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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 71

Multiple Choice

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

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

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

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Question 72

Multiple Choice

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Which of the following statements regarding the child and dependent care credit is true?

A) A married couple must file jointly to claim the credit.
B) A taxpayer may claim a credit for dependent care expenses for a dependent who is 14 years old or older but only if the dependent lives in the taxpayer's home for the entire year.
C) All else equal, a taxpayer making qualifying expenditures for three children may claim more dependent care credit than a taxpayer making (the same amount of) qualifying expenditures for two children.
D) None of the above statements is true.

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

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Question 73

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Katlyn reported $300 of net income from her sole proprietorship. She is not required to pay self-employment tax.

What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?

The taxable income levels in the married filing jointly tax rate schedule are _______ those in the married filing separately schedule.

Which of the following statement(s) concerning estimated tax payments and underpayment penalties for individuals is(are) true?

An individual could pay 100% of her tax liability by the due date of her tax return and still be subject to underpayment tax penalties.

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

In 2016, John (52 years old) files as a head of household with one 18-year old dependent (qualifying) child. John is eligible to claim a $700 American opportunity credit for the year. John did not have any taxes withheld by his employer during the year and he did not make any estimated tax payments. After taking credits into account, what is the amount of John's taxes payable or refund assuming that his AGI is $26,000 (all from salary) and his taxable income is $9,000?

Paul and Melissa plan on filing jointly in 2016. For the year, the couple reported taxable income of $130,000. What is their gross tax liability?

Maria and Tony are married. They are preparing to file their 2016 tax return. If they were to file as single taxpayers, Maria and Tony would report $40,000 and $60,000 of taxable income, respectively. On their joint tax return, their taxable income is $100,000. How much of a marriage penalty or benefit will Maria and Tony experience in 2016?

Clarissa's gross tax liability for 2016 is $1,300. She has a $1,500 nonrefundable personal tax credit, a $750 business tax credit, and a $400 refundable personal tax credit. Her employer withheld $1,000 from her pay for taxes. What is her net tax due or refund for this year?

Allen Green is a single taxpayer with an AGI (and modified AGI) of $210,000, which includes $170,000 of salary, $25,000 of interest income, $10,000 of dividends, and $5,000 of long-term capital gains. What is Allen's net investment income tax liability this year, rounded to the nearest whole dollar amount?

Which of the following suggests that a working taxpayer is an independent contractor rather than an employee?

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

Linda is a qualifying widow in 2016. In 2016, she reports $80,000 of taxable income (all ordinary) . What is her gross tax liability using the tax rate schedules?

If a married couple has one primary breadwinner, filing a joint return will likely result in a marriage penalty.

Long-term capital gains are taxed at the stated AMT rate for purposes of the alternative minimum tax.

Hester (age 17) is claimed as a dependent by his parents, Charlton and Abigail. In 2016, Hester received $10,000 of qualified dividends and he received $6,000 from a part time job. What is his taxable income for 2016?

Max is a 14-year-old dependent of his parents. During 2016, Max earned $1,800 working part time jobs and he received $1,500 of interest income from corporate bonds that were given to him last year. What is Max's 2016 taxable income?