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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 51

True/False

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For married couples,the Social Security wage base limitation applies separately to each spouse.

A) True
B) False

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Question 52

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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?

A) $2,465
B) $1,520
C) $570
D) $380

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

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Question 53

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Julien and Sarah are married,file a joint return,and have two children,Kaya and Christopher.Kaya just finished her third year at college and Christopher just finished his first year of graduate school (fifth year of college).Tuition and books for the past year were $1,800 for Kaya and $5,000 for Christopher.How much can Julien and Sarah claim in educational credits if their joint AGI was $124,000 for 2017?

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.

Selene made $54,300 in 2017 working at the local burger joint,Moon Café.How much should her employer withhold from her paycheck for FICA taxes if the calculation is made correctly?

Harmony is single and was self-employed for the first half of 2017,earning $18,000 of Schedule C (business)net income.During the second half of the year,she began working as an employee and earned $38,000 in salary.What amount of self-employment taxes is Harmony required to pay?

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.

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

For alternative minimum tax purposes,taxpayers are required to add back the regular tax standard deduction amount for their filing status whether or not they itemized deductions for regular tax purposes.

Cassy reports a gross tax liability of $1,000.She also claims $400 of nonrefundable personal credits,$700 of refundable personal credits,and $200 of business credits.What is Cassy's tax refund or tax liability due after applying the credits?

Assuming the kiddie tax applies,what amount of a child's income is subject to the kiddie tax?

Hestia (age 17) is claimed as a dependent by her parents,Rhea and Chronus.In 2017,Hestia received $1,000 of interest income from a corporate bond that she owns.In addition,she has earned income of $200.What is her taxable income for 2017?

In certain circumstances a child with very little income may have at least a portion of their income taxed at the parents' marginal tax rate.

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 are Henry and Janice's net investment income tax liability this year,rounded to the nearest whole dollar amount?

Which of the following statements concerning tax credits is true?

Hester (age 17) is claimed as a dependent by his parents,Charlton and Abigail.In 2017,Hester received $10,000 of qualified dividends and he received $6,200 from a part time job.What is his taxable income for 2017?

Which of the following tax credits is fully refundable?

In 2017,Athena reported $38,950 of taxable income.Of this,$33,950 came from her work at the local library and the remaining $5,000 was from capital gains to be taxed at preferential rates.Compute her tax liability for 2017 as a single taxpayer.Use tax rate schedule in the text.)

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

Sam is 30 years old.In 2017,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 2017? Use Exhibit 8-10 in the text