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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 31

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Which of the following represents the correct order in which credits are applied to gross tax liability (from first to last) ?

A) Nonrefundable personal, business, refundable
B) Business, nonrefundable personal, refundable
C) Refundable, nonrefundable personal, business
D) Refundable, business, nonrefundable personal

E) A) and C)
F) All of the above

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Question 32

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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? (Round intermediate calculations and final answer to the nearest dollar.)

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$14,117, consisting of $13,836 of self-e...

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Question 33

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

In 2020, Maia (who files as a head of household) reported regular taxable income of $117,000. She itemized her deductions, deducting $8,200 in charitable contributions and $3,200 in state income taxes. What is Maia's alternative minimum taxable income?

Maria and Tony are married. Assume their taxable income in 2020 after all deductions is $82,000, including $5,000 of qualified dividends. What is their income tax liability in 2020? (Use the tax rate schedules, long-term capital gains tax brackets.)

Johann had a gross tax liability of $22,508 in 2021, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2020. Calculate Johann's under/overpayment in each quarter for 2021 tax purposes.

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 $4,180 to care for her son. What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $31,800? (Exhibit 8-9)

How could an individual obtain a business tax credit?

For married couples, the Social Security wage base limitation applies separately to each spouse.

Which of the following statements concerning estimated tax payments and underpayment penalties for individuals is true?

Which of the following statements regarding the child and dependent care credit is false?

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?

Due to the alternative minimum tax rate structure,a taxpayer with a large amount of long-term capital gains may be susceptible to the alternative minimum tax.

Parents may claim a child and dependent care credit for expenses incurred in providing for their dependents while the parents work as long as the children are over age 14 and under age 18 at year-end.

Harmony reports a regular tax liability of $16,200 and tentative minimum tax of $18,320. Given just this information, what is her alternative minimum tax liability for the year?

Clarissa's gross tax liability for 2020 is $1,300. She has a $1,500 nonrefundable personal tax credit, a $750 business tax credit, and a $400 refundable personal tax credit. Her employer withheld $1,000 from her pay for taxes. What is her net tax due or refund for this year?

During 2020, Jasmine (age 12) received $7,250 from a corporate bond. She also received $750 from a savings account established for her by her parents. Jasmine lives with her parents and she is claimed as a dependent in their tax return.. What is Jasmine's gross tax liability? ( Use Tax Rate Schedule, Standard deduction, Estates and Trusts.)

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

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

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.