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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 71

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All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.

A) True
B) False

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Question 72

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

A) True
B) False

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Question 73

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Business credits are generally refundable credits.

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

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

During 2018, Jasmine (age 12) received $6,500 from a corporate bond. She also received $600 from a savings account established for her by her parents. Jasmine lives with her parents and she is their dependent. What is Jasmine's gross tax liability?

Candace is claimed as a dependent on her parent's tax return. In 2018, Candace received $5,000 of interest income from corporate bonds she obtained several years ago. This is her only source of income. She is 15 years old at year-end. What is her gross tax liability?

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

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

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

If both spouses of a married couple earn roughly equivalent high level of wages, the couple is likely to pay a marriage penalty due to the nature of the tax rate schedules.

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

Hera earned $175,000 salary in 2018. Her husband, Zeus, earned $100,000 salary in 2018. Hera and Zeus file a joint tax return. How much FICA taxes will they owe in 2018?

Jackson earned a salary of $254,000 in 2018. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Costa is a single taxpayer. His regular tax liability was $38,000. For 2018, he reported $190,000 of alternative minimum taxable income. What is his alternative minimum tax?

All else equal, a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.

Demeter is a single taxpayer. Her AGI in 2018 is $209,200. Demeter may claim a child tax credit for her daughter Persephone. What amount of child tax credit is Demeter entitled to claim after any applicable phase-out?

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

How could an individual obtain a business tax credit?

Jack paid $5,000 in daycare expenses for his five-year-old daughter so he could work. His AGI for the year was $37,500 (all earned income). What is the amount of his child and dependent care credit?