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Taxes Chapter 7

Terms in this set (16)

B
Russ and Linda are married and file a joint tax return claiming their three children, ages 4, 7, and 18, as dependents. Their adjusted gross income for 2020 is $421,400. What is Russ and Linda's total child and other dependent tax credit for 2020?
a. $2,000
b. $3,400
c. $3,700
d. $4,500
e. $6,000
E
Jennifer is divorced and files a head of household tax return claiming her children, ages 4, 7, and 11, as dependents. Her adjusted gross income for 2020 is $81,200. What is Jennifer's total child tax credit for 2020?
a. $500
b. $2,500
c. $3,700
d. $4,500
e. $6,000
C
Assuming they all meet the income requirements, which of the following taxpayers qualify for the earned income credit in 2020?
a. A married taxpayer who files a separate tax return and has a dependent child
b. A single taxpayer who waited on tables for 3 months of the tax year and is claimed as a dependent by her mother
c. A single taxpayer who is self-employed and has a dependent child
d. a and c above e. None of the above qualify for the earned income credit
D
Which of the following payments does not qualify as a child care expense for purposes of the child and dependent care credit?
a. Payments to a day care center
b. Payments to the taxpayer's sister (21 years old) for daytime babysitting
c. Payments to a housekeeper who also babysits the child
d. Payments to the taxpayer's dependent brother (16 years old) for daytime babysitting
e. All of the above qualify for the child and dependent care credit
C
Which of the following is not a requirement to receive the premium tax credit for health care?
a. Health care through the employer is not available
b. Health insurance is purchased through the state or federal exchange
c. Income must be no greater than 200 percent of the federal poverty line
d. The taxpayer cannot be claimed as a dependent
D
For purposes of determining income eligibility for the premium tax credit, household AGI is
a. AGI for the taxpayer and spouse
b. AGI for the taxpayer, spouse, and any other household members required to file a tax return
c. AGI for the taxpayer, spouse, and any other household members required to file a tax return plus any tax-exempt income
d. AGI for the taxpayer, spouse, and any other household members required to file a tax return plus any tax-exempt income and untaxed Social Security benefits
C
The American Opportunity tax credit is 100 percent of the first _________ of tuition and fees paid and 25 percent of the next _________
.a. $600; $1,200
b. $1,100; $550
c. $2,000; $2,000
d. $1,100; $5,500
e. None of the above
B
Which of the following costs is not a qualified education expense for the American Opportunity tax credit?
a. tuition
b. student loan payments
c. course-related books
d. lab supplies required by the course
E
In November 2020, Simon pays $1,000 to take a course to improve his job skills to qualify for a new position at work. Simon's employer reimbursed him for the cost of the course. For 2020, Simon's lifetime learning credit is:
a. $200
b. $500
c. $1,000
d. $2,500
e. None of the above
D
Joan, a single mother, has AGI of $72,000 in 2020. In September 2020, she pays $5,000 in qualified tuition for her dependent son who just started at Big University. What is Joan's American Opportunity credit for 2020?
a. $0
b. $1,250
c. $2,125
d. $2,500
e. Some other amount
C
Lucas, a single U.S. citizen, works in Denmark for MNC Corp during all of 2020. His MNC salary is $187,000. Lucas may exclude from his gross income wages of:
a. $0
b. $40,000
c. $107,600
d. $187,000
B
Taxpayer L has income of $55,000 from Norway, which imposes a 40 percent income tax, and income of $45,000 from France, which imposes a 30 percent income tax. L has additional taxable income from U.S. sources of $200,000 and U.S. tax liability before credits of $105,000. What is the amount of the foreign tax credit?
a. $16,500
b. $35,000
c. $35,500
d. $100,000
e. $45,000
D
John and Joan pay $16,500 of qualified adoption expenses in 2020 to finalize the adoption of a qualified child. Their AGI is $197,000 for 2020. What is their adoption credit for 2020?
a. $0
b. $16,500
c. $14,080
d. $14,300
A
In connection with the adoption of an eligible child who is a U.S. citizen and who is not a child with special needs, Sean pays $4,000 of qualified adoption expenses in 2019 and $3,000 of qualified adoption expenses in 2020. The adoption is finalized in 2020. There is no phase-out of the adoption credit. What are the adoption credits for both 2019 and 2020, respectively?
a. $0; $7,000
b. $4,000; $1,000
c. $4,000; $3,000
d. $7,000; $0
D
Barbara purchased a new Honda Clarity electric vehicle in 2020 for $36,000. Her federal tax credit will be:
a. $0
b. $2,500
c. $5,000
d. $7,500
e. $10,000
B
Virginia and Richard are married taxpayers with adjusted gross income of $28,000 in 2020. If Virginia is able to make a $1,500 contribution to her IRA and Richard makes a $1,500 contribution to his IRA, what is the Saver's Credit Virginia and Richard will be eligible for?
a. $0
b. $1,500
c. $2,000
d. $3,000
e. $4,000
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