Chap 7 Tax credits

Which of the following does not qualify for the Residential Energy-Efficient Property (REEP) credit?

Installation of solar water-heating property to heat a swimming pool

Which of the following is required to qualify for the child tax credit of $2,000 per child (before any phase-out)?

The child must be a "qualifying child."

Janie, a 36-year-old single taxpayer, has AGI of $31,000 in 2019. Janie failed to obtain minimum essential coverage for any part of 2019. What is Janie's federal individual shared responsibility?

$0

Sarah is 26 years old and graduated in May with an MBA from Big State University. In this tough job climate, it took her a while to obtain employment, and she started work in November 2019. She earned $8,333 and had interest income of $5,000 from a savings account. She has no qualifying child. What is Sarah's earned income credit for 2019?

$0

What is the amount of the individual shared responsibility in 2019?

$0

Jessica and Donald have two young children. The children go to daycare during the winter and during the summer they are looked after by Jessica's 20-year-old cousin. The total cost of the child care is $7,000. Jessica and David both work and they earn $25,000 and $20,000 respectively. They have no other income. What may they claim as a child care credit?

$1,200

Manuel is a U.S. taxpayer working abroad and has the following foreign income and tax: income from Country A, $40,000 taxed at 20 percent; and income from Country B, $30,000 taxed at 30 percent. Manuel also has U.S. taxable income (not including the foreign income) of $70,000 and his U.S. tax liability is $20,000. What is Manuel's foreign tax credit?

$10,000

David and Susan have AGI of $220,000 in 2019. In that year, they finalize the adoption of a U.S. child without special needs. Their qualified expenses were $10,000 paid in 2018 and $8,000 paid in 2019. What is the adoption credit they may claim in 2019?

$10,968

Gary decides 2019 is his year to "go green." He purchases a Nissan Leaf for $30,000 and spends another $30,000 on a solar system designed to generate electricity and to heat water for his vacation home. He does not own a swimming pool or a hot tub. What is the total amount of the credit(s) he may claim on his 2019 return?

$16,500

Robert takes one class a semester at EPU (Expensive Private University) where he pays $10,000 for tuition and fees in 2019. Robert has AGI of $50,000. How much is his lifetime learning credit?

$2,000

Ted and Alice are married and have two children under the age of 16. For 2019, their AGI is $420,000. What may they claim as a child tax credit?

$3,000

David is divorced and has custody of his 2-year-old son. David's wages are $18,000 for the year and his AGI is $20,000. His tax liability is $370. What is David's earned income credit from the EIC table?

$3,367

Linda is unmarried and has a 4-year-old dependent daughter. Linda works at a local fast food restaurant and earns $15,000. She also has interest income of $1,200 on an account left to her by her grandfather. Linda has $0 tax liability for the year. What is Linda's earned income credit from the EIC table?

$3,526

Rick has net taxable income of $20,000 from Country Z which imposes a 40 percent income tax. Rick also has net taxable income from U.S. sources before foreign taxable income of $80,000, and U.S. tax liability, before the foreign tax credit, of $22,000. What is the amount of Rick's foreign tax credit?

$4,400

Courtney and Ralph are married, file a joint return, and have two dependent children, ages 10 and 12. Their combined income is $410,000. By how much is their child credit reduced in 2019?

$500

Marge and Lester file a joint tax return for 2019, with adjusted gross income of $33,000. Marge and Lester earned income of $20,000 and $12,000 respectively. In order for Marge to be gainfully employed, they pay the following child care expenses for their 4-year-old son, Kevin: San Diego Child Care Center $1,750 Ann, the baby sitter $1,250 Assuming they do not claim any other credits against their tax, what is the amount of the child and dependent care credit that they should report on their tax return for 2019?

$780

Which of the following is not true regarding the child tax credit? a. Children 17 or older are not qualifying children. b. The phase-out thresholds for the child tax credit are currently not adjusted for cost-of-living increases. c. The credit is $2,000 per qualifying child. d. For married filing joint taxpayers, the credit is phased out starting at AGI of $200,000.

For married filing joint taxpayers, the credit is phased out starting at AGI of $200,000.

A taxpayer may claim a REEP credit for which of the following?

Installation of solar panels for heating water in his vacation home

Which of the following is not true of the child and dependent care credit? a. Even taxpayers with very high incomes are eligible for this credit. b. If married, both taxpayers must be employed or one must qualify as disabled or a student. c. The maximum percent of qualified expenses used to calculate the credit is 35 percent and the minimum percent is 20 percent. d. The child must be under the age of 13. e. The maximum expenses taken into consideration are $3,000 for one child and $6,000 for two or more children. f. Outside daycare expenses qualify as expenses for the credit, but in-house babysitters do not.

Outside daycare expenses qualify as expenses for the credit, but in-house babysitters do not.

Which of the following statements is not correct? a. Expenses paid for room and board do not qualify for the education credits. b. The persons who claim the students as dependents can claim the educational credit. c. The American Opportunity tax credit and the lifetime learning credit are both phased out at different levels of adjusted gross income. d. Taxpayers can take both the American Opportunity tax credit and the lifetime learning credit for the same student in the same year. e. All of these statements are correct.

Taxpayers can take both the American Opportunity tax credit and the lifetime learning credit for the same student in the same year.

Mr. and Mrs. Brown adopted a child in 2019. During 2019, Mrs. Brown 's employer pays $3,000 of her adoption expenses under an adoption assistance program. The Browns also pay $12,300 out of their pocket during 2019. Their AGI is $100,000. Which of the following is accurate?

The $3,000 of adoption expenses will not be included as wages on Mrs. Brown's W-2 and the Browns will also be able to claim a $12,300 adoption credit on their 2019 tax return.

Which of the following is true of the American Opportunity tax credit? a. It is available for the first 2 years of post-secondary education only. b. The credit is available for qualifying education expenses paid on behalf of the taxpayer and his or her spouse as well as expenses paid for dependents. c. The credit is 100 percent of the first $2,000 of tuition and fees and 50 percent of the next $2,000. d. It is fully refundable even if there is no tax liability.

The credit is available for qualifying education expenses paid on behalf of the taxpayer and his or her spouse as well as expenses paid for dependents.

Roger's foreign tax credit is limited by the overall limitation. In 2019, he has unused credit of $4,000. How does Roger treat this unused credit?

The credit may be carried back 1 year and forward 10 years.

Mr. French had the following income and taxes: Net foreign income $10,000 Foreign taxes $4,000 Net U.S. income (including foreign income) $100,000 U.S. taxes (before foreign tax credit) $30,000 What is the amount of the foreign tax credit?

The current year foreign tax credit is $3,000.

Which of the following statements is true concerning the individual shared responsibility?

The individual shared responsibility was repealed for 2019.

Which of the following is not a requirement to claim the premium tax credit?

The premium tax credit is claimed at the time the health coverage is purchased

John works for Grande Corporation which has an adoption assistance plan. In 2019, John and Marie finalize the adoption of a U.S. child. During 2019, John and Marie pay qualified expenses of $10,000 and John's company pays $5,000 to an attorney for other expenses under the adoption assistance plan. How are these amounts treated in John and Marie's 2019 tax return? Assume their AGI is below $211,160.

They may claim a credit of $10,000 and the full $5,000 paid by the company is excluded from their income.