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Exam 7: Individual Income Tax Computation and Tax Credits

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Question 61

Multiple Choice

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Angelena files as a head of household.In 2013,she reported $50,000 of taxable income,including a $10,000 qualified dividend.What is her gross tax liability,rounded to the nearest whole dollar amount (use the tax rate schedules) ?

A) $5,363
B) $5,573
C) $7,500
D) $6,863

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

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Question 62

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

A) True
B) False

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Question 63

Multiple Choice

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

Which of the following statements regarding the earned income credit is true?

Carolyn has an AGI of $38,000 (all from earned income) ,two qualifying children,and is filing as a head of household.What amount of earned income credit is she entitled to?

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.

In 2013,Maia (who files as a head of household) reported regular taxable income of $115,000.She itemized her deductions,deducting $8,000 in charitable contributions and $3,000 in state income taxes.She claimed exemptions for herself and her son,Hermes, ($3,900 each) .What is Maia's alternative minimum taxable income?

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

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Which of the following is not one of the general tax credit categories?

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?

Keith and Nicole are married filing joint with two daughters who qualify as dependents.Their gross income for 2013 is $21,000.Are they required to file a tax return? How do you know this without memorizing the gross income thresholds? In 2013,the standard deduction for taxpayers filing a joint return is $12,200 and the personal exemption is $3,900.

Employees are not allowed to deduct FICA taxes they pay.

To qualify for the earned income credit,the taxpayer must have a qualified dependent.

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

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

Cassy reports a gross tax liability of $1,000.She also claims $400 of nonrefundable personal 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?

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

Which of the following statements regarding late filing penalties is true?

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