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Wolfina's twins, Romulus and Remus, finished their first year of school at an accredited university in 2014. She paid $10,000 in qualified educational expenses for Romulus and $2,000 of qualifying expenses for Remus. Wolfina is a head of household with an AGI of $85,000. What amount of American opportunity credit may she claim?

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Looking at the following partial calendar for April, when will individual tax returns be due?  April  Sunday  Monday  Tuesday  Wednesday  Thursday  Friday  Saturday 1234567891011121314151617 National  Accountants  Day  (Federal  Holiday)  1819202122\begin{array} { c} \begin{array} { | c | } \hline{ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad\text { April } \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad\quad \quad \quad \quad}\end{array}\\\begin{array} { | r | r | r | r | r | r | r | } \hline \text { Sunday } & \text { Monday } & \text { Tuesday } & \text { Wednesday } & \text { Thursday } & \text { Friday } & \text { Saturday } \\\hline & & & & & & 1 \\\hline 2 & 3 & 4 & 5 & 6 & 7 & 8 \\\hline 9 & 10 & 11 & 12 & 13 & 14 & 15 \\\hline 16 & \begin{array} { r } 17 \\\text { National } \\\text { Accountants } \\\text { Day }\text { (Federal } \\\text { Holiday) }\end{array} & 18 & 19 & 20 & 21 & 22 \\\hline\end{array}\end{array}


A) Friday, April 14
B) Saturday, April 15
C) Sunday, April 16
D) Monday, April 17
E) Tuesday, April 18

F) A) and E)
G) B) and E)

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An 80-year-old taxpayer with earned income and no dependent children could qualify for the earned income credit.

A) True
B) False

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


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) B) and D)
G) A) and D)

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Maria and Tony are married. They are preparing to file their 2014 tax return. If they were to file as single taxpayers, Maria and Tony would report $10,000 and $70,000 of taxable income, respectively. On their joint tax return, their taxable income is $80,000. How much of a marriage penalty or benefit will Maria and Tony experience in 2014?

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Filing jointly will ...

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


A) Federal income
B) Social Security
C) Medicare
D) Alternative minimum

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

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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 $1,000
D) The child for whom the credit is claimed must meet the definition of a qualifying child

E) B) and D)
F) A) and B)

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Which of the following is not true of the lifetime learning credit?


A) It is a nonrefundable credit.
B) The credit can be claimed by taxpayers who have graduated from college and are taking professional training courses to improve their job skills.
C) A taxpayer with multiple dependents can claim a credit for each dependent's qualifying expenses.
D) The credit is subject to phase out based on the taxpayer's AGI.

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

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Parents may claim a child tax credit for a dependent child who is 22 years of age at the end of the year if the child is a full-time student.

A) True
B) False

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For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year, which of the following statements regarding FICA and self-employment taxes is most accurate?


A) The Social Security limit applies to the salary but not to the self-employment income.
B) The Social Security limit applies to the self-employment income but not to the salary.
C) Salary is first applied against the Social Security limit and then self-employment income is applied against the Social Security limit.
D) Self-employment income is first applied against the Social Security limit and then salary is applied against the Social Security limit.

E) A) and D)
F) A) and C)

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Pyrrha, a 12-year-old dependent of Epimetheus and Pandora, received $2,100 of interest income in 2014. Her parents' marginal tax rate is 35%. What is Pyrrha's gross tax liability for the year?

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Due to the alternative minimum tax rate structure, timing tax planning strategies are not effective under the alternative minimum tax system.

A) True
B) False

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


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 expenses

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

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Which of the following is not true of the extension to file an individual tax return?


A) It is granted automatically by the IRS if requested
B) It must be requested by the original due date of the return
C) It extends the due date for the return and associated tax payments beyond the original due date of the tax return
D) The extension is for six months beyond the original due date

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

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

A) True
B) False

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

A) True
B) False

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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?


A) $0
B) $810
C) $1,080
D) $3,000

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

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The child and dependent care credit entitles qualifying taxpayers to a credit equal to the full amount of qualified expenses.

A) True
B) False

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Quantitatively, what is the relationship between the AGI phase-out thresholds for the child tax credit?


A) Head of household/Single = Married Filing Separately = Married Filing Jointly
B) Head of household/Single < Married Filing Separately < Married Filing Jointly
C) Head of household/Single = Married Filing Separately > Married Filing Jointly
D) Head of household/Single > Married Filing Separately < Married Filing Jointly

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

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Henry and Janice are married and file jointly. They have an AGI (and modified AGI) of $290,000, which includes $90,000 of salary, $170,000 of active business income, $10,000 of interest income, $15,000 of dividends, and $5,000 of long-term capital gains. What is Henry and Janice's Net Investment Income tax liability this year, rounded to the nearest whole dollar amount?

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