tax 8
Mr. and Mrs. X had adjusted gross income of $172,000 in 2022. Their daughter's eligible education expenses for her first year of college were $4,500 in 2022. What is the amount of American Opportunity Tax Credit that Mr. and Mrs. X may use in 2022?
$1,000
Mr. and Mrs. Greg adopted a child in the current year. During the year, the Gregs' qualified adoption expenses were $23,000, and they had an AGI of $270,000. What is the Gregs' Adoption Credit for 2022?
$0
A head of household taxpayer claiming an above-the-line IRA deduction of $6,000 with AGI of $30,000 may claim a maximum Retirement Savings Contribution Credit of
$1,000
Cathy, a single mother, has modified AGI of $86,000. In 2022, her daughter began work on her bachelor's degree. Cathy pays $6,000 in qualified tuition for her daughter's first semester. What is the amount of American Opportunity Tax Credit (AOTC) Cathy is allowed on her return?
$1,000
Which of the following is NOT a qualifying student for purposes of the Lifetime Learning Credit?
All are qualifying students for the Lifetime Learning Credit.
The Earned Income Credit is available to
All of the answers are correct.
All of the following statements with respect to qualifications for the Earned Income Credit are true EXCEPT
All of the following statements with respect to qualifications for the Earned Income Credit are true EXCEPT
Hollie filed as head of household and would like to take the Child Tax Credit for Amanda in 2022. Which of the following statements is false regarding the Child Tax Credit?
Amanda must be under 18 at the end of the tax year.
Marge Godfrey sold her investment property March 30, 2022, at a gain of $50,000. Marge expects to owe $10,000 in additional income taxes on this sale. She had a tax liability of $900 for 2021 and will have no withholding for 2022. Marge's first estimated tax payment is due on what date?
April 15, 2022.
In 2022, Ruth had wages of $34,000, and her husband John's wages were $27,000. They have three children ages 3, 6, and 9. They paid a total of $7,200 to Creative Child Care School, Inc. Assuming a 20% credit rate, what will be their Child and Dependent Care Credit?
$1,200
Marc and Mandy's dependent children, ages 3 and 4, attend day care where the total expense for 2022 was $5,200, $2,600 per child. Marc earned $20,000 and Mandy earned $15,000, and the two are a married couple. How much Child and Dependent Care Credit can they claim for 2022?Adjusted Gross IncomePercentage for Credit$15,00035$20,00032$35,00025
$1,300
Miss Dunn, a single parent who keeps up a home for herself and her two preschool children, paid work-related expenses of $5,200 for child care at a nursery school. Her adjusted gross income is $20,000, the sole source of which is wages. What amount can she claim as a Child and Dependent Care Credit?
$1,664
What is the maximum amount of qualified expenses allowed per year for the Lifetime Learning Credit?
$10,000
Tom, age 45, contributed $1,000 to his 401(k) in the current year. Additionally, Tom rolled over $25,000 from a separate 401(k). Tom had AGI of $24,000. If Tom files as a single taxpayer, what amount of Saver's credit may he claim for the year?
$100
Dan and Marge filed a joint return for 2022. Dan was 67 years old, and Marge's 65th birthday was January 1, 2023; neither of them are disabled. During 2022, they received total nontaxable income of $3,800 from Social Security. Their adjusted gross income was $16,000. How much can they claim as a credit for the elderly before any income tax limitation?
$105
Mr. and Mrs. Ball adopted a child in the current year. During the year, the Balls' qualified adoption expenses were $15,000, and their adjusted gross income was $228,410. What is the amount of the Balls' Adoption Credit for the current year?
$13,029
Fred and Tonya adopted a special-needs child in 2022. Their AGI was $200,000, and they incurred qualified adoption expenses of $15,800. What is their allowable Adoption Credit for the current year?
$14,890
Liz incurred qualified adoption expenses of $17,000 in 2022. Liz's AGI for 2022 was $60,000. What is the amount of the credit Liz can take in 2022 for the adoption expenses she incurred?
