 16

Tom and Anita are married,file a joint return with an AGI of $165,000,and have one dependent child,Tim,who is a first-time freshman in college.The following expenses are incurred and paid in 2017:
  
What is the maximum education credit allowed to Tom and Anita?

Accepted Answer

The answer of Tom and Anita are married,file a joint...

Question 17

In lieu of a foreign tax credit,a taxpayer may elect to take a deduction for foreign taxes paid or accrued.

Accepted Answer

A) True 
 B)False

Question 18

The alternative minimum tax applies to individuals only if it exceeds the taxpayer's regular income tax liability.

Accepted Answer

A) True 
 B)False

Question 19

Jay and Cara's daughter is starting her freshman year of college.Jay and Cara will be able to claim the American Opportunity Tax Credit for a percentage of the cost of tuition,required fees and course materials,but the room and board charges will not qualify for the credit.

Accepted Answer

A) True 
 B)False

Question 20

Self-employment taxes include components for

Accepted Answer

A)  Medicare hospital insurance and SUTA. 
B)  Social Security and FUTA. 
C)  FICA and FUTA. 
D)  Social Security and Medicare hospital insurance.

Exam 14: Special Tax Computation Methods, tax Credits, and Payment of Tax

Nick and Nicole are both 68 years old and file a joint return.They have AGI of $15,000 and receive nontaxable Social Security payments of $4,200 during the current year.What is the amount of the tax credit for the elderly?

If an employee has more than one employer during the year,all employers must withhold federal income taxes but only one employer must withhold FICA tax.

Assume you plan to volunteer at a Volunteer Income Tax Assistance (VITA) program for low income taxpayers and wish to prepare so you can help your clients achieve the maximum tax savings.Briefly discuss tax credits with which you should become familiar.

A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,450 in 2017.Disqualified income includes all the following except

In the fall of 2017,Gina went back to school to earn a master of taxation degree.She incurred $7,000 of qualified educational expenses and her modified AGI for the year was $58,000.Her Lifetime Learning Credit is

Tyler and Molly,who are married filing jointly with $210,000 of AGI in 2017,incurred the following expenses in their efforts to adopt a child: The adoption was finalized in 2017.What is the amount of the allowable adoption credit in 2017?

An individual with AGI equal to or less than $150,000 in the prior year may generally avoid penalties for underpayment of estimated tax in each of the following cases with the exception of

In calculating a taxpayer's AMT,adjustments for timing differences will be made for all of the following assets except for

Research expenses eligible for the research credit include costs that are incident to the development or improvement of a product or component.

The child and dependent care credit is partially refundable.

Tom and Anita are married,file a joint return with an AGI of $165,000,and have one dependent child,Tim,who is a first-time freshman in college.The following expenses are incurred and paid in 2017: What is the maximum education credit allowed to Tom and Anita?

In lieu of a foreign tax credit,a taxpayer may elect to take a deduction for foreign taxes paid or accrued.

The alternative minimum tax applies to individuals only if it exceeds the taxpayer's regular income tax liability.

Jay and Cara's daughter is starting her freshman year of college.Jay and Cara will be able to claim the American Opportunity Tax Credit for a percentage of the cost of tuition,required fees and course materials,but the room and board charges will not qualify for the credit.

Self-employment taxes include components for