Question 1

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Accepted Answer

A) True 
 B)False

Question 2

Paul and Melissa plan on filing jointly in 2018.For the year,the couple reported taxable income of $130,000.What is their gross tax liability? (Use Tax Rate Schedule.)

Accepted Answer

$20,479,computed as ...

Question 3

If there is not enough gross tax liability to use the foreign tax credit,________.

Accepted Answer

A)  it expires unused
B)  it is carried back 2 years or forward 20 years
C)  it is carried back 3 years or forward 5 years
D)  it is carried back 1 year or forward 10 yearsE) None of the above
F) A) and B)

Question 4

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

Accepted Answer

A)  If a taxpayer fails to file a tax return,the late filing penalty will continue to grow until the taxpayer files the tax return.
B)  The amount of the late filing penalty is the same for both fraudulent failure to file and non-fraudulent failure to file.
C)  Taxpayers who owe no tax as of the due date of their tax returns are not subject to late filing penalties even if they file late.
D)  None of the choices are correct.E) B) and C)
F) C) and D)

Question 5

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

Accepted Answer

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 C)

Question 6

Which of the following statements concerning a comparison between employees and independent contractors is most accurate?

Accepted Answer

A)  Employees and independent contractors deduct business expenses as miscellaneous itemized deductions.
B)  While employees are typically eligible for nontaxable fringe benefits from employers,independent contractors are not.
C)  Employers are required to withhold either FICA or self-employment taxes from compensation paid to employees and compensation paid to independent contractors.
D)  Employers typically withhold federal income taxes from compensation paid to employees and to independent contractors.E) B) and D)
F) B) and C)

Question 7

Hera wants to reduce her income tax liability by shifting some of her income to her 10-year-old daughter (a dependent),Athena.Last year,Hera gifted corporate bonds to Athena.This year,Athena received $1,550 in interest income from the bonds.What amount of tax will Athena pay on the interest income?

Accepted Answer

$50 Because the kiddie tax only potentia...

Question 8

Maria and Tony are married.They are preparing to file their 2018 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 2018? (Use Tax Rate Schedule.)

Accepted Answer

No marriage penalty or benefit. Answer c...

Question 9

Sam is 30 years old.In 2018,he reported an AGI of $12,000,all from his job as a server at the local café.He is single and has no dependents.What amount of earned income credit may he claim in 2018? Use Exhibit 8-10

Accepted Answer

$250 Answe...

Question 10

Which of the following statements regarding the AMT exemption amounts is not true?

Accepted Answer

A)  The amount of the exemption depends on the taxpayer's filing status.
B)  The exemption amount is completely phased-out for high income taxpayers.
C)  Taxpayers must choose whether they will claim the exemption or itemize deductions.
D)  None of the above statements is false (all of the above statements are true) .E) B) and C)
F) B) and D)

Question 11

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

Accepted Answer

A)  Federal income.
B)  Social Security.
C)  Medicare.
D)  Alternative minimum.E) A) and C)
F) All of the above

Question 12

In 2018,Shawn's AGI is $170,000.He earned the income evenly throughout the year.He owed $29,890 in federal income tax and self-employment taxes of $2,590.Last year,he had a gross tax liability of $50,000.What is the minimum quarterly estimated tax payment Shawn must pay each quarter to avoid underpayment penalties for 2018?

Accepted Answer

$7,308. An...

Question 13

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?

Accepted Answer

$0 Answer computed as follows:Costa's AM...

Question 14

Long-term capital gains,dividends,and taxable interest income are all taxed at preferential rates.

Accepted Answer

A) True 
 B)False

Exam 7: Individual Income Tax Computation and Tax Credits

Correct Answer
verified
$7,308. An...
View Answer

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

Correct Answer
verified

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?

Correct Answer
verified
$0 Answer computed as follows:Costa's AM...
View Answer

If there is not enough gross tax liability to use the foreign tax credit,________.

Correct Answer
verified

Correct Answer
verified
No marriage penalty or benefit. Answer c...
View Answer

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

Correct Answer
verified

Paul and Melissa plan on filing jointly in 2018.For the year,the couple reported taxable income of $130,000.What is their gross tax liability? (Use Tax Rate Schedule.)

Correct Answer
verified
$20,479,computed as ...
View Answer

Hera wants to reduce her income tax liability by shifting some of her income to her 10-year-old daughter (a dependent),Athena.Last year,Hera gifted corporate bonds to Athena.This year,Athena received $1,550 in interest income from the bonds.What amount of tax will Athena pay on the interest income?

Correct Answer
verified
$50 Because the kiddie tax only potentia...
View Answer

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

Correct Answer
verified

Long-term capital gains,dividends,and taxable interest income are all taxed at preferential rates.

Correct Answer
verified

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Correct Answer
verified

Sam is 30 years old.In 2018,he reported an AGI of $12,000,all from his job as a server at the local café.He is single and has no dependents.What amount of earned income credit may he claim in 2018? Use Exhibit 8-10

Correct Answer
verified
$250 Answe...
View Answer

Which of the following statements regarding the AMT exemption amounts is not true?

Correct Answer
verified

Which of the following statements concerning a comparison between employees and independent contractors is most accurate?

Correct Answer
verified

Exam 7: Individual Income Tax Computation and Tax Credits

Correct Answerverified$7,308. An...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct Answerverified$0 Answer computed as follows:Costa's AM...View AnswerShow Answer

If there is not enough gross tax liability to use the foreign tax credit,________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNo marriage penalty or benefit. Answer c...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Paul and Melissa plan on filing jointly in 2018.For the year,the couple reported taxable income of $130,000.What is their gross tax liability? (Use Tax Rate Schedule.)

Correct Answerverified$20,479,computed as ...View AnswerShow Answer

Hera wants to reduce her income tax liability by shifting some of her income to her 10-year-old daughter (a dependent),Athena.Last year,Hera gifted corporate bonds to Athena.This year,Athena received $1,550 in interest income from the bonds.What amount of tax will Athena pay on the interest income?

Correct Answerverified$50 Because the kiddie tax only potentia...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Long-term capital gains,dividends,and taxable interest income are all taxed at preferential rates.

Correct AnswerverifiedShow Answer

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Correct AnswerverifiedShow Answer

Sam is 30 years old.In 2018,he reported an AGI of $12,000,all from his job as a server at the local café.He is single and has no dependents.What amount of earned income credit may he claim in 2018? Use Exhibit 8-10

Correct Answerverified$250 Answe...View AnswerShow Answer

Which of the following statements regarding the AMT exemption amounts is not true?

Correct AnswerverifiedShow Answer

Which of the following statements concerning a comparison between employees and independent contractors is most accurate?

Correct AnswerverifiedShow Answer

Correct Answer
verified
$7,308. An...
View Answer

Correct Answer
verified

Correct Answer
verified
$0 Answer computed as follows:Costa's AM...
View Answer

Correct Answer
verified

Correct Answer
verified
No marriage penalty or benefit. Answer c...
View Answer

Correct Answer
verified

Correct Answer
verified
$20,479,computed as ...
View Answer

Correct Answer
verified
$50 Because the kiddie tax only potentia...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$250 Answe...
View Answer

Correct Answer
verified

Correct Answer
verified