ACCT 218 | Chapter 5 & 6 | Test (Incomplete)

Problem 6-14 (Algorithmic) Child and Dependent Care Credit (LO 6.3) Marty and Jean are married and have 4-year-old twins. Jean is going to school full-time for 7 months of the year, and Marty earns $63,700. The twins are in day care so Jean can go to school while Marty is at work. The cost of day care is $8,100. What is their child and dependent care credit?

$

During the current year, George, a salaried taxpayer, paid the following taxes which were not incurred in connection with a trade or business: Federal income tax (withheld by employer) $1,500 State income tax (withheld by employer) $1,100 FICA tax (withheld by employer) $700 Real property taxes $300 Federal auto gasoline taxes $200 Federal excise tax on telephone bills $50 What amount can George claim for the current year as an itemized deduction for the taxes paid, assuming he elects to deduct state and local income taxes?

$ Math:

Jon, age 45, had adjusted gross income of $26,000 in 2015. During the year, he incurred and paid the following medical expenses: Drugs and medicines prescribed by doctors $300 Health insurance premiums $750 Doctors' fees $2,250 Eyeglasses $75 Jon received $900 in 2015 as a reimbursement for a portion of the doctors' fees. If Jon were to itemize his deductions, what would be his allowable medical expense deduction after the adjusted gross income limitation is taken into account?

$0 Math: ($300 + $750 + $2,250 + $75 - $900) - (10% × $26,000)

Peter is a plumber employed by a major contracting firm. During the current year, he paid the following miscellaneous expenses: Unreimbursed employee business expenses $450 Union dues $600 Tax return preparation fee $100 Safe deposit box rental fee (used only for personal effects) $20 If Peter were to itemize his deductions for the current year, what amount could he claim as miscellaneous itemized deductions (before applying the 2 percent of adjusted gross income limitation)?

$1,150 Math: 450 + 600 + 100 = 1,150

During the current year, Mary paid the following expenses: Prescription drugs $490 Aspirin and over the counter cold capsules $130 Hospital and doctors $700 Life insurance $260 What is the total amount of medical expenses (before considering the limitation based on adjusted gross income) that would enter into the calculation of itemized deductions on Mary's current year income tax return?

$1,190 Math: 490 + 700 = 1,190

Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2015, Clark earned a salary of $32,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2015. How much can Clark claim as a child and dependent care credit in 2015?

$1,326 Math: (3,600 + 1,500) x 26%

Charles, a corporate executive, incurred business related, unreimbursed expenses in the current year as follows: Entertainment $1,200 Transportation $600 Education $300 Assuming that Charles itemizes his deductions, how much of these expenses should he deduct on his current year Schedule A, before considering the 2 percent of adjusted gross income limitation?

$1,500 Math: (1,200 / 2) + 600 + 300 = 1,500

Denice is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2015 is $81,500. Denice's child tax credit for 2015 is:

$1,650 Math: (2 × $1,000) - [($81,500 - $75,000) / $1,000 rounded up to the nearest whole number × $50]

Which of the following is not an exemption from minimum essential coverage for health insurance:

the taxpayer's income of less than 200% of the federal poverty level

What is the maximum amount of home equity debt (not acquisition debt) on which interest is fully deductible?

$100,000

Jennie receives $12,000 (of which $2,000 is earnings) from a Qualified Tuition Program. She uses the funds to pay for new furniture for her apartment. What amount is taxable to Jennie?

$2,000

Randy is advised by his physician to install an elevator in his residence, since he is afflicted with heart disease. The cost of installing the elevator is $10,000 and it has an estimated useful life of 10 years. He installs the elevator in January of the current year, and it increases the value of his residence by $8,000. Disregarding the limitation based on adjusted gross income, how much of the cost of the elevator may Randy take into account in determining his medical expense deduction for the current year?

$2,000 Math: 10,000 - 8,000 = $2,000

For 2015, Eugene and Linda had adjusted gross income of $30,000. Additional information for 2015 is as follows: Cash contribution to church $1,600 Tuition paid to a parochial school $1,200 Contribution to a qualified charity $400 Cash contribution to a needy family $100 What is the maximum amount that they can use as a deduction for charitable contributions for 2015?

$2,000 Math: 1,600 + 400 = 2,000

Steve goes to Tri-State University and pays $40,000 in tuition. Steve works a part-time job to pay for his schooling and has an AGI of $17,000. How much is his American Opportunity tax credit?

$2,500

Margo has $2,200 withheld from her wages for state income taxes during 2015. In March of 2015, she paid $400 in additional taxes for her 2014 state tax return. Her state income tax liability for 2015 is $2,700 and she pays the additional $500 when she files her 2015 state tax return in April of 2016. What amount should Margo deduct as an itemized deduction for state income taxes on her 2015 federal income tax return, assuming she elects to deduct state and local income taxes?

$2,600 Math: 2,200 + 400

Jerry and Ann paid the following amounts during the current year: Interest on automobile loan $1,500 Interest on bank loan (proceeds were used to purchase municipal bonds) $5,000 Qualified home mortgage interest $3,150 What is the maximum amount they can use as interest expense in calculating itemized deductions for the current year?

$3,150

Bill has a mortgage loan on his personal residence. He decides to pay 18 months of interest in advance on October 1, 2015. The total advanced interest payment is $36,000. How much of the advance interest payment can he deduct in 2015?

