Question 1

To qualify for the earned income credit, the taxpayer must have a qualified dependent.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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 taxE) None of the above
F) C) and D)

Question 4

Which of the following statements regarding late filing penalties is true?

Accepted Answer

A)  If a taxpayer fails to file a tax return, the late filing penalty will continue to grow until the taxpayer files the tax return.
B)  The amount of the late filing penalty is the same for both fraudulent failure to file and nonfraudulent failure to file.
C)  Taxpayers who owe no tax as of the due date of their tax returns are not subject to late filing penalties even if they file late.
D)  None of the choices are correct.E) B) and C)
F) C) and D)

Question 5

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Accepted Answer

A)  Head of household
B)  Qualifying widow or widower
C)  Married filing separately
D)  Single
E)  All of these are taxpayer filing statusesF) D) and E)
G) B) and C)

Question 6

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

Accepted Answer

A)  A married couple must file jointly to claim the credit.
B)  A taxpayer may claim a credit for dependent care expenses for a dependent who is 14 years old or older but only if the dependent lives in the taxpayer's home for the entire year.
C)  All else equal, a taxpayer making qualifying expenditures for three children may claim more dependent care credit than a taxpayer making (the same amount of) qualifying expenditures for two children.
D)  None of these statements are true.E) C) and D)
F) None of the above

Question 7

Both the width (or range)of the tax brackets (the amount of income taxed at a particular rate)in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate)vary by filing status.

Accepted Answer

A) True 
 B)False

Question 8

Clarissa's gross tax liability for 2019 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?

Accepted Answer

Refund of ...

Question 9

Long-term capital gains are taxed at the stated AMT rate for purposes of the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 10

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

Accepted Answer

A) True 
 B)False

Question 11

For married couples, the additional Medicare tax is based on the couple's combined wages.

Accepted Answer

A) True 
 B)False

Question 12

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 dateE) None of the above
F) A) and B)

Question 13

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.E) C) and D)
F) A) and B)

Question 14

Which of the following statements concerning a comparison between employees and independent contractors is most accurate?

Accepted Answer

A)  Employees and independent contractors deduct business expenses as miscellaneous itemized deductions.
B)  While employees are typically eligible for nontaxable fringe benefits from employers, independent contractors are not.
C)  Employers are required to withhold either FICA or self-employment taxes from compensation paid to employees and compensation paid to independent contractors.
D)  Employers typically withhold federal income taxes from compensation paid to employees and to independent contractors.E) A) and D)
F) C) and D)

Question 15

Quantitatively, what is the relationship between the AGI phase-out thresholds for the child tax credit?

Accepted Answer

A)  Head of household/Single = Married Filing Separately = Married Filing Jointly
B)  Head of household/Single 
C)  Head of household/Single = Married Filing Separately > Married Filing Jointly
D)  Head of household/Single > Married Filing Separately < Married Filing JointlyE) C) and D)
F) B) and D)

Question 16

For alternative minimum tax purposes, taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Tax rate schedules are provided for use by (relatively)higher-income taxpayers, while the tax tables are provided for use by (relatively)lower-income taxpayers.

Accepted Answer

A) True 
 B)False

Question 19

For married couples, the Social Security wage base limitation applies separately to each spouse.

Accepted Answer

A) True 
 B)False

Question 20

Hera earned a $175,000 salary in 2019.Her husband, Zeus, earned $100,000 salary in 2019.Hera and Zeus file a joint tax return.How much in FICA taxes will they owe in 2019?

Accepted Answer

A)  $14,440
B)  $18,652
C)  $19,547
D)  $4,213E) A) and D)
F) A) and C)

Exam 8: Individual Income Tax Computation and Tax Credits

Which of the following statements regarding late filing penalties is true?

Correct AnswerverifiedShow Answer

Tax rate schedules are provided for use by (relatively)higher-income taxpayers, while the tax tables are provided for use by (relatively)lower-income taxpayers.

Correct AnswerverifiedShow Answer

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Correct AnswerverifiedShow Answer

For married couples, the Social Security wage base limitation applies separately to each spouse.

Correct AnswerverifiedShow Answer

Quantitatively, what is the relationship between the AGI phase-out thresholds for the child tax credit?

Correct AnswerverifiedShow Answer

Which of the following statements concerning a comparison between employees and independent contractors is most accurate?

Correct AnswerverifiedShow Answer

Hera earned a $175,000 salary in 2019.Her husband, Zeus, earned $100,000 salary in 2019.Hera and Zeus file a joint tax return.How much in FICA taxes will they owe in 2019?

Correct AnswerverifiedShow Answer

Clarissa's gross tax liability for 2019 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?

Correct AnswerverifiedRefund of ...View AnswerShow Answer

For married couples, the additional Medicare tax is based on the couple's combined wages.

Correct AnswerverifiedShow Answer

To qualify for the earned income credit, the taxpayer must have a qualified dependent.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Long-term capital gains are taxed at the stated AMT rate for purposes of the alternative minimum tax.

Correct AnswerverifiedShow Answer

Both the width (or range)of the tax brackets (the amount of income taxed at a particular rate)in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate)vary by filing status.

Correct AnswerverifiedShow 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

The kiddie tax does not apply to children over 24 years old at the end of the tax year.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For alternative minimum tax purposes, taxpayers are allowed to deduct state income taxes but are not allowed to deduct charitable contributions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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