Question 1

Which of the following statements regarding the child tax credit is false?

Accepted Answer

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 childE) A) and D)
F) A) and B)

Question 2

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?

Accepted Answer

The answer of Henry and Janice are married and file...

Question 3

Harmony reports a regular tax liability of $15,000 and tentative minimum tax of $17,000. Given just this information, what is her alternative minimum tax liability for the year?

Accepted Answer

A)   $0
B)   $2,000
C)   $15,000
D)   $17,000E) C) and D)
F) B) and D)

Question 4

Which of the following statements regarding late filing penalties and/or late payment penalties is true?

Accepted Answer

A)   An extension of time to file the tax return protects a taxpayer from late payment penalties as long as the tax is paid by the extended due date of the return.
B)   The penalty rate for late filing penalties is less than the penalty rate for late payment penalties.
C)   If a taxpayer has not paid the full tax liability by the original due date of the return and the taxpayer has not filed a tax return by the due date of the return, the maximum late filing and late payment penalty will be no greater than the late filing penalty by itself.
D)   None of theseE) A) and D)
F) A) and C)

Question 5

Montague (age 15)  is claimed as a dependent by his parents Matt and Mary. In 2014, Montague received $5,000 of qualified dividends and he received $800 from a part time job. What is his taxable income for 2014?

Accepted Answer

A)   $0
B)   $3,800
C)   $4,650
D)   $4,800E) B) and C)
F) A) and D)

Question 6

Sam is 30 years old. In 2014, 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 2014?

Accepted Answer

The answer of Sam is 30 years old. In 2014,...

Question 7

In 2014, Maia (who files as a head of household)  reported regular taxable income of $115,000. She itemized her deductions, deducting $8,000 in charitable contributions and $3,000 in state income taxes. She claimed exemptions for herself and her son, Hermes, ($3,900 each) . What is Maia's alternative minimum taxable income?

Accepted Answer

A)   $118,000
B)   $126,000
C)   $133,900
D)   $125,900E) B) and D)
F) C) and D)

Question 8

Which of the following is not typical of taxpayers who are most likely affected by the AMT?

Accepted Answer

A)   Have many dependents
B)   Pay high state income tax
C)   Pay high property taxes
D)   Have relatively low capital gainsE) A) and D)
F) All of the above

Question 9

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

Accepted Answer

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

Question 10

Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.

Accepted Answer

A) True 
 B)False

Question 11

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The child tax credit is subject to phase-out based on the taxpayer's AGI.

Accepted Answer

A) True 
 B)False

Question 14

Sheryl's AGI is $250,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded)  amounts (assume she makes the required payments each quarter) ?

Accepted Answer

A)   $46,861
B)   $48,722
C)   $51,547
D)   $53,594E) None of the above
F) A) and D)

Question 15

Employees must pay both Social Security tax and Medicare tax on all of their wages no matter the amount of their wages.

Accepted Answer

A) True 
 B)False

Question 16

Harrison received a qualified dividend. Without knowing any additional facts, which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Accepted Answer

A)   The dividend will be taxed at a 15% tax rate.
B)   The dividend will be taxed at a 20% tax rate.
C)   The entire dividend will be taxed at either 15% or the entire dividend will be taxed at 20% depending on Harrison's marginal ordinary income tax rate.
D)   None of these.E) A) and B)
F) C) and D)

Exam 7: Individual Income Tax Computation and Tax Credits

Sheryl's AGI is $250,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts (assume she makes the required payments each quarter) ?

Correct Answer
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Sam is 30 years old. In 2014, 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 2014?

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

Correct Answer
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Correct Answer
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Harmony reports a regular tax liability of $15,000 and tentative minimum tax of $17,000. Given just this information, what is her alternative minimum tax liability for the year?

Correct Answer
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The child tax credit is subject to phase-out based on the taxpayer's AGI.

Correct Answer
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Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

Correct Answer
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Which of the following statements regarding late filing penalties and/or late payment penalties is true?

Correct Answer
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Which of the following statements regarding the child tax credit is false?

Correct Answer
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Montague (age 15) is claimed as a dependent by his parents Matt and Mary. In 2014, Montague received $5,000 of qualified dividends and he received $800 from a part time job. What is his taxable income for 2014?

Correct Answer
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Employees must pay both Social Security tax and Medicare tax on all of their wages no matter the amount of their wages.

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

Correct Answer
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Which of the following is not typical of taxpayers who are most likely affected by the AMT?

Correct Answer
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Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.

Correct Answer
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Harrison received a qualified dividend. Without knowing any additional facts, which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Correct Answer
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Correct Answer
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Exam 7: Individual Income Tax Computation and Tax Credits

Sheryl's AGI is $250,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts (assume she makes the required payments each quarter) ?

Correct AnswerverifiedShow Answer

Sam is 30 years old. In 2014, 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 2014?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Harmony reports a regular tax liability of $15,000 and tentative minimum tax of $17,000. Given just this information, what is her alternative minimum tax liability for the year?

Correct AnswerverifiedShow Answer

The child tax credit is subject to phase-out based on the taxpayer's AGI.

Correct AnswerverifiedShow Answer

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

Correct AnswerverifiedShow Answer

Which of the following statements regarding late filing penalties and/or late payment penalties is true?

Correct AnswerverifiedShow Answer

Which of the following statements regarding the child tax credit is false?

Correct AnswerverifiedShow Answer

Montague (age 15) is claimed as a dependent by his parents Matt and Mary. In 2014, Montague received $5,000 of qualified dividends and he received $800 from a part time job. What is his taxable income for 2014?

Correct AnswerverifiedShow Answer

Employees must pay both Social Security tax and Medicare tax on all of their wages no matter the amount of their wages.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not typical of taxpayers who are most likely affected by the AMT?

Correct AnswerverifiedShow Answer

Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.

Correct AnswerverifiedShow Answer

Harrison received a qualified dividend. Without knowing any additional facts, which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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