$14,890
Mr. and Mrs. Clegg adopted a child in the current year. During the year, the Cleggs' qualified adoption expenses were $15,000, and they had an AGI of $70,000. What is the Cleggs' Adoption Credit for 2022?
$14,890
An employer must deduct and withhold Social Security tax up to what amount of an employee's wages?
$147,000
Mr. and Mrs. Ring, who file a joint tax return, have adjusted gross income of $110,000 for 2022. Their daughter Vicky was in her fifth year of college in 2022. The expenses incurred in 2022 were $20,000 for tuition. What is the amount of Lifetime Learning Credit that the Rings may claim in 2022?
$2,000
Sally and Joe Johnson have one child who is a U.S. citizen under the age of 17. Their earned income for all of 2022 was $80,000. What is the amount of Child Tax Credit that they may take in 2022 if they file a joint return?
$2,000
Mr. and Mrs. Donegan are filing a joint return for the current year. Mr. Donegan was employed the full year. Mrs. Donegan was a full-time student for 9 months and was not employed at any time during the year. For the 9 months that Mrs. Donegan was a student, she paid $250 per month to a child care center to care for their 4-year-old daughter. For purposes of the Child and Dependent Care Credit, Mrs. Donegan is considered to have current-year earned income of
$2,250
Joe and Mary Day's daughter Julie is a first-year student in college during 2022. Joe and Mary, who filed jointly, had an adjusted gross income of $128,100, and Julie's eligible expenses were $8,000. What is the amount of the American Opportunity Tax Credit that the Days may use in 2022?
$2,500
Taylor and Graham Wood's son Corey is a first-year college student in 2022. Taylor and Graham have an adjusted gross income of $120,000, and Corey has eligible education expenses of $7,000 in 2022. What amount can the Woods claim for the American Opportunity Tax Credit in 2022?
$2,500
Jerry has two dependent children, Greg and Mandy, who are attending an accredited college in 2022. Greg, a fifth-year senior since January 1, spent $7,000 for tuition and fees. Mandy, a freshman with no prior post-secondary education, had tuition expenses of $4,000. Jerry meets all the income and filing status requirements for the education credits. There is no tax-free assistance to pay these expenses. Jerry's tax liability before credits equals $14,000. What is the maximum credit that Jerry may claim on his 2022 tax return?
$2,500 AOTC and $1,400 Lifetime Learning Credit.
For the current year, Gannon Corporation has U.S. taxable income of $500,000, which includes $100,000 from a foreign division. Gannon paid $45,000 of foreign income taxes on the income of the foreign division. Assuming Gannon's U.S. income tax for the current year before credits is $105,000, its maximum Foreign Tax Credit for the current year is
$21,000
The following information pertains to Bald Corporation's operations for the current year:Worldwide taxable income$300,000U.S. source taxable income180,000U.S. income tax before Foreign Tax Credit63,000Foreign nonbusiness-related interest earned30,000Foreign income taxes paid on nonbusiness-related interest earned6,000Other foreign-source taxable income90,000Foreign income taxes paid on other foreign-source taxable income30,000What amount of Foreign Tax Credit may Bald claim for the current year?
$24,900
Bethany is single and has adjusted gross income of $40,000. Bethany works full-time and keeps up a home for herself and her dependent father, who is not able to care for himself. She pays a housekeeper $1,000 per month to care for and provide meals to her father. What is the maximum amount of annual housekeeper expenses that Bethany can use to compute her Child and Dependent Care Credit?
$3,000
Michael had to pay $4,000 alternative minimum tax last year. This year, his regular income tax is $60,000 and tentative minimum tax on his income is $57,000, so he will pay only regular income tax. How much credit for prior year minimum tax can he take this year?
$3,000
Rose, a single parent, has two children ages 10 and 13. She earned $28,000 in 2022, and her investments earned $2,000 interest income. Taxable income on her 2022 return was $22,000. After applying her withholding, Rose's tax due was $800. Using the following Earned Income Credit information, determine Rose's balance due/overpayment for 2022: Credit figured using $30,000 adjusted gross income = $4,085 Credit figured using $28,000 earned income = $4,507 Credit figured using $22,000 taxable income = $5,770
$3,285 overpayment (refund).
