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Exam 7: Tax Credits

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Question 21

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Household income for purpose of the premium tax credit includes all of the following except:

A) AGI of the taxpayer
B) AGI of the taxpayer's dependents if required to file a return
C) Any tax-exempt income
D) Nontaxable Social Security benefits
E) All of these are included in household income

F) D) and E)
G) A) and E)

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Question 22

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What would generally reduce income taxes more: a $100 tax credit or a $100 tax deduction?

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Tax credits reduce taxes more than deduc...

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Question 23

Multiple Choice

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Hal is enrolled for one class at a local community college; tuition cost him $190. Hal's AGI is $20,000. Before considering a limitation due to tax liability, Hal can take a lifetime learning credit of:

All taxpayers are required to have minimum essential health coverage in order to avoid the individual shared responsbility tax.

Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2019, Clark earned a salary of $32,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2019. Before considering any limitation due to tax liability, how much can Clark claim as a child and dependent care credit in 2019?

Steve goes to Tri-State University and pays $40,000 in tuition. Steve works to pay for his schooling and has an AGI of $37,000. How much is his American Opportunity tax credit?

Calculate the total child tax credit and other dependent credit for the following taxpayers. Please show your work. a. Ninfa is a single mother with 8-year-old and 9-year-old dependent sons and has $50,000 of AGI. b. Sharon and Mark have one dependent 2-year-old child and $426,300 of AGI. c. Carol is single and has one dependent 18-year-old son and $21,000 of AGI.

Vicky is a single, 21-year-old, full-time student who purchased health care through the state health care exchange for the full year. Her part-time job pays her $12,000 in 2019. She files her own tax return but is claimed as a dependent by her parents. Vicky is eligible for the premium tax credit.

Richard has $30,000 of income from a country that imposes a 40-percent income tax and $30,000 of income from a country that imposes a 34 percent income tax. In addition to the foreign income, he has taxable income from US sources of $120,000 and a US tax liability, before credits, of $45,575. The amount of Richard's foreign tax credit is:

A tax credit is allowed for qualified adoption expenses paid by taxpayers:

Arthur is divorced with two dependent children, ages 8 and 13. His adjusted gross income is $28,000, and he incurs qualified child care expenses of $6,000, $3,000 for each child. a.What is the amount of Arthur's qualified child care expenses after any limitation? b.Calculate the amount of Arthur's child and dependent care credit before any tax liability limitation.

Curly and Rita are married, file a joint return, and have two dependent children, ages 11 and 13. Their AGI is $417,000. By how much is their child credit reduced in 2019?

For 2019, the maximum amount of expenses that qualify for the child and dependent care credit is the same for three dependents as it is for two dependents.

Brad works at the local pizza shop as a delivery person. He is hoping to change to a position in the kitchen and takes a culinary course at the local community college for $1,400. Assuming he is eligible, Brad's lifetime learning credit is:

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Why is there an earned income credit in the law?

Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $22,000 in 2019. What is their allowable child and dependent care credit considering their pre-credit tax liability?

Which of the following is not a requirement to claim an earned income credit?

The earned income credit:

Martin and Rachel are married and have a 3-year-old child. Martin is going to medical school full-time for 12 months of the year and Rachel earns $45,000. Their child is in day care so Martin can go to school while Rachel is at work. The cost of their day care is $10,000. What is their child and dependent care credit? Please show your calculations and explain.

Clark maintains a household for himself and his two dependent preschool children and files as head of household. For the year ended December 31, 2019, Clark earned a salary of $62,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2019. His tax liability before any credits is $5,011. How much can Clark claim as a child and dependent care credit, child tax credit, and additional child tax credit in 2019?