9. Tax Credits (Form 1040, Lines 47 through 53 and Lines 64a through 71)
Conner and Matsuko paid $1,000 and $2,000, in qualifying expenses for their two sons, Jason and Justin, respectively, to attend Arizona State University. Jason is a sophomore and Justin is a freshman. Conner and Matsuko's AGI is $195,000. What is their allowable American opportunity tax credit after the credit phase-out based on AGI is taken into account? A) $0. B) $2,000. C) $3,050. D) $3,700.
A) $0.
Harrison is single and his son Jack is 12 years old. If his AGI is $195,000, what amount of child tax credit can Harrison claim? A) $0. B) $1,000. C) $2,000. D) $2,500.
A) $0.
Nick and Katelyn paid $1,600 and $2,100 in qualifying expenses for their two daughters, Nicole and Naomi, respectively, to attend the University of Nevada. Nicole is a sophomore and Naomi is a freshman. Nick and Katelyn's AGI is $202,000. What is their allowable American opportunity tax credit after the credit phaseout based on AGI is taken into account? A) $0. B) $2,000. C) $3,050. D) $3,700.
A) $0.
Noah and Olivia have two boys, Jordan, age 6 and Jack, age 5. Their AGI is $176,000. What amount of child tax credit can they claim? A) $0. B) $1,000. C) $2,000. D) $2,300.
A) $0.
Andrew and Marina are married filing joint and have modified AGI of $47,500. Andrew made a contribution to a qualified retirement plan of $2,000 during the year. How much is their retirement savings contributions credit? A) $200. B) $1,000. C) $1,250. D) $2,500.
A) $200.
Edward and Ethel are ages 71 and 59, respectively, and file a joint return. They have AGI of $11,000 and received $2,000 in nontaxable social security benefits. How much can Edward and Ethel take as a credit for the elderly or the disabled? A) $375 B) $1,125 C) $2,000 D) $2,500
A) $375
Bob and Joyce are married, file a joint return, and have one dependent child, Dane, age 9. Bob has earned income of $72,000. Joyce was a full-time student (for nine months) with no income. They paid a qualified day care center $4,000. What amount of child and dependent care credit can Bob and Joyce receive? A) $450. B) $600. C) $800. D) $1,200.
A) $450.
Kevin paid $2,550 in qualifying expenses for his daughter, Jasmine, who attended a community college. What is Kevin's lifetime learning credit without regard to AGI limitations or other credits? A) $510. B) $1,650. C) $2,000. D) $2,550.
A) $510.
Rolando and Silvia have modified AGI of $200,000. They adopted a boy from Guatemala, whose adoption became final in the current year. They incurred a total of $15,000 in qualified adoption expenses. What is the amount of adoption credit they can claim in the current year? A) $9,396. B) $10,000. C) $12,650. D) $15,000.
A) $9,396.
A student can only receive the American opportunity tax credit if he/she is enrolled in the first four years of postsecondary education. A) True B) False
A) True
Credit for child and dependent care expenses can only be claimed if a taxpayer incurs employment- related expenses to care for one or more qualifying individuals. A) True B) False
A) True
The child tax credit is reduced if AGI exceeds $110,000 for married filing joint taxpayers. A) True B) False
A) True
The maximum American opportunity tax credit for 2012 is $2,500 per student. A) True B) False
A) True
The maximum amount per year of dependent care expenses that can be used for calculating the credit for child and dependent care expenses is $3,000 for one qualifying individual. A) True B) False
A) True
Sam is a single father with two dependent twin daughters, Amy and Amanda, ages 4. He has AGI of $31,000 and paid $5,300 to a qualified day care center. What amount of credit can Sam receive for child and dependent care credit? A) $1,060. B) $1,431. C) $3,000. D) $5,300.
B) $1,431.
Vincent and Maria, whose modified AGI is $164,000, adopted a little girl from Mexico which was finalized in 2012. They incurred a total of $16,000 in qualified adoption expenses. What is the amount of adoption credit they can claim in 2012? A) $0. B) $12,650. C) $16,000. D) $18,000.
