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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 41

Multiple Choice

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Jamie is single. In 2018, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount? (Use the tax rate schedules)

A) $19,443
B) $18,290
C) $17,840
D) $15,000

E) C) and D)
F) B) and C)

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Question 42

Multiple Choice

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Which of the following tax credits is fully refundable?

A) American opportunity credit.
B) Dependent care credit.
C) Earned income credit.
D) None of the choices are correct.

E) B) and C)
F) A) and C)

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Question 43

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Jerusha is married and she files a separate tax return in 2018. She claimed the standard deduction for regular tax purposes ($12,000). She had no other adjustments. Her regular taxable income was $67,800. What is Jerusha's AMTI?

Employee status is always better than independent contractor status for a taxpayer because the employee is responsible for paying the employee portion of the FICA taxes.

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

Hera wants to reduce her income tax liability by shifting some of her income to her 10-year-old daughter (a dependent), Athena. Last year, Hera gifted corporate bonds to Athena. This year, Athena received $1,550 in interest income from the bonds. What amount of tax will Athena pay on the interest income?

Baker is single and earned $225,000 of salary as an employee in 2018. How much should his employer have withheld from his paycheck for FICA taxes (rounded to the nearest whole dollar amount) ?

Johann had a gross tax liability of $22,508 in 2018, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2017. Calculate Johann's under/overpayment in each quarter for 2018 tax purposes.

Asteria earned a $25,500 salary as an employee in 2018. How much should her employer have withheld from her paycheck for FICA taxes? (Rounded to the nearest whole dollar amount) .

Kaelyn's mother, Judy, looks after Kaelyn's four-year-old twins so Kaelyn can go to work (she drops off and picks up the twins from Judy's home every day) . Since Judy is a relative, Kaelyn made sure, for tax purposes, to pay her mother the going rate for child care ($6,300 for the year) . What is the amount of Kaelyn's child and dependent care credit if her AGI for the year was $36,000? (Exhibit 8-9)

The wage base for which of the following taxes is capped?

The taxable income levels in the married filing jointly tax rate schedule are ________ those in the married filing separately schedule.

The earned income credit is sometimes referred to as a negative income tax.

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 $4,000 to care for her son. What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,000? (Exhibit 8-9)

The alternative minimum tax base is typically ________ the regular income tax base.

The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children?

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

Which of the following statements regarding credits is correct?

For alternative minimum tax purposes, taxpayers are required to add back the regular tax standard deduction amount for their filing status whether or not they itemized deductions for regular tax purposes.

Long-term capital gains, dividends, and taxable interest income are all taxed at preferential rates.