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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 71

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Jackson earned a salary of $254,000 in 2020. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

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$12,706.
A...

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Question 72

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Jamie is single. In 2020, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability? (Round your answer to the nearest whole dollar amount.) (Use the tax rate schedules, long-term capital gains tax brackets.)

A) $15,000
B) $18,080
C) $17,630
D) $16,975

E) None of the above
F) B) and C)

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Question 73

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

Sheryl's AGI is $250,300. Her current tax liability is $52,098. Last year, her tax liability was $48,752. She will not owe underpayment penalties if her total estimated tax payments are at least which of the following (rounded) amounts? (Assume she makes the required payments each quarter.)

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

Demeter is a single taxpayer. Her AGI in 2020 is $209,200. 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?

Allen Green is a single taxpayer with an AGI (and modified AGI) of $210,000, which includes $170,000 of salary, $25,000 of interest income, $10,000 of dividends, and $5,000 of long-term capital gains. What is Allen's net investment income tax liability this year, rounded to the nearest whole dollar amount?

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.

Which of the following statements about estimated tax payments and underpayment penalties is true for individual taxpayers?

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.

Tax credits reduce a taxpayer's taxable income dollar for dollar.

Max is a 14-year-old dependent of his parents. During 2020, Max earned $1,800 working part-time jobs, and he received $1,500 of interest income from corporate bonds that were given to him last year. What is Max's 2020 taxable income?

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

Apollo is single and his AMT base is $100,250. This amount includes $500 of qualified dividends (the dividends were taxed at 15 percent in determining the regular tax liability). What is Apollo's tentative minimum tax?

Trudy is Jocelyn's friend. Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work. During the year, Jocelyn paid Trudy $4,060 to care for her son. What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,600? (Exhibit 8-9)

The child and dependent care credit entitles qualifying taxpayers to a credit equal to the full amount of qualified expenses.

Which of the following does not affect the amount of the earned income credit?

If there is not enough gross tax liability to use the foreign tax credit, _____.

Cassy reports a gross tax liability of $1,100. She also claims $500 of nonrefundable personal credits, $750 of refundable personal credits, and $300 of business credits. What is Cassy's tax refund or tax liability due after applying the credits? (Round your answer to the nearest whole dollar amount.)

Pyrrha, a 12-year-old, claimed in a tax return as a dependent of Epimetheus and Pandora, received $8,200 of interest income in 2020. What is Pyrrha's gross tax liability for the year? (Use Tax Rate Schedule, Standard deduction,Estates and Trusts.)