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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 41

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Which of the following is not a barrier to income shifting among family members?

A) The assignment of income doctrine
B) Net unearned income for children 18 and younger taxed at marginal tax rates for trusts
C) Elimination of preferential tax rates (on dividends and long-term capital gains) for dependents
D) None of the choices are correct

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

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Question 42

Multiple Choice

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

A) The child for whom the credit is claimed must be under the age of 15 at the end of the year
B) The credit is subject to phase-out based on the taxpayer's AGI
C) The full credit for a child who qualifies is $2,000
D) The child for whom the full credit is claimed must meet the definition of a qualifying child

E) C) and D)
F) None of the above

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Question 43

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Taxpayers are not allowed to deduct the standard deduction for alternative minimum tax purposes.

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

In 2019,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.What is Maia's alternative minimum taxable income?

Costa is a single taxpayer.His regular tax liability was $38,000.For 2019,he reported $190,000 of alternative minimum taxable income.What is his alternative minimum tax?

Paul and Melissa plan on filing jointly in 2019.For the year,the couple reported taxable income of $130,000.What is their gross tax liability? (Use Tax rate schedules.)

Which of the following represents the correct order in which credits are applied to gross tax liability (from first to last) ?

Harmony is single and was self-employed for the first half of 2019,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?

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

For married couples,the additional Medicare tax is based on the couple's combined wages.

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

Julien and Sarah are married,file a joint return,and have two children,Kaya and Christopher.Kaya just finished her third year at college and Christopher just finished his first year of graduate school (fifth year of college).Tuition and books for the past year were $1,800 for Kaya and $5,000 for Christopher.How much can Julien and Sarah claim in educational credits if their joint AGI was $126,000 for 2019?

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

Jerusha is married and she files a separate tax return in 2019.She claimed the standard deduction for regular tax purposes ($12,200).She had no other adjustments.Her regular taxable income was $67,800.What is Jerusha's AMTI?

Due to the alternative minimum tax rate structure,a taxpayer with a large amount of long-term capital gains may be susceptible to the alternative minimum tax.

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

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

All capital gains are taxed at preferential rates.

Which of the following is typical of taxpayers who are most likely affected by the AMT?