Virginia's earned income for 2022 was $24,000. She paid $3,000 to a qualifying child care center for the care of her 2-year-old son while she worked. She received $2,000 from Social Services to assist with her child care expenses. Compute Virginia's Child and Dependent Care Credit for 2022 from the following excerpt from the child and dependent care table:
$300
Mr. and Mrs. Robinson are both over age 65 and file a joint return. During the current year, they received $4,000 in nontaxable benefits from Social Security. This was their only nontaxable income. Their adjusted gross income was $12,000. How much can they claim as tentative credit for the elderly?
$375
Ms. Gower is 58 years old, is single, and files Form 1040. In 2020, she retired on permanent and total disability. Ms. Gower received the following income for 2022: Nontaxable Social Security $2,000 Interest (taxable) 100 Taxable disability pension 8,400 What is Ms. Gower's Credit for the Elderly or the Disabled in 2022 before any income tax limitations?
$375
Liz has adjusted gross income of $65,000, no foreign source income, and a tax before credits of more than $3,000. Her dependents include her son, Ben, who turned 17 in September 2022; her daughter, Sheila, who is 12; and her niece, Abigail, who is 6. All of the children are U.S. citizens and lived with her all year. What is the amount of Child Tax Credit she may claim on her 2022 return filed April 15, 2023?
$4,000
Ms. Smith, a calendar-year taxpayer, made estimated tax payments of $1,000 and got an extension of time to October 15, Year 2, to file her Year 1 tax return. She filed her return on October 1, Year 2. She filed an amended return on December 11, Year 3, and paid an additional $400 tax due on that date. On November 26, Year 5, Ms. Smith claimed a refund of $800 on the Year 1 return amended in December Year 3. What is the maximum amount she could receive?
$400
Juliet Corporation has U.S. taxable income of $800,000, of which 25% is from a foreign division. Juliet paid $45,000 of foreign income taxes on the income of the foreign division. Assuming Juliet's U.S. income tax for the current year before credits is $168,000, its maximum Foreign Tax Credit for the current year is
$42,000
Mr. Bagley, a self-employed musician, timely filed his Year 1 income tax return, which showed an AGI of $180,000 and total tax of $45,000. He expects his Year 2 total tax to be $70,000. What is his required payment through withholding and estimated tax for Year 2?
$49,500
Jerry and Ann Moore are married and keep up a home for their two preschool children, ages 2 and 4. They claim their children as dependents and file a joint return using Form 1040. Their adjusted gross income (AGI) is $27,500. Jerry earned $12,500, and Ann earned $15,000. During the year, they pay work-related expenses of $3,000 for child care for their son, Daniel, at a neighbor's home and $2,200 for child care for their daughter, Amy, at Pine Street Nursery School. How much of their child care payments are eligible for the Child and Dependent Care Credit on their return?
$5,200
Zach and Myra have four children ranging in age from 2 to 10. Zach has wages of $80,000, and Myra has wages of $40,000. Two of the children went to Child Nursery School, Inc., at a total cost of $18,000. The two older children attended a qualified after-school program that costs $2,500. What amount of childcare expenses can be used to determine the Child and Dependent Care Credit on their 2022 return?
$6,000
Smithco, Inc., a domestic corporation, was paid $20,000 of the total of $100,000 in dividends paid by a foreign corporation this year. Smithco owned 20% of the foreign corporation's stock. The foreign corporation paid $35,000 in foreign taxes and had accumulated profits of $120,000 after payment of its foreign taxes for the last 11 years. Smithco also had $1,000 in taxes withheld by the foreign country on the dividend. Smithco has a Foreign Tax Credit before limitation of
$6,833
When considering a taxpayer's Retirement Savings Contribution Credit, what is the AGI limit for a taxpayer who is married and filing jointly?
$68,000
During the current year, Bold, Inc., had worldwide taxable income of $2,100,000 and a tentative U.S. income tax of $270,000. Bold's taxable income from business operations in Colombia was $700,000, and foreign income taxes imposed were $140,000 stated in U.S. dollars. How much should Bold claim as a credit for foreign income taxes on its U.S. income tax return in the current year?
