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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 61

Multiple Choice

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

A) Medicare.
B) Federal income.
C) Alternative minimum.
D) Social Security.

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

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Question 62

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If both spouses of a married couple earn roughly equivalent wages, the couple is likely topay a marriage penalty due to the nature of the tax rate schedules.

A) True
B) False

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Question 63

Multiple Choice

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Which of the following is not one of the general tax credit categories?

Which of the following is not true of the lifetime learning credit?

Montague (age 15) is claimed as a dependent by his parents Matt and Mary. In 2017, Montague received $5,000 of qualified dividends and he received $800 from a part time job. What is his taxable income for 2017?

Hestia (age 17) is claimed as a dependent by her parents, Rhea and Chronus. In 2017, Hestia received $1,000 of interest income from a corporate bond that she owns. In addition, she has earned income of $200. What is her taxable income for 2017?

Pyrrha, a 12-year-old dependent of Epimetheus and Pandora, received $2,200 of interest income in2017. Her parents' marginal tax rate is 35%. What is Pyrrha's gross tax liability for the year?

Hester (age 17) is claimed as a dependent by his parents, Charlton and Abigail. In 2017, Hester received $10,000 of qualified dividends and he received $6,200 from a part time job. What is his taxable income for 2017?

Sam is 30 years old. In 2017, he reported an AGI of $12,000, all from his job as a server at the local café. He is single and has no dependents. What amount of earned income credit may he claim in2017? Use Exhibit 8-10.

Employees are not allowed to deduct FICA taxes they pay.

Hera earned $175,000 salary in 2017. Her husband, Zeus, earned $100,000 salary in2017. Hera and Zeus file a joint tax return. How much FICA taxes will they owe in2017?

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

Demeter is a single taxpayer. Her AGI in 2017 is $81,200. Demeter may claim a child tax credit for her daughter Persephone. What amount of child tax credit is Demeter entitled to claim after any applicable phase-out?

Akiko and Hitachi (married filing jointly for 2017) 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 $118,000. How much lifetime learning credit can they claim?

Assuming the kiddie tax applies, what amount of a child's income is subject to the kiddie tax?

Lexa, a single taxpayer, worked as an employee during the first half of the year earning $65,000 of salary. Lexa's employer withheld $4,030 of Social Security tax, $943 of Medicare tax, and $0 of .9 percent additional Medicare tax. In the second half of the year, she was self-employed and she reported $180,000 of self-employment income on her Schedule C. What amount of self-employment taxes and .9 percent additional Medicare tax is Lexa required to pay on her self-employmentincome?

Miley, a single taxpayer, plans on reporting $28,950 of taxable income this year (all of her income is from a part-time job) . She is considering applying for a second part-time job that would give her an additional $10,000 of taxable income. By how much will the income from the second job increase her tax liability? (use the tax rate schedules)

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

Costa is a single taxpayer. His regular tax liability was $38,000. For 2017, he reported $190,000 of alternative minimum taxable income. What is his alternative minimum tax?

During 2017, Montoya (age 15) received $2,200 from a corporate bond. He also received$600 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?