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Exam 12: Tax Credits and Payments

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Question 21

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Black Company paid wages of $180,000,of which $40,000 was qualified wages for the work opportunity tax credit under the general rules.Black Company's deduction for wages for the year is:

A) $140,000.
B) $164,000.
C) $166,000.
D) $180,000.
E) None of the above.

F) C) and D)
G) B) and D)

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Question 22

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George and Martha are married and file a joint tax return claiming their two children,ages 10 and 8 as dependents.Assuming their AGI is $119,650,George and Martha's child tax credit is:

A) $0.
B) $1,000.
C) $1,500.
D) $2,000.
E) None of the above.

F) A) and B)
G) All of the above

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Question 23

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Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

Julia is 30 years old,unmarried with a 9 year-old daughter,and has earnings during 2015 of $19,700.Does she qualify for the earned income credit? If so,calculate the amount of credit that is available to her.

For purposes of computing the credit for child and dependent care expenses,the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

Ahmad is considering making a $10,000 investment in a venture which its promoter promises will generate immediate tax benefits for him.Ahmad,who normally itemizes his deductions,is in the 28% marginal tax bracket.If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment,what treatment normally would be most beneficial to Ahmad and by how much will Ahmad's tax liability decline because of the investment?

Rex and Dena are married and have two children,Michelle (age 7) and Nancy (age 5) .During 2015,Rex earned a salary of $24,500,received interest income of $300,and filed a joint income tax return with Dena.Dena had $0 gross income.Their earned income credit for the year is:

For the current year,the base amount for the Social Security portion (old age,survivors,and disability insurance) is different from that for the Medicare portion of FICA.

Refundable tax credits include the:

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

The work opportunity tax credit is available only for wages paid to qualifying individuals during their first year of employment.

Green Company,in the renovation of its building,incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

Identify the statement below that is false.

Phil and Audrey,husband and wife,are both employed by Laurel Corporation.Phil earns $125,000 in salary in 2015,and Audrey earns $70,000.How much FICA tax must they pay for 2015?

An expatriate who works in a country with an income tax rate higher than the U.S.rate probably will find the foreign earned income exclusion preferable to the foreign tax credit.

Discuss the treatment of unused general business credits.

Because current U.S.corporate income tax rates are higher than many foreign corporate income tax rates only infrequently will the credit's,the overall limitation yield a lower foreign tax credit than the amount of foreign taxes actually paid.

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.