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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 21

True/False

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Depending on the year, the original (unextended) due date for an individual's tax return may be before April 15.

A) True
B) False

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Question 22

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The kiddie tax does not apply to children over 24 years old at the end of the tax year.

A) True
B) False

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Question 23

Multiple Choice

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Which of the following statements about estimated tax payments and underpayment penalties is true for individual taxpayers?

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

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Which of the following statements regarding the child tax credit is false?

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2018. All of the income is ordinary. What is her tax liability for the year? (Use Tax Rate Schedule.)

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

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?

In 2018, Shawn's AGI is $170,000. He earned the income evenly throughout the year. He owed $29,890 in federal income tax and self-employment taxes of $2,590. Last year, he had a gross tax liability of $50,000. What is the minimum quarterly estimated tax payment Shawn must pay each quarter to avoid underpayment penalties for 2018?

Parents may claim a $2,000 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.

Carolyn has an AGI of $38,000 (all from earned income) , two qualifying children, and is filing as a head of household. What amount of earned income credit is she entitled to? (Exhibit 8-10)

Atlas earned $17,300 from his sole proprietorship in 2018. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

Paul and Melissa plan on filing jointly in 2018. For the year, the couple reported taxable income of $130,000. What is their gross tax liability? (Use Tax Rate Schedule.)

Miley, a single taxpayer, plans on reporting $29,700 of taxable income this year (all of her income is from a part-time job) . She is considering applying for a second part-time job that would give her an additional $10,000 of taxable income. By how much will the income from the second job increase her tax liability? (Use the tax rate schedules)

Generally, income from an active trade or business is subject to the 3.8% net investment income tax.

Rhianna and Jay are married filing jointly in 2018. 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 2018 tax return?

Which of the following taxpayers (all age 40) are required to file a return?

Which of the following best describes the manner in which self-employed taxpayers may deduct self-employment taxes?

Due to the alternative minimum tax rate structure, a taxpayer with a large amount of long-term capital gains may be susceptible to the alternative minimum tax.