yeet8
7. All capital gains are taxed at preferential rates.
FALSE
All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.
FALSE
Alton reported net income from his sole proprietorship of $90,000. To determine his self employment tax, he would multiply $90,000 by the self-employment tax rate.
FALSE
An 80-year-old taxpayer with earned income and no dependent children could qualify for the earned income credit.
FALSE
Both the width (or range) of the tax brackets (the amount of income taxed at a particular rate) in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate) vary by filing status.
FALSE
Business credits are generally refundable credits.
FALSE
Depending on the year, the original (unextended) due date for an individual's tax return may be before April 15.
FALSE
Due to the alternative minimum tax rate structure, timing tax planning strategies are not effective under the alternative minimum tax system.
FALSE
Employee status is always better than independent contractor status for a taxpayer because the employee is responsible for paying the employee portion of the FICA taxes.
FALSE
Employees are allowed to deduct a portion of the FICA taxes they pay.
FALSE
Employees must pay both Social Security tax and Medicare tax on all of their wages no matter the amount of their wages.
FALSE
For alternative minimum tax purposes, taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.
FALSE
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.
FALSE
Generally, income from an active trade or business is subject to the 3.8% net investment income tax.
FALSE
Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.
FALSE
Long-term capital gains are taxed at the stated AMT rate for purposes of the alternative minimum tax.
FALSE
Long-term capital gains, dividends, and taxable interest income are all taxed at preferential rates.
FALSE
Parents may claim a child and dependent care credit for expenses incurred in providing for their dependents while the parents work as long as the children are over age 14 and under age 20 at year- end.
FALSE
Parents may claim a child tax credit for a dependent child who is 22 years of age at the end of the year if the child is a full-time student.
FALSE
Self-employed taxpayers are allowed to deduct the full amount of the self-employment taxes they pay.
FALSE
Tax credits reduce a taxpayer's taxable income dollar for dollar.
FALSE
The alternative minimum tax is the AMT base multiplied by the AMT rate.
FALSE
The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.
FALSE
The child and dependent care credit entitles qualifying taxpayers to a credit equal to the full amount of qualified expenses.
FALSE
The late payment penalty is based on the amount of tax owed and the number of days that the tax is not paid. The maximum amount of the penalty is unlimited.
FALSE
The tax rate schedules are set up to tax lower levels of income at higher tax rates than higher levels of income.
FALSE
To qualify for the earned income credit, the taxpayer must have a qualified dependent.
FALSE
All else equal, a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.
TRUE
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.
TRUE
Depending on the year, the original (unextended) due date for an individual's tax return may be after April 15.
TRUE
Employees are not allowed to deduct FICA taxes they pay
TRUE
For married couples, the .9 percent additional Medicare tax is based on the couple's combined wages.
TRUE
For married couples, the Social Security wage base limitation applies separately to each spouse.
TRUE
In certain circumstances a child with very little income may have their income taxed at the parents' marginal tax rate.
TRUE
John and Sally pay Janet (Sally's older sister) to watch John and Sally's child Dexter during the day. Janet cares for Dexter in her home. John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter.
TRUE
Katlyn reported $300 of net income from her sole proprietorship. She is not required to pay self- employment tax.
TRUE
Regular taxable income is the starting point for determining the alternative minimum tax.
TRUE
Tax rate schedules are provided for use by (relatively) higher income taxpayers while the tax tables are provided for use by (relatively) lower income taxpayers.
TRUE
Taxpayers are generally allowed to carry back and/or carry forward unused business credits.
TRUE
Taxpayers are not allowed to deduct personal or dependency exemptions for alternative minimum tax purposes.
TRUE
The AMT exemption amount is phased-out for high income taxpayers.
TRUE
The child tax credit is subject to phase-out based on the taxpayer's AGI.
TRUE
The earned income credit is sometimes referred to as a negative income tax.
TRUE
The kiddie tax does not apply to children over 24 years old at the end of the tax year.
TRUE
When applying credits against a taxpayer's gross tax liability, nonrefundable personal credits are applied first, then business credits, and finally refundable personal credits.
TRUE