$90,000
Trapezoid, Inc., had worldwide taxable income in the current year of $2.5 million. Seventy-five percent of this was earned within the United States, with the remainder being earned in Laos. Trapezoid paid $10,000 in foreign income taxes on $200,000 of nonbusiness-related interest earned in Laos. Trapezoid also paid $150,000 in taxes to Laos on foreign source business income of $425,000. Trapezoid's tentative U.S. income tax was $525,000. What is Trapezoid's Foreign Tax Credit in the current year?
$99,250
Which of the following statements is NOT true regarding the Child Tax Credit for 2022?
A qualifying child must be under age 13 at the end of 2022.
For which of the following dependent children will a parent NOT be allowed a Child Tax Credit?
19-year-old stepchild.
If an individual paid income taxes in the current year through withholding but did not file a current-year return because his or her income was insufficient to require the filing of a return, the deadline for filing a refund claim is
2 years from the date the tax was paid.
All of the following individuals, who meet the income and residency requirements, qualify for the Earned Income Credit EXCEPT
A 22-year-old married individual whose spouse is 18 years old.
None of the following are qualifying persons for purposes of claiming the Child and Dependent Care Credit EXCEPT
A dependent who was physically unable to care for himself or herself for whom the dependency exemption would have been claimed if the dependent had earned less than $4,400 in gross income.
Each of the following can be qualifying persons for purposes of claiming the Child and Dependent Care Credit EXCEPT
A dependent, age 14, for whom the dependency exemption is claimed.
Each of the following can be qualifying persons for purposes of claiming the Child and Dependent Care Credit EXCEPT
A dependent, age 5, who is sent to an overnight camp while the parent is out of town on business.
Which of the following conditions would NOT prevent an individual from qualifying for the Earned Income Credit for the year 2022?
Being age 25.
Which of the following situations will disqualify a single individual from claiming the Premium Tax Credit?
Being claimed as a dependent on the individual's parent's joint tax return.
In Year 1, Ron and Cindy had an alternative minimum tax (AMT) liability of $19,000. This was the first tax year in which they had ever paid the AMT. They recomputed the AMT amount using only exclusion preferences and adjustments; the recomputation resulted in a $8,500 AMT liability. In Year 2, Ron and Cindy had a regular tax liability of $45,000. Their tentative minimum tax liability was $42,000. What is the amount of Ron and Cindy's Minimum Tax Credit (MTC) carryover to Year 2? What is the amount of the carryover that can be used in Year 2?
Carryover to Year 2 $10,500 Carryover Used $3,000
Which of the following are expenses that are NOT eligible for the Adoption Credit?
Child care expenses.
Which one of the following is NOT a qualifying person for purposes of the Child and Dependent Care Credit?
Child who was under age 13 when the care was provided, but who lived with the taxpayer's former spouse all year.
Which of the following taxpayers may claim the Earned Income Credit for 2022?
Cinnamon, 42 years old, who was divorced the entire year. She had investment income of $7,000 and had W-2 wages of $9,000.
Judy purchased her first home in January of the current year. She obtained a new mortgage and paid $6,000 of interest during the current year. Her state has elected to issue mortgage credit certificates in lieu of mortgage subsidy bonds. If Judy receives a mortgage credit certificate specifying a 20% credit rate, how much are her income tax credit and interest deduction?
Credit $1,200 Deduction $4,800
The Minimum Tax Credit (MTC) makes use of exclusionary items in its computations. Which of the following is NOT an exclusion item used for this purpose?
Depreciation.
For the current year, for purposes of the Earned Income Credit, which of the following amounts qualifies as earned income?
Earnings from self-employment.
Which statement pertaining to estimated tax payments is NOT correct?
Estimated tax payments are required when the withholding taxes are greater than the overall tax liability.
Which of the following is an expense that is eligible for the Adoption Credit?
Expenses incurred for attorneys during the course of the adoption.
