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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 1

True/False

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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 2

Multiple Choice

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

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 choices are correct.

E) All of the above
F) B) and C)

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Question 3

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The kiddie tax does not apply to children over 24 years old at the end of the tax year.

The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children?

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

Allen Green is a single taxpayer with an AGI (and modified AGI) of $221,000, which includes $175,500 of salary, $28,300 of interest income, $11,100 of dividends, and $6,100 of long-term capital gains. What is Allen's net investment income tax liability this year, rounded to the nearest whole dollar amount?

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?

Clarissa's gross tax liability for 2020 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?

In 2020, Maia (who files as a head of household) reported regular taxable income of $115,300. She itemized her deductions, deducting $8,030 in charitable contributions and $3,030 in state income taxes. What is Maia's alternative minimum taxable income?

During 2020, Montoya (age 15) received $2,240 from a corporate bond. He also received $640 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

During all of 2020, Mr. and Mrs. Clay lived with their four children (all are under the age of 17). They provided over one-half of the support for each child. Mr. and Mrs. Clay file jointly for 2020. Neither is blind, and both are under age 65. They reported the following tax-related information for the year. (Use the tax rate schedules, 2020 Alternative minimum tax (AMT)exemption) What are the Clays' taxes payable or refund due? (Ignore the alternative minimum tax.)What are the Clays' tentative minimum tax and alternative minimum tax?

Johann had a gross tax liability of $22,508 in 2020, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2019. Calculate Johann's under/overpayment in each quarter for 2019 tax purposes.

Which of the following statements accurately describes the alternative minimum tax rate(s) ?

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

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

During all of 2020, Mr. and Mrs. Clay lived with their four children (all are under the age of 17). They provided over one-half of the support for each child. Mr. and Mrs. Clay file jointly for 2020. Neither is blind, and both are under age 65. They reported the following tax-related information for the year. (Use the tax rate schedules, 2020 Alternative minimum tax (AMT)exemption) What are the Clays' taxes payable or refund due? (Ignore the alternative minimum tax.)What are the Clays' tentative minimum tax and alternative minimum tax?

During 2020, Jasmine (age 12) received $7,350 from a corporate bond. She also received $770 from a savings account established for her by her parents. Jasmine lives with her parents and she is claimed as a dependent in their tax return.. What is Jasmine's gross tax liability? ( Use Tax Rate Schedule, Standard deduction, Estates and Trusts.)

Why would a taxpayer file a tax return if not required to do so?

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)

Which of the following taxpayers (all age 40) is/are required to file a return?