Question 1

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.

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  Deduct employer portion from AGI.
B)  Deduct entire amount from AGI.
C)  Deduct employer portion for AGI.
D)  Deduct entire amount for AGI.
E)  No deduction. C

Question 4

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Accepted Answer

A)  for AGI deductions.
B)  from AGI deductions not subject to the two percent of AGI floor.
C)  from AGI deductions subject to a two percent of AGI floor.
D)  for AGI deductions limited to income from the business activities.

Question 5

Candace is claimed as a dependent on her parent's tax return.In 2018,Candace received $5,000 of interest income from corporate bonds she obtained several years ago.This is her only source of income.She is 15 years old at year-end.What is her gross tax liability?

Accepted Answer

$444. Answ...

Question 6

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Accepted Answer

A)  Federal short-term interest rate.
B)  Federal short-term interest rate plus three percentage points.
C)  Federal long-term interest rate plus six percentage points.
D)  Zero.The government does not pay interest on overpayments.

Question 7

Which of the following is not true of the extension to file an individual tax return?

Accepted Answer

A)  It is granted automatically by the IRS if requested.
B)  It must be requested by the original due date of the return.
C)  It extends the due date for the return and associated tax payments beyond the original due date of the tax return.
D)  The extension is for six months beyond the original due date.

Question 8

Regular taxable income is the starting point for determining the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 9

Employees are allowed to deduct a portion of the FICA taxes they pay.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not an additional tax a taxpayer may have to pay?

Accepted Answer

A)  Alternative minimum tax.
B)  Self-employment tax.
C)  Net investment income tax.
D)  Excess wage tax.

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.

Accepted Answer

A) True 
 B)False  False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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.)

Accepted Answer

$240,230,computed using the si...

Question 16

Which of the following tax credits is fully refundable?

Accepted Answer

A)  American opportunity credit.
B)  Dependent care credit.
C)  Earned income credit.
D)  None of the choices are correct.

Question 17

The computation of the alternative minimum tax base begins with regular taxable income.Which of the following is not part of the formula for computing the alternative minimum tax base?

Accepted Answer

A)  Subtract state income taxes paid.
B)  Add the standard deduction amount if used for regular tax.
C)  Subtract the AMT exemption amount (if any) .
D)  Add back tax-exempt interest from a private activity bond not issued in 2009 or 2010.

Question 18

Which of the following statements regarding the earned income credit is true?

Accepted Answer

A)  It is a nonrefundable credit.
B)  It is possible that a taxpayer with more earned income may receive more credit than a taxpayer with less earned income.
C)  A 70-year-old taxpayer with no dependents can qualify for the credit in certain circumstances.
D)  A taxpayer whose only source of income is interest from corporate bonds is eligible for the credit.

Question 19

In 2018,John (52 years old)files as a head of household with one 18-year old dependent (qualifying)child.John is eligible to claim a $700 American opportunity credit for the year.John did not have any taxes withheld by his employer during the year and he did not make any estimated tax payments.After taking credits into account,what is the amount of John's taxes payable or refund assuming that his AGI is $26,000 (all from salary)and his taxable income is $8,000?

Accepted Answer

Refund of $2,288. Answer computed as fol...

Question 20

Which of the following statements regarding the child and dependent care credit is false?

Accepted Answer

A)  Taxpayers may claim a credit for only a portion of qualifying dependent care expenditures.
B)  If a taxpayer's income is too high,she will be ineligible to claim any child and dependent care credit.
C)  A single taxpayer must have earned income to claim any child and dependent care credit.
D)  A taxpayer is not eligible to claim the dependent care credit if any dependent relative provides the care.

Exam 7: Individual Income Tax Computation and Tax Credits

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.

Correct Answer
verified
True

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

Correct Answer
verified

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

Correct Answer
verified
C

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Correct Answer
verified

Candace is claimed as a dependent on her parent's tax return.In 2018,Candace received $5,000 of interest income from corporate bonds she obtained several years ago.This is her only source of income.She is 15 years old at year-end.What is her gross tax liability?

Correct Answer
verified
$444. Answ...
View Answer

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Correct Answer
verified

Which of the following is not true of the extension to file an individual tax return?

Correct Answer
verified

Regular taxable income is the starting point for determining the alternative minimum tax.

Correct Answer
verified

Employees are allowed to deduct a portion of the FICA taxes they pay.

Correct Answer
verified

Which of the following is not an additional tax a taxpayer may have to pay?

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.

Correct Answer
verified
False

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

Correct Answer
verified

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.)

Correct Answer
verified
$240,230,computed using the si...
View Answer

Which of the following tax credits is fully refundable?

Correct Answer
verified

The computation of the alternative minimum tax base begins with regular taxable income.Which of the following is not part of the formula for computing the alternative minimum tax base?

Correct Answer
verified

Which of the following statements regarding the earned income credit is true?

Correct Answer
verified

Correct Answer
verified
Refund of $2,288. Answer computed as fol...
View Answer

Which of the following statements regarding the child and dependent care credit is false?

Correct Answer
verified

Exam 7: Individual Income Tax Computation and Tax Credits

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.

Correct AnswerverifiedTrue

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Correct AnswerverifiedShow Answer

Candace is claimed as a dependent on her parent's tax return.In 2018,Candace received $5,000 of interest income from corporate bonds she obtained several years ago.This is her only source of income.She is 15 years old at year-end.What is her gross tax liability?

Correct Answerverified$444. Answ...View AnswerShow Answer

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Correct AnswerverifiedShow Answer

Which of the following is not true of the extension to file an individual tax return?

Correct AnswerverifiedShow Answer

Regular taxable income is the starting point for determining the alternative minimum tax.

Correct AnswerverifiedShow Answer

Employees are allowed to deduct a portion of the FICA taxes they pay.

Correct AnswerverifiedShow Answer

Which of the following is not an additional tax a taxpayer may have to pay?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty.

Correct AnswerverifiedFalse

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

Correct AnswerverifiedShow Answer

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.)

Correct Answerverified$240,230,computed using the si...View AnswerShow Answer

Which of the following tax credits is fully refundable?

Correct AnswerverifiedShow Answer

The computation of the alternative minimum tax base begins with regular taxable income.Which of the following is not part of the formula for computing the alternative minimum tax base?

Correct AnswerverifiedShow Answer

Which of the following statements regarding the earned income credit is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedRefund of $2,288. Answer computed as fol...View AnswerShow Answer

Which of the following statements regarding the child and dependent care credit is false?

Correct AnswerverifiedShow Answer

Correct Answer
verified
True

Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
verified
$444. Answ...
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
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False

Correct Answer
verified

Correct Answer
verified
$240,230,computed using the si...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Refund of $2,288. Answer computed as fol...
View Answer

Correct Answer
verified