B) $12,650.
Kim paid the following expenses during November 2012 for her son Joshua's spring 2012 expenses, which begins in January 2013: In addition, Kim's sister paid $800 for college fees on behalf of Joshua directly to the college. Joshua is claimed as Kim's dependent on her tax return. How much of the paid expenses qualify for purposes of the education credit deduction for Kim in 2012? A) $8,000. B) $14,800. C) $24,000. D) $28,500.
B) $14,800.
Andrew and Eunice are married filing jointly with AGI of $48,000. They contributed $1,800 to a qualified retirement plan. How much is their retirement savings contributions credit? A) $0. B) $180. C) $900. D) $1,800.
B) $180.
Matt is a single father. He paid $5,000 in qualifying expenses for his son, Kyle, to attend the University of Oregon. Kyle is a sophomore. Matt's AGI is $47,000. What is his allowable American opportunity tax credit after the credit phaseout based on AGI is taken into account? A) $0. B) $2,500. C) $4,000. D) $5,000.
B) $2,500.
Adrienne has total taxable income of $93,000 which includes $10,000 taxable income from India. She paid $2,800 in foreign income taxes, and her U.S. tax liability is $25,210. Adrienne's foreign tax credit is: A) $0. B) $2,711. C) $2,800. D) $25,210.
B) $2,711.
Brian and Clara paid $4,350 in foreign income taxes to Mexico. Their total income was $105,000, which included $16,000 of foreign income. Their U.S. tax liability is $22,750. How much can Brian and Clara claim as foreign tax credit? A) $0 B) $3,467. C) $4,350. D) $16,000.
B) $3,467.
Juan paid $1,750 in qualifying expenses for his daughter who attended a community college. How much is Juan's lifetime learning credit without regard to AGI limitations or other credits? A) $250. B) $350. C) $825. D) $1,750.
B) $350.
Guillermo and Felicia are married, file a joint return, and have one dependent child/Hannah, age 6. Guillermo has earned income of $38,000. Felicia was a full-time student (for 8 months) with no income. They paid a qualified day care center $4,800. What is the amount of their child and dependent care credit for the year? A) $0. B) $460. C) $600. D) $4,800.
B) $460.
Ian and Jolene are ages 70 and 72, respectively, and file a joint return. They have AGI of $15,000 and received $1,000 in nontaxable social security benefits. How much can Ian and Jolene take as a credit for the elderly or the disabled? A) $225. B) $600. C) $1,000. D) $2,250.
B) $600.
Max and Nora have modified AGI of $75,000, and adopted a little boy from San Antonio, Texas, in the current year and incurred a total of $16,000 in qualified adoption expenses. Additionally, Max's employer provided the couple with adoption benefits of $4,000. What is the amount of adoption credit they can take this year? A) $4,000. B) $8,650. C) $12,650. D) $16,000.
B) $8,650.
Tuan and Marisa are married, file a joint return, and have two dependent children, Zack, age 6 and Aaron, age 5. Tuan has earned income of $72,000. Marisa was a full- time student (for nine months) with no income. They paid a qualified day care center $5,000. How much is Tuan and Marisa's child and dependent care credit for the year? A) $600. B) $900. C) $1,000. D) $1,200.
B) $900.
Brendan paid $950 to Brazil in foreign income taxes. His total income was $52,500, which included $12,000 of investment income from Brazil. His U.S. tax liability is $8,000. Brendan's foreign tax credit is: A) $0. B) $950. C) $1,829. D) $12,000.
B) $950.