Charles's parents are divorced. He lives with each parent 6 months out of the year. Last year, his father had an adjusted gross income of $80,000, and his mother had an adjusted gross income of $70,000. Which parent has the right to claim Charles as a dependent?
Father.
Which of the following statements is a requirement for eligibility of the Premium Tax Credit (PTC)?
Filing status other than MFS.
Which of the following is NOT a requirement for a student to be eligible for the American Opportunity Tax Credit?
Full-time enrollment.
Ms. W, who is single, determined that her total tax liability for Year 2 would be $10,000. W is required to make estimated tax payments if
Her Year 1 tax liability was $9,000 and her Year 2 income tax withholding will be $8,500.
Which of the following are eligible expenses for the American Opportunity Tax Credit?Tuition and fees required for enrollmentCourse materialsRoom and board
I and II only.
Which of the following is an eligible child for purposes of the Adoption Credit?An infant childA 15-year-old childA 19-year-old mentally handicapped child
I, II, and III.
All of the following statements with respect to qualifications to claim the Child and Dependent Care Credit are true EXCEPT
If you make payments to your sister, she can be your dependent.
In 2022, Jonathan Smith paid his educational expenses at a community college where he completed his freshman year and began his sophomore year. His father, John Smith, provides more than half of the support for Jonathan and claims an exemption for him on his tax return. Which of the following is true?
John is eligible to take the AOTC on his 2022 tax return.
Ms. B filed her Year 1 Form 1040 on April 15, Year 2, but did not pay her tax liability of $3,000. On June 15, Year 3, she paid the tax in full. In Year 4, Ms. B discovered additional deductions for Year 1 that will result in a refund of $1,000. To receive her refund, Ms. B must file an amended income tax return by (assuming no relevant days are Saturdays, Sundays, or holidays)
June 15, Year 5.
Karen, filing as head of household, and her son James and daughter Julia are all in graduate school. James and Julia are not dependents on Karen's return, although they live with her and she pays all of their education expenses. Karen paid $6,000 in qualified tuition expenses for herself in January 2022 for the term starting in January 2022. She also paid $2,500 in qualified tuition expenses for James and another $2,500 for Julia in July 2022 for the term starting in July 2022. Her adjusted gross income is $100,000. Which of the following about the American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit is true for tax year 2022?
Karen may claim neither the AOTC nor the Lifetime Learning Credit.
All of the following individuals file their income tax returns as single. Which one is required to make estimated tax payments for Year 2?
Ms. Givonni, who had a $4,000 tax liability for Year 1, expects a tax liability of $4,900 for Year 2 with $3,900 withholding.
Which of the following is true regarding the premium tax credit (PTC)?
No PTC is allowed for any period during which an individual is not lawfully present in the United States.
Which one of the following could prevent an individual from qualifying for the Child and Dependent Care Credit?
Not identifying the care provider on the tax return.
What are the limits for the rate specified by the mortgage credit certificates (MCCs)?
Not less than 10% and not greater than 50%.
All of the following qualify as work-related expenses for computing the Child and Dependent Care Credit EXCEPT
Payments to a housekeeper who provides dependent care while the parent is off from work because of illness.
Mr. and Mrs. Pine both work full time. They have three children ages 18, 6, and 3. For purposes of claiming the Child and Dependent Care Credit, which of the following expenses qualify?
Payments to the taxpayer's mother who lives with them but does not qualify as their dependent.
During the current year, Mr. Hughes celebrated his 55th birthday. In order to qualify for the Credit for the Elderly or the Disabled, Mr. Hughes must have
Retired on permanent and total disability.
During the year, Mr. Yogi celebrated his 63rd birthday. In order to qualify for the Credit for the Elderly or the Disabled, Mr. Yogi must have
Retired on permanent and total disability.
Which of the following statements is NOT true regarding tax benefits for education?
Room and board are qualifying expenses for the AOTC.
Which of the following items is considered earned income for the Earned Income Credit?
Self-employment income earned from a sole proprietorship.
