Question 1

Which of the following does not affect the amount of the earned income credit?

Accepted Answer

A)   Filing status
B)   Amount of credit taken in previous years
C)   Number of qualifying children
D)   Taxpayer's AGIE) None of the above
F) C) and D)

Question 2

Jerusha is married and she files a separate tax return in 2016. She claims two exemptions (2 × 4,050 = $8,100). She claimed the standard deduction for regular tax purposes ($6,300). She had no other adjustments. Her regular taxable income was $67,800. What is Jerusha's AMTI?

Accepted Answer

$82,200
Ex...

Question 3

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?

Accepted Answer

A)   Subtract personal exemptions
B)   Add the standard deduction amount if used for regular tax
C)   Subtract the AMT exemption amount (if any) 
D)   Add back tax exempt interest from a private activity bond not issued in 2009 or 2010E) A) and D)
F) A) and C)

Question 4

The child tax credit is subject to phase-out based on the taxpayer's AGI.

Accepted Answer

A) True 
 B)False

Question 5

Tax credits reduce a taxpayer's taxable income dollar for dollar.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)   to remain in favor with the IRS
B)   to claim a refund of taxes paid
C)   all taxpayers are required to file returns
D)   in order to claim the standard deductionE) A) and B)
F) A) and C)

Question 7

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

Accepted Answer

A)   A taxpayer with multiple eligible dependents can claim a credit for each dependent's qualifying expenses
B)   The credit is available for students during their first four years of postsecondary education only
C)   It is phased out based on the taxpayer's AGI
D)   A taxpayer may not claim a credit unless the taxpayer pays a dependent's qualifying educational expensesE) A) and B)
F) B) and D)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

$26,010
Ex...

Question 10

Sheryl's AGI is $250,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded)  amounts? (assume she makes the required payments each quarter)

Accepted Answer

A)   $46,861
B)   $48,722
C)   $51,547
D)   $53,594E) B) and D)
F) A) and C)

Question 11

How could an individual obtain a business tax credit?

Accepted Answer

A)   Through self-employment activities
B)   Through flow-through from a partnership or S corporation
C)   By working overseas and obtaining a foreign tax credit
D)   All of the aboveE) A) and B)
F) A) and C)

Question 12

Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.

Accepted Answer

A) True 
 B)False

Question 13

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.

Accepted Answer

A) True 
 B)False

Question 14

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?

Accepted Answer

A)   The dividend will be taxed at a 15% tax rate.
B)   The dividend will be taxed at a 20% tax rate.
C)   The entire dividend will be taxed at either 15% or the entire dividend will be taxed at 20% depending on Harrison's marginal ordinary income tax rate.
D)   None of the above.E) B) and D)
F) B) and C)

Question 15

Miley, a single taxpayer, plans on reporting $28,650 of taxable income this year (all of her income is from a part-time job) . She is considering applying for a second part-time job that would give her an additional $10,000 of taxable income. By how much will the income from the second job increase her tax liability? (use the tax rate schedules)

Accepted Answer

A)   $1,000
B)   $1,500
C)   $1,600
D)   $2,500E) B) and C)
F) A) and B)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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) C) and E)
G) C) and D)

Question 18

If an employer withholds taxes from an employee, in general, when are these taxes treated as paid to the IRS?

Accepted Answer

A)   As withheld
B)   As the employee requests on his/her W-4 form
C)   Evenly throughout the year
D)   On April 15E) A) and D)
F) A) and B)

Question 19

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

Accepted Answer

A)   Taxpayers who have paid their full tax liability by the original tax return due date are protected from underpayment penalties.
B)   Taxpayers who have paid their full tax liability by the extended tax return due date are protected from underpayment penalties.
C)   Taxpayers who have uneven income streams can pay estimated tax quarterly in uneven amounts and not be susceptible to underpayment penalties.
D)   Taxpayers who have paid their required amount of estimated tax, even though not on time, are protected from underpayment penalties.E) None of the above
F) C) and D)

Question 20

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Accepted Answer

A)   for AGI deductions
B)   from AGI deductions not subject to the two percent of AGI floor
C)   from AGI deductions subject to a two percent of AGI floor
D)   for AGI deductions limited to income from the business activitiesE) B) and D)
F) B) and C)

Exam 8: Individual Income Tax Computation and Tax Credits

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Correct Answer
verified

The child tax credit is subject to phase-out based on the taxpayer's AGI.

Correct Answer
verified

Jerusha is married and she files a separate tax return in 2016. She claims two exemptions (2 × 4,050 = $8,100). She claimed the standard deduction for regular tax purposes ($6,300). She had no other adjustments. Her regular taxable income was $67,800. What is Jerusha's AMTI?

Correct Answer
verified
$82,200
Ex...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

How could an individual obtain a business tax credit?

Correct Answer
verified

Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.

Correct Answer
verified

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

Correct Answer
verified

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.

Correct Answer
verified

Which of the following does not affect the amount of the earned income credit?

Correct Answer
verified

If an employer withholds taxes from an employee, in general, when are these taxes treated as paid to the IRS?

Correct Answer
verified

Tax credits reduce a taxpayer's taxable income dollar for dollar.

Correct Answer
verified

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?

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Sheryl's AGI is $250,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts? (assume she makes the required payments each quarter)

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified
$26,010
Ex...
View Answer

Exam 8: Individual Income Tax Computation and Tax Credits

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Correct AnswerverifiedShow Answer

The child tax credit is subject to phase-out based on the taxpayer's AGI.

Correct AnswerverifiedShow Answer

Jerusha is married and she files a separate tax return in 2016. She claims two exemptions (2 × 4,050 = $8,100). She claimed the standard deduction for regular tax purposes ($6,300). She had no other adjustments. Her regular taxable income was $67,800. What is Jerusha's AMTI?

Correct Answerverified$82,200Ex...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How could an individual obtain a business tax credit?

Correct AnswerverifiedShow Answer

Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.

Correct AnswerverifiedShow Answer

Which of the following does not affect the amount of the earned income credit?

Correct AnswerverifiedShow Answer

If an employer withholds taxes from an employee, in general, when are these taxes treated as paid to the IRS?

Correct AnswerverifiedShow Answer

Tax credits reduce a taxpayer's taxable income dollar for dollar.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Sheryl's AGI is $250,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts? (assume she makes the required payments each quarter)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified$26,010Ex...View AnswerShow Answer

Correct Answer
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$82,200
Ex...
View Answer

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$26,010
Ex...
View Answer