In order to be eligible for the credit for the elderly or the disabled, the taxpayer must be age 55 or older or have retired on permanent disability. A) True B) False
B) False
The American opportunity tax and lifetime learning credits are available to taxpayers without any limitations due to AGI amounts. A) True B) False
B) False
The child tax credit of $1,000 per child is available for taxpayers with children under the age of 16. A) True B) False
B) False
The earned income credit (EIC) is NOT available for taxpayers without children. A) True B) False
B) False
The foreign tax credit is available only to individuals born in a foreign country. A) True B) False
B) False
The maximum adoption credit is 50% of all qualified expenses. A) True B) False
B) False
The maximum allowable lifetime learning credit per year is $2,000 per student. A) True B) False
B) False
The maximum contribution amount for the retirement savings contributions credit for each tax year is 20% of a taxpayer's AGI. A) True B) False
B) False
The retirement savings contributions credit is available for married filing joint taxpayers only. A) True B) False
B) False
The two types of education credits available, American opportunity tax credit and lifetime learning credit, may be used in combination in any given year to give the taxpayer the greatest tax advantage. A) True B) False
B) False
Which of the following statements is true with regard to child and dependent care expense credit? A) The maximum amount of expenses for one dependent is 35% of all qualified expenses. B) Married taxpayers may file separate returns and still qualify for the credit. C) If a spouse is attending school full- time, the credit cannot be claimed. D) The credit phases out completely if the taxpayer's AGI exceeds certain amounts.
B) Married taxpayers may file separate returns and still qualify for the credit.
Dane is a single father with two dependent children, Elle, age 7 and Eva, age 5. He has AGI of $61,000 and paid $6,100 to a qualified day care center for the two children. What amount of child and dependent care credit can Dane receive this year? A) $600. B) $1,000. C) $1,200. D) $1,220.
C) $1,200.
Casey and Lupe have AGI of $125,000. They have twin daughters, Ashley and Alley, ages 5. What amount of child tax credit can they claim? A) $0. B) $1,000. C) $1,250. D) $2,000.
C) $1,250.
Arin and Bo have $74,000 total taxable income, which includes $13,500 of taxable income from France. They paid $1,600 in foreign income taxes, and their U.S. tax liability is $17,610. Arin and Bo's foreign tax credit is: A) $0. B) $600. C) $1,600. D) $3,213.
C) $1,600.
Lupe paid the following expenses during December 2012 for her son David's spring 2012 college expenses. The semester begins in February 2013. In addition, David's grandfather paid $500 in fees on behalf of David directly to the college. David is claimed as a dependent on Lupe's tax return. How much of the above expenses qualify for purposes of Lupe's education credit deduction in 2012? A) $8,500. B) $16,000. C) $16,500. D) $24,500.
C) $16,500.
Molly is single with AGI of $22,500. During the year, she contributed $900 to an IRA. What amount of retirement savings contributions credit can Molly claim? A) $0. B) $90. C) $180. D) $900.
C) $180.
Mindy and Xavier had a tax liability of $475 before EIC. Their EIC for the current year is $2,578. What is their total tax refund or tax liability for the current year (assume they no other credits or additional tax liability)? A) $0. B) $475 tax liability. C) $2,103 tax refund. D) $2,578 tax refund.
C) $2,103 tax refund.
Victoria is a single with two qualifying children and AGI of $14,000. What is her EIC? A) $475. B) $3,169. C) $5,236. D) $5,891.
C) $5,236.
Jillian is single and her son, Parker is 12 years old. If her AGI is $76,200, what is her child tax credit for Parker? A) $0. B) $500. C) $900. D) $1,000.
C) $900.
Patricia is single and her son Quinn is age 11. If her AGI is $77,000, what amount of child tax credit can she claim? A) $0. B) $400. C) $900. D) $1,000.
C) $900.
Andy and Delilah both work and have one qualifying child. They had AGI of $21,000. What is their EIC? A) $0. B) $464. C) $2,396. D) $3,169.
D) $3,169.
Thomas and Emma are married, file a joint return, and have three qualifying children. Their AGI was $21,000. What is their EIC? A) $475. B) $3,169. C) $5,236. D) $5,891.
D) $5,891.
Which of the following statements regarding adoption credits is true? A) The maximum credit allowed per adopted child is $16,000. B) Qualified expenses may include reimbursements from employer programs. C) Adoption of foreign children does not qualify for the credit. D) The adoption credit may be limited if AGI amounts exceed certain levels.
D) The adoption credit may be limited if AGI amounts exceed certain levels.
