Question 1

What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?

Accepted Answer

A)  Nothing, unless the taxpayer is audited
B)  The taxpayer is immediately sent to the Tax Court
C)  The IRS will compute and assess the penalty
D)  The penalty is increased by five percentage pointsE) A) and B)
F) C) and D)

Question 2

Tamra and Jacob are married and they file a joint tax return. Tamra received nearly five times the salary that Jacob received. Which of the following statements is true?

Accepted Answer

A)  Tamra and Jacob likely pay no tax marriage penalty nor receive a tax marriage benefit.
B)  Tamra and Jacob likely pay a tax marriage penalty.
C)  Tamra and Jacob likely receive a tax marriage benefit.
D)  Tamra and Jacob likely will pay a tax marriage penalty and receive a tax marriage benefit.E) None of the above
F) A) and B)

Question 3

Wolfina's twins, Romulus and Remus, finished their first year of school at an accredited university in 2016. She paid $10,000 in qualified educational expenses for Romulus and $2,000 of qualifying expenses for Remus. Wolfina is a head of household with an AGI of $85,000. What amount of American opportunity credit may she claim?

Accepted Answer

$2,250
Exp...

Question 4

Why would a taxpayer file a tax return if not required to do so?

Accepted Answer

A)  to remain in favor with the IRS
B)  to claim a refund of taxes paid
C)  all taxpayers are required to file returns
D)  in order to claim the standard deductionE) B) and C)
F) A) and C)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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?

Accepted Answer

A)  $0
B)  $1,400
C)  $3,373
D)  $4,172
E)  $5,572F) None of the above
G) A) and E)

Question 9

Looking at the following partial calendar for April, when will individual tax returns be due?

Accepted Answer

A)  Friday, April 14
B)  Saturday, April 15
C)  Sunday, April 16
D)  Monday, April 17
E)  Tuesday, April 18F) A) and B)
G) None of the above

Question 10

Which of the following is not typical of taxpayers who are most likely affected by the AMT?

Accepted Answer

A)  Have many dependents
B)  Pay high state income tax
C)  Pay high property taxes
D)  Have relatively low capital gainsE) A) and D)
F) A) and C)

Question 11

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

Accepted Answer

A)  Federal income
B)  Social Security
C)  Medicare
D)  Alternative minimumE) B) and D)
F) B) and C)

Question 12

Max is a 14-year-old dependent of his parents. During 2016, 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 2016 taxable income?

Accepted Answer

$1,150
Explanation: This consi...

Question 13

Which of the following does not affect the amount of the earned income credit?

Accepted Answer

A)  Filing status
B)  Amount of credit taken in previous years
C)  Number of qualifying children
D)  Taxpayer's AGIE) C) and D)
F) A) and C)

Question 14

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 15

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Accepted Answer

A) True 
 B)False

Question 16

Atlas earned $17,300 from his sole proprietorship in 2016. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

Accepted Answer

$1,222
Explanation: ...

Question 17

Which of the following statements regarding the self-employment tax is most accurate?

Accepted Answer

A)  The self-employment tax base is generally the taxpayer's net income from self-employment (usually net income from Schedule 
C)  .
B)  Taxpayers who report less than $600 of net income from self-employment (usually net income from Schedule 
C)   are not required to pay self employment taxes.
C)  The self-employment tax base is net earnings from self employment which is less than net income from self-employment.
D)  The Social Security tax limit does not apply to self-employment taxes.E) A) and B)
F) None of the above

Question 18

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

Accepted Answer

A)  Taxpayers who have paid their full tax liability by the original tax return due date are protected from underpayment penalties.
B)  Taxpayers who have paid their full tax liability by the extended tax return due date are protected from underpayment penalties.
C)  Taxpayers who have uneven income streams can pay estimated tax quarterly in uneven amounts and not be susceptible to underpayment penalties.
D)  Taxpayers who have paid their required amount of estimated tax, even though not on time, are protected from underpayment penalties.E) B) and D)
F) All of the above

Question 19

Akiko and Hitachi (married filing jointly for 2016) are both educators. They attended a conference to further their job-related skills. Tuition for the conference was $2,000 for each person. Their AGI was $117,000. How much lifetime learning credit can they claim?

Accepted Answer

$560
Expla...

Question 20

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.

Accepted Answer

A) True 
 B)False

Exam 8: Individual Income Tax Computation and Tax Credits

Looking at the following partial calendar for April, when will individual tax returns be due?

Correct Answer
verified

Atlas earned $17,300 from his sole proprietorship in 2016. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

Correct Answer
verified
$1,222
Explanation: ...
View Answer

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Correct Answer
verified

Which of the following is not typical of taxpayers who are most likely affected by the AMT?

Correct Answer
verified

What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?

Correct Answer
verified

Why would a taxpayer file a tax return if not required to do so?

Correct Answer
verified

Correct Answer
verified
$2,250
Exp...
View Answer

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

Correct Answer
verified

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?

Correct Answer
verified

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Correct Answer
verified

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

Correct Answer
verified

Which of the following does not affect the amount of the earned income credit?

Correct Answer
verified

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

Correct Answer
verified

Tamra and Jacob are married and they file a joint tax return. Tamra received nearly five times the salary that Jacob received. Which of the following statements is true?

Correct Answer
verified

Max is a 14-year-old dependent of his parents. During 2016, 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 2016 taxable income?

Correct Answer
verified
$1,150
Explanation: This consi...
View Answer

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

Correct Answer
verified

Which of the following statements regarding the self-employment tax is most accurate?

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

Akiko and Hitachi (married filing jointly for 2016) are both educators. They attended a conference to further their job-related skills. Tuition for the conference was $2,000 for each person. Their AGI was $117,000. How much lifetime learning credit can they claim?

Correct Answer
verified
$560
Expla...
View Answer

Exam 8: Individual Income Tax Computation and Tax Credits

Looking at the following partial calendar for April, when will individual tax returns be due?

Correct AnswerverifiedShow Answer

Atlas earned $17,300 from his sole proprietorship in 2016. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

Correct Answerverified$1,222Explanation: ...View AnswerShow Answer

The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

Correct AnswerverifiedShow Answer

Which of the following is not typical of taxpayers who are most likely affected by the AMT?

Correct AnswerverifiedShow Answer

What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?

Correct AnswerverifiedShow Answer

Why would a taxpayer file a tax return if not required to do so?

Correct AnswerverifiedShow Answer

Correct Answerverified$2,250Exp...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following does not affect the amount of the earned income credit?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Tamra and Jacob are married and they file a joint tax return. Tamra received nearly five times the salary that Jacob received. Which of the following statements is true?

Correct AnswerverifiedShow Answer

Max is a 14-year-old dependent of his parents. During 2016, 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 2016 taxable income?

Correct Answerverified$1,150Explanation: This consi...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements regarding the self-employment tax is most accurate?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Akiko and Hitachi (married filing jointly for 2016) are both educators. They attended a conference to further their job-related skills. Tuition for the conference was $2,000 for each person. Their AGI was $117,000. How much lifetime learning credit can they claim?

Correct Answerverified$560Expla...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
$1,222
Explanation: ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$2,250
Exp...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$1,150
Explanation: This consi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$560
Expla...
View Answer