Sue must make estimated tax payments of $4,000 for the tax year. She makes the following payments:1st payment - credit of $1,000 from her previous year refund2nd payment - $500 on April 20th3rd payment - $500 on May 31st4th payment - $1,000 on August 15th5th payment - $500 on October 15th6th payment - $500 on December 30th Which of the following is true?
She has made timely estimated payments.
Which of the following is NOT a test to determine if a child is a qualifying child for the Earned Income Credit (EIC)?
Support.
Two taxpayers married on November 30. That same year, the husband enrolled in an accredited college to further his career and subsequently received a Form 1098-T, Tuition Statement. The wife was employed with an income of $45,000 and paid for the husband's education expenses. The taxpayers did not receive any other income for the year. Based on their circumstances, what is the correct method to report the education credit?
Taxpayers must file a joint return to claim an education credit.
Which of the following statements is correct regarding Form 1095-A, Health Insurance Marketplace Statement?
Taxpayers will use Form 1095-A to complete Form 8962, Premium Tax Credit, to reconcile advance payments of the Premium Tax Credit or claim the Premium Tax Credit on their tax return.
Which of the following statements is false for purposes of the Lifetime Learning Credit?
The Lifetime Learning Credit is subject to a lifetime limit of $25,000.
All of the following statements regarding the "Credit for the Elderly or the Disabled" are true EXCEPT
The amount of the credit that is not absorbed can be carried back 3 years or carried forward 5 years.
With respect to the Child and Dependent Care Credit, all of the following statements apply EXCEPT
The child cannot have in excess of $500 of his or her own unearned income.
Which of the following is NOT a requirement for a qualifying child for purposes of the Child Tax Credit?
The child was under age 19 at the end of 2022 or under age 24 at the end of 2022 and was a student.
All of the following child and dependent care expenses may qualify as work-related for purposes of the Child and Dependent Care Credit EXCEPT
The cost of getting a qualifying person from the home to the care location and back.
If a taxpayer has a dependent that (s)he cannot claim for the child tax credit, the dependent may still qualify the taxpayer for which $500 credit?
The credit for other dependents.
Which of the following statements concerning the American Opportunity Tax Credit (AOTC) is false?
The credit is available for all qualified tuition and room and board expenses.
The taxpayer has a child under the age of 24 who is a full-time student in their second year of college. The student will be claimed as a dependent on the taxpayer's return.The student's educational expenses included $8,000 for tuition and $4,000 for room and board.The student received a $5,000 scholarship for tuition use only, as well as an additional $2,500 scholarship to pay any of the student's college expenses. The taxpayer paid the remaining $4,500.Which of the following statements is correct, based on the information above?
The taxpayer can claim the American Opportunity Tax Credit on the taxpayer's return for tuition expenses of $3,000, and the student should report the additional $2,500 scholarship as income.
Which of the following is NOT required for a taxpayer to be eligible for the Premium Tax Credit?
The taxpayer is eligible for coverage through an employer plan.
All of the following statements regarding qualification for the Earned Income Credit are true EXCEPT
The taxpayer's filing status must be either married filing a joint return or head of household.
Which of the following is earned income for Earned Income Credit purposes?
The wages of a minister who has an exemption from self-employment tax.
For 2022, Mike and Denise, calendar-year taxpayers, had gross income comprised of the following: Wages received as a farm employee $26,000 Gross income from Schedule F dairy operations 40,000 Distributable share of an S corporation's gross income from farming 12,000 Long-term capital gains from stock sales 18,000 Short-term capital losses from stock sales (21,000) They have made no estimated tax payments as of December 31, 2022, and the withholding from wages is not sufficient to relieve them from the estimated tax penalty. Which of the following statements is true if they make an estimated tax payment by January 17, 2023?
They will not avoid the estimated tax penalty since their farm income does not comprise two-thirds of their gross income.
You and your son lived with your mother all year. You are 25 years old. Your only income was $9,300 from a part-time job. Your mother's adjusted gross income was $15,000. All her income was from her job. Which of the following is true?
You can claim the Earned Income Credit.
Which of the following statements is NOT a general requirement to qualify for the Child and Dependent Care Credit?
You must be divorced or legally separated when you incur the expense.
