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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 51

Multiple Choice

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Carolyn has an AGI of $38,000 (all from earned income) and two qualifying children and is filing as a head of household. What amount of earned income credit is she entitled to? (Exhibit 8-10)

A) $0
B) $1,988
C) $3,584
D) $3,932
E) $5,920

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

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Question 52

Multiple Choice

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Individual taxpayers are not required to file a tax return unless their gross income passes a certain threshold. This threshold is generally the _____.

A) applicable standard deduction amount
B) AMT exemption amount
C) twice the applicable standard deduction amount
D) amount of their itemized deductions

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

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Question 53

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Employees are not allowed to deduct FICA taxes they pay.

Baker is single and earned $225,000 of salary as an employee in 2020. How much should his employer have withheld from his paycheck for FICA taxes? (Round your answer to the nearest whole dollar amount.)

Miley, a single taxpayer, plans on reporting $31,125 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.)

Which of the following items is not added back to regular taxable income in computing alternative minimum taxable income?

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

Akiko and Hitachi (married filing jointly for 2020)are both educators. They attended a conference to further their job-related skills. Tuition for the conference was $2,000 for each person. Their AGI was $124,000. How much lifetime learning credit can they claim?

Asteria earned a $25,500 salary as an employee in 2020. How much should her employer have withheld from her paycheck for FICA taxes? (Round your answer to the nearest whole dollar amount.)

Looking at the following partial calendar for a typical April (not 2020) , when will individual tax returns be due?

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

Hestia (age 17) is claimed as a dependent by her parents, Rhea and Chronus. In 2020, Hestia received $1,030 of interest income from a corporate bond that she owns. In addition, she has earned income of $230. What is her taxable income for 2020?

John and Sally pay Janet (Sally's older sister)to watch John and Sally's child Dexter during the day. Janet cares for Dexter in her home. John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter.

Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500. Given just this information, what is her alternative minimum tax liability for the year?

Angelena files as a head of household. In 2020, she reported $54,300 of taxable income, including a $10,000 qualified dividend. What is her gross tax liability? (Round your answer to the nearest whole dollar amount.) (Use the tax rate schedules, long-term capital gains tax brackets.)

Montague (age 15) is claimed as a dependent by his parents, Matt and Mary. In 2020, Montague received $5,000 of qualified dividends, and he received $800 from a part-time job. What is his taxable income for 2020?

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

The lifetime learning credit can be used toward the cost of any course of instruction to acquire or improve a taxpayer's job skills, no matter the age of the taxpayer.

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

Atlas earned $17,300 from his sole proprietorship in 2020. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?