$6,000 Math: (36,000 / 18 months) x 3 months =

Robert and Mary file a joint tax return for 2015 with adjusted gross income of $34,000. Robert and Mary earned income of $20,000 and $14,000, respectively, during 2015. In order for Mary to be gainfully employed, they pay the following child care expenses for their 4-year-old son, John: Union Day Care Center $1,700 Wilma, baby sitter (Robert's mother) $1,000 What is the amount of the child and dependent care credit they should report on their tax return for 2015?

$675 Math: (1,700 + 1,000) x 25% = 675

Which one of the following taxpayers qualify for the earned income credit?

A 31-year-old construction worker with $22,000 of AGI and two children.

Which of the following employees may deduct the cost of a uniform?

A member of the clergy that must wear ornate robes for special ceremonies May NOT deduct uniform cost: -A construction worker required by her employer to wear blue jeans -A stock broker required by her employer to wear a business suit -A police detective who must wear a suit and tie while on duty -A delivery person who must wear khaki-colored clothes on the job

To qualify for the additional child tax credit

All of these choices are required to qualify for the additional child tax credit.

Which one of the following is not tax deductible?

All of these choices are tax deductible. Tax Deductible: -Property taxes -Real estate taxes -State income taxes -Local income taxes

Which of the following is not deductible as an itemized deduction?

All of these choices may be deductible as itemized deductions. Itemized Deductions: -Personal property taxes -Local income taxes -State income taxes -Charitable contributions

A parent may elect to include a child's income in the parent's return if:

All of these choices must be met for a parent to elect to include a child's income in the parent's return. -The child's gross income is more than $1,050 and less than $10,500. -The child is under age 18. -The child's income is only from interest and dividend distributions.

Which of the following is not a requirement to claim an earned income credit?

At least one child claimed as a dependent Earned Income Credit Requirement: -US citizenship or resident alien status -At least $1 of earned income

Which of the following is not a true statement regarding community property law?

Colorado, Ohio, and Florida are community property states.

What income tax form does an employee use to report business expenses that are not reimbursed by an employer under an accountable plan?

Form 2106, Employee Business Expenses

Which of the following is not an itemized deduction?

IRA contribution deduction Itemized Deductions: -Union dues -Medical expenses -Personal property taxes

In the case of the adoption of a child who is not a U.S. citizen or resident of the U.S., the credit for qualified adoption expenses is available:

In the year the adoption becomes final.

Which of the following is NOT deductible as a medical expense on Schedule A?

Payments for marriage counseling Deductible medical expenses: -Payments to a nurse -Payments for dentures -Payments for psychiatric care

Which of the following charitable contributions is not tax deductible?

Time donated to a qualified veterans' organization. Tax Deductible Charitable Contributions: -Donation of a car to a qualified non-profit organization. -Cash donated to a qualified church. -Clothing donated to a qualified veterans' organization.

Problem 5-11 (Algorithmic) Interest (LO 5.3) Janet and James purchased their personal residence 15 years ago for $492,500. For the current year, they have an $123,125 first mortgage on their home, on which they paid $6,156 in interest. They also have a home equity loan secured by their home with a balance throughout the year of $117,500. They paid interest on the home equity loan of $11,750 for the year. Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for the current year. Note: Round any fraction to five decimal places; then, round your final answers to the nearest dollar. a. Qualified residence acquisition debt interest b. Qualified home equity debt interest

a. $ b. $

Problem 6-20 (Algorithmic) Education Tax Credits (LO 6.5) Janie graduates from high school in 2015 and enrolls in college in the fall. Her parents (who file a joint return) pay $13,725 for her tuition and fees. If required, round your computations to the nearest whole value. a. Assuming Janie's parents have AGI of $168,000, what is the American Opportunity tax credit they can claim for Janie? b. Assuming Janie's parents have AGI of $67,200, what is the American Opportunity tax credit they can claim for Janie?

a. $ b. $

Problem 6-33 (Algorithmic) Unearned Income of Minor Children and Certain Students (LO 6.10) Nikkie and Jean have two children, Richard (age 4) and Roberta (age 3). For purposes of the parental tax, Richard has net unearned income of $4,700 and Roberta has net unearned income of $2,820. Assuming that their total parental tax for 2015 is $4,800, allocate the total parental tax to Richard and Roberta. If required, round your answers to the nearest whole dollar. a. Richard's parental tax b. Roberta's parental tax

a. $ b. $

Problem 5-9 (Algorithmic) Interest (LO 5.3) Matthew borrows $165,000 to invest in bonds. During the current year, his interest on the loan is $16,500. Matthew's interest income from the bonds is $9,900. This is Matthew's only investment income. a. Calculate Matthew's itemized deduction for investment interest expense for this year. b. Is Matthew entitled to a deduction in future years?

a. $9,900 b. yes

Amy paid the following interest expense during the current year: Qualified home mortgage interest $5,000 Credit card interest $1,000 Personal bank loan interest $3,000 What is the amount of Amy's interest deduction for the current year?

$5,000

An accountable expense reimbursement plan:

Requires the employee to substantiate expenses with receipts and to return any excess reimbursement.

Damage resulting from which of the following would probably not give rise to a casualty loss deduction?

Rust

Which of the following types of income is not subject to the "kiddie tax?"

Salary income

Which of the following itemized deductions may not be deducted in computing the individual alternative minimum tax?

State income taxes