FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Individual Income Tax Computation and Tax Credits

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

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

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.

F) D) and E)
G) All of the above

Correct Answer

verified

Show Answer

Question 42

True/False

Review LaterAdd Note

Review Later

Regular taxable income is the starting point for determining the alternative minimum tax.

A) True
B) False

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

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

Sam is 30 years old. In 2020, he reported an AGI of $12,000, all from his job as a server at the local café. He is single and has no dependents. What amount of earned income credit may he claim in 2020? (Use Exhibit 8-10)

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

Which of the following statements about estimated tax payments and underpayment penalties is true for individual taxpayers?

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

The computation of the alternative minimum tax base begins with regular taxable income. Which of the following is not part of the formula for computing the alternative minimum tax base?

Alton reported net income from his sole proprietorship of $90,000. To determine his self-employment tax, he would multiply $90,000 by the self-employment tax rate.

Employees must pay both Social Security tax and Medicare tax on the full amount of their wages no matter the amount of their wages.

Maria and Tony are married. They are preparing to file their 2020 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 2020? (Use tax rate schedules.)

Which of the following statements accurately describes the alternative minimum tax rate(s) ?

During 2020, Montoya (age 15) received $2,230 from a corporate bond. He also received $630 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

Generally, income from an active trade or business is subject to the 3.8 percent net investment income tax.

Wolfina's twins, Romulus and Remus, finished their first year of school at an accredited university in 2020. She paid $10,000 in qualified educational expenses for Romulus and $2,000 of qualifying expenses for Remus. Wolfina is a head of household with an AGI of $85,000. What amount of American opportunity tax credit may she claim?

Harmony is single and was self-employed for the first half of 2020, earning $18,000 of Schedule C (business)net income. During the second half of the year, she began working as an employee and earned $38,000 in salary. What amount of self-employment taxes is Harmony required to pay?

Hestia (age 17) is claimed as a dependent by her parents, Rhea and Chronus. In 2020, 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 2020?

All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.

Hester (age 17) is claimed as a dependent by his parents, Charlton and Abigail. In 2020, Hester received $10,000 of qualified dividends, and he received $13,000 from a part-time job. What is his taxable income for 2020? (Standard deduction)

Jamie is single. In 2020, she reported $105,000 of taxable income, including a long-term capital gain of $5,500. What is her gross tax liability? (Round your answer to the nearest whole dollar amount.) (Use the tax rate schedules, long-term capital gains tax brackets.)