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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 71

Multiple Choice

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Asteria earned a $25,500 salary as an employee in 2019.How much should her employer have withheld from her paycheck for FICA taxes? (Round your answer to the nearest whole dollar amount.)

A) $370
B) $1,581
C) $1,951
D) $3,902

E) None of the above
F) A) and C)

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Question 72

Multiple Choice

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Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500.Given just this information, what is her alternative minimum tax liability for the year?

A) $0
B) $11,500
C) $975
D) $12,475

E) B) and C)
F) A) and B)

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Question 73

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The amount of expenditures eligible for the child and dependent care credit is the least of three amounts.Which of the following is not one of those amounts?

The alternative minimum tax base is typically ________ the regular income tax base.

Which of the following is not one of the general tax credit categories?

Cassy reports a gross tax liability of $1,000.She also claims $400 of nonrefundable personal credits, $700 of refundable personal credits, and $200 of business credits.What is Cassy's tax refund or tax liability due after applying the credits?

Candace is claimed as a dependent on her parent's tax return.In 2019, Candace received $5,000 of interest income from corporate bonds she obtained several years ago.This is her only source of income.She is 15 years old at year-end.What is her gross tax liability?

Which of the following items is not added back to regular taxable income in computing alternative minimum taxable income?

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.

The child and dependent care credit entitles qualifying taxpayers to a credit equal to the full amount of qualified expenses.

Linda is a qualifying widow in 2019.In 2019, she reports $80,000 of taxable income (all ordinary) .What is her gross tax liability using the tax rate schedules? (Tax rate schedules.)

Jamie is single.In 2019, she reported $100,000 of taxable income, including a long-term capital gain of $5,000.What is her gross tax liability, rounded to the nearest whole dollar amount? (Use the Tax rate schedules.)

The alternative minimum tax is the AMT base multiplied by the AMT rate.

Rhianna and Jay are married filing jointly in 2019.They have six children under age 17 for whom they may claim the child tax credit.Their AGI was $419,400.What amount of child tax credit may they claim on their 2019 tax return?

Taxpayers are not allowed to deduct the standard deduction for alternative minimum tax purposes.

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.

The wage base for which of the following taxes is capped?

Which of the following is typical of taxpayers who are most likely affected by the AMT?

Maria and Tony are married.They are preparing to file their 2019 tax return.If they were to file as single taxpayers, Maria and Tony would report $10,000 and $70,000 of taxable income, respectively.On their joint tax return, their taxable income is $80,000.How much of a marriage penalty or benefit will Maria and Tony experience in 2019? (Use Tax rate schedules.)

An 80-year-old taxpayer with earned income and no dependent children could qualify for the earned income credit.