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Exam 12: Tax Credits and Payments

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Question 31

True/False

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Child and dependent care expenses include amounts paid for general household services.

A) True
B) False

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Question 32

Multiple Choice

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Which,if any,of the following correctly describes the earned income credit?

A) Would be available regardless of the amount of the taxpayer's adjusted gross income.
B) Not available to a surviving spouse.
C) A taxpayer must have a qualifying child to take advantage of the credit.
D) Is a refundable credit.

E) All of the above
F) C) and D)

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Question 33

Multiple Choice

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During the current year,Eleanor earns $120,000 in wages as an employee of an accounting firm.She also earns $13,000 in gross income from an outside consulting service she operates.Deductible expenses paid in connection with the consulting service amount to $3,000.Eleanor also incurs a recognized long-term capital gain of $1,000 from the sale of a stock investment.She must pay a self-employment tax on:

Nonrefundable credits are those that reduce the taxpayer's tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer's tax liability.

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Only married taxpayers with children are qualified to receive the earned income credit.

The credit for child and dependent care expenses is an example of a refundable credit.

If a taxpayer chooses to claim a foreign tax credit,those foreign income taxes paid can also be claimed as a deduction.

Jermaine and Kesha are married,file a joint tax return,have AGI of $82,500,and have two children.Devona is beginning her freshman year at State University during Fall 2017,and Arethia is beginning her senior year at Northeast University during Fall 2017 after having completed her junior year during the spring of that year.Both Devona and Arethia are claimed as dependents on their parents' tax return. ​ Devona's qualifying tuition expenses and fees total $4,000 for the fall semester,while Arethia's qualifying tuition expenses and fees total $6,200 for each semester during 2017.Full payment is made for the tuition and related expenses for both children during each semester.The American Opportunity credit available to Jermaine and Kesha for 2017 is:

Realizing that providing for a comfortable retirement is up to them,Jim and Julie commit to making regular contributions to their IRAs,beginning this year.Consequently,they each make a $2,000 contribution to their traditional IRA.If their AGI is $35,000 on their joint return,what is the amount of their credit for certain retirement plan contributions?

An employer's tax deduction for wages is affected by the work opportunity tax credit.

The disabled access credit was enacted to encourage small businesses to make their businesses more accessible to disabled individuals.

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Harry and Wilma are married and file a joint income tax return.On their tax return,they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wilma) and claim two exemptions for their dependent children.During the year,they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work. ​ Harry and Wilma may claim a credit for child and dependent care expenses of:

If an employee holds two jobs during the year,an overwithholding of FICA tax will result.

The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

Golden Corporation is an eligible small business for purposes of the disabled access credit.During the year,Golden makes the following expenditures on a structure originally placed in service in 1988. ​ In addition,$8,000 was expended by Golden on a building originally placed in service in the current year to ensure easy accessibility by disabled individuals.Calculate the amount of the disabled access credit available to Golden Corporation.

John owns and operates a real estate agency as a sole proprietor.On a full-time basis,he employs his 17-year old daughter as a receptionist and his 22-year old son as a bookkeeper.Both children are subject to FICA withholding.

In March 2017,Gray Corporation hired two individuals,both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2017.Gray Corporation's work opportunity tax credit amounts for 2017 is:

During the year,Green,Inc.,incurs the following research expenditures: ​ Green's qualifying research expenditures for the year are: