Question 1

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 is a true statement.Credits reduce taxes payable dollar for dollar while deductions reduce taxes payable at the marginal tax rate. C

Question 2

If a married couple has one primary breadwinner,filing a joint return will likely result in a marriage penalty.

Accepted Answer

A) True 
 B)False  False

Question 3

Sheryl's AGI is $200,000.Her current tax liability is $52,068.Last year,her tax liability was $48,722.She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts (assume she makes the required payments each quarter) ?

Accepted Answer

A)  $46,861
B)  $48,722
C)  $51,547
D)  $53,594 A

Question 4

Business credits are generally refundable credits.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements concerning differences between employees and independent contractors is most accurate?

Accepted Answer

A)  Employees and independent contractors deduct business expenses as miscellaneous itemized deductions.
B)  While employees are typically eligible for nontaxable fringe benefits from employers,independent contractors are not.
C)  Employers are required to withhold either FICA or self employment taxes from compensation paid to employees and compensation paid to independent contractors.
D)  Employers typically withhold federal income taxes from compensation paid to employees and to independent contractors.Non-employees are ineligible for nontaxable fringe benefits.

Question 6

Harmony reports a regular tax liability of $15,000 and tentative minimum tax of $17,000.Given just this information,what is her alternative minimum tax liability for the year?

Accepted Answer

A)  $0
B)  $2,000
C)  $15,000
D)  $17,000

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 
C)  Head of household/Single = Married Filing Separately > Married Filing Jointly
D)  Head of household/Single > Married Filing Separately < Married Filing Jointly

Question 8

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

Question 9

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 $1,000
D)  The child for whom the credit is claimed must meet the definition of a qualifying child.The child must be under age 17 at the end of the year.

Question 10

Self-employed taxpayers are allowed to deduct the full amount of the self-employment taxes they pay.

Accepted Answer

A) True 
 B)False

Question 11

Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.

Accepted Answer

A) True 
 B)False

Question 12

Happy,Sleepy,Grumpy,and Doc all did not make adequate estimated payments.Which of them will not owe underpayment penalties for 2013 given the following information?

Accepted Answer

A)  Happy
B)  Sleepy
C)  Grumpy
D)  Doc
E)  Two of these

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

How could an individual obtain a business tax credit?

Accepted Answer

A)  Through self-employment activities
B)  Through flow-through from a partnership or S corporation
C)  By working overseas and obtaining a foreign tax credit
D)  All of these

Question 15

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 16

In 2013,John (52 years old) files as a head of household with one 18-year old dependent (qualifying) child.John is eligible to claim a $700 American opportunity credit for the year.John did not have any taxes withheld by his employer during the year and he did not make any estimated tax payments.After taking credits into account,what is the amount of John's taxes payable or refund assuming that his AGI is $26,000 (all from salary) and his taxable income is $10,350?

Accepted Answer

The answer of In 2013,John (52 years old) files as...

Question 17

Johann had a gross tax liability of $22,508 in 2012 and $21,000 in 2011,but his employer only withheld $19,500.Calculate his under/overpayment in each quarter for 2013 tax purposes.

Accepted Answer

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

Question 18

Maria and Tony are married.They are preparing to file their 2013 tax return.If they were to file as single taxpayers,Maria and Tony would report $10,000 and $70,000 of taxable income,respectively.On their joint tax return,their taxable income is $80,000.How much of a marriage penalty or benefit will Maria and Tony experience in 2013?

Accepted Answer

The answer of Maria and Tony are married.They are preparing...

Question 19

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.The AOC is available for the first four years of postsecondary education.

Accepted Answer

A) True 
 B)False

Question 20

Montague (age 15) is claimed as a dependent by his parents Matt and Mary.In 2013,Montague received $5,000 of qualified dividends and he received $800 from a part time job.What is his taxable income for 2013?

Accepted Answer

A)  $0
B)  $3,800
C)  $4,650
D)  $4,800

Exam 7: Individual Income Tax Computation and Tax Credits

Which of the following statements concerning tax credits is true?

If a married couple has one primary breadwinner,filing a joint return will likely result in a marriage penalty.

Sheryl's AGI is $200,000.Her current tax liability is $52,068.Last year,her tax liability was $48,722.She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts (assume she makes the required payments each quarter) ?

Business credits are generally refundable credits.

Which of the following statements concerning differences between employees and independent contractors is most accurate?

Harmony reports a regular tax liability of $15,000 and tentative minimum tax of $17,000.Given just this information,what is her alternative minimum tax liability for the year?

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

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

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

Self-employed taxpayers are allowed to deduct the full amount of the self-employment taxes they pay.

Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.

Happy,Sleepy,Grumpy,and Doc all did not make adequate estimated payments.Which of them will not owe underpayment penalties for 2013 given the following information?

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

How could an individual obtain a business tax credit?

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

Johann had a gross tax liability of $22,508 in 2012 and $21,000 in 2011,but his employer only withheld $19,500.Calculate his under/overpayment in each quarter for 2013 tax purposes.

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.The AOC is available for the first four years of postsecondary education.

Montague (age 15) is claimed as a dependent by his parents Matt and Mary.In 2013,Montague received $5,000 of qualified dividends and he received $800 from a part time job.What is his taxable income for 2013?