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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 71

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Apollo is single and his AMT base is $100,250. This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability). What is Apollo's tentative minimum tax?

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$26,010
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Question 72

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During 2017, Jasmine (age 12) received $2,400 from a corporate bond. She also received$600 from a savings account established for her by her parents. Jasmine lives with her parents and she is their dependent. Assuming her parents' marginal tax rate is 28%, what is Jasmine's gross tax liability?

A) $357
B) $0
C) $252
D) $105

E) B) and D)
F) A) and B)

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Question 73

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The AMT exemption amount is phased-out for high income taxpayers.

Maria and Tony are married. They are preparing to file their 2017 tax return. If they were to file as single taxpayers, Maria and Tony would report $40,000 and $60,000 of taxable income,respectively. On their joint tax return, their taxable income is $100,000. How much of a marriage penalty or benefit will Maria and Tony experience in 2017? (Use Tax Rate Schedule.)

John and Sally pay Janet (Sally's older sister) to watch John and Sally's child Dexterduring 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.

Which of the following is not typical of taxpayers who are most likely affected by theAMT?

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

Rhianna and Jay are married filing jointly in 2017. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2017 tax return?

Stephanie and Mitch are married and they file a joint tax return. Mitch received a slightly higher salary than Stephanie did during the year. Which of the following statements is true?

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?

Which of the following is not a true statement about the American opportunity credit (AOC) and lifetime learning credits (assume the 2016 rules apply for the qualified education expense deduction) ?

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

Cassy reports a gross tax liability of $1,000. She also claims $400 of nonrefundablepersonal credits, $700 of refundable personal credits, and $200 of business credits. What is Cassy's tax refund or tax liability due after applying the credits?

Persephone has a regular tax liability of $12,475 and a tentative minimum tax of$11,500. Given just this information, what is her alternative minimum tax liability for the year?

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return thanthey would have paid had they filed married filing separate returns.

The tax rate schedules are set up to tax lower levels of income at higher tax rates thanhigher levels of income.

Which of the following is not true of the American opportunity credit?

In certain circumstances a child with very little income may have at least a portion of their income taxed at the parents' marginal tax rate.

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

Atlas earned $17,300 from his sole proprietorship in 2017. This was his only source of income.How much in self-employment taxes will Atlas be able to deduct?