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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 31

True/False

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The lifetime learning credit can be used toward the cost of any course of instruction to acquire or improve a taxpayer's job skills,no matter the age of the taxpayer.

A) True
B) False

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Question 32

Multiple Choice

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Which of the following taxpayers (all age 40) are required to file a return? $\begin{array} { l l c l } \text { Taxpayer } & \text { Filing Status } & \text { Nurnber of exemptions } & \text { Income } \\\text { Jerryy and Jirn } & \text { Married Filing Jointly } & 2 & \$ 21,700 \\\text { Allen } & \text { Single } & 1 & \$ 2,300 \\\text { Tirrryy } & \text { Head of Household } & 2 & \$ 11,000\end{array}$

A) Jenny and Jim.
B) Allen.
C) Timmy.
D) None of the choices are correct.

E) A) and D)
F) C) and D)

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Question 33

Multiple Choice

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During 2017,Montoya (age 15) received $2,200 from a corporate bond.  He also received $600 from a savings account established for him by his parents.Montoya lives with his parents and he is their dependent.What is Montoya's taxable income?

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

Montague (age 15) is claimed as a dependent by his parents Matt and Mary.In 2017,Montague received $5,000 of qualified dividends and he received $800 from a part time job.What is his taxable income for 2017?

Pyrrha,a 12-year-old dependent of Epimetheus and Pandora,received $2,200 of interest income in 2017.Her parents' marginal tax rate is 35%.What is Pyrrha's gross tax liability for the year?

Sheryl's AGI is $250,000.Her current tax liability is $52,068.Last year,her tax liability was $48,722.She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts (assume she makes the required payments each quarter) ?

The taxable income levels in the married filing jointly tax rate schedule are ________ those in the married filing separately schedule.

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.

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.

Clarissa's gross tax liability for 2017 is $1,300.She has a $1,500 nonrefundable personal tax credit,a $750 business tax credit,and a $400 refundable personal tax credit.Her employer withheld $1,000 from her pay for taxes.What is her net tax due or refund for this year?

Business credits are generally refundable credits.

If an employer withholds taxes from an employee,in general,when are these taxes treated as paid to the IRS?

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

During 2017,Jasmine (age 12) received $2,400 from a corporate bond.  She also received $600 from a savings account established for her by her parents.  Jasmine lives with her parents and she is their dependent.  Assuming her parents' marginal tax rate is 28%,what is Jasmine's gross tax liability?

Tax credits reduce a taxpayer's taxable income dollar for dollar.

Max is a 14-year-old dependent of his parents.During 2017,Max earned $1,800 working part time jobs and he received $1,500 of interest income from corporate bonds that were given to him last year.What is Max's 2017 taxable income?

Katlyn reported $300 of net income from her sole proprietorship.She is not required to pay self-employment tax.

Happy,Sleepy,Grumpy,and Doc all did not make adequate estimated payments.Which of them will not owe underpayment penalties for 2017 given the following information?

Which of the following statements regarding the AMT exemption amounts is not true?