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Exam 13: Tax Credits and Payment Procedures

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Question 21

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Bradley has two college-age children, Clint, a freshman at State University, and Abigail, a junior at Northwest University. Both Clint and Abigail are full-time students. Clint's expenses during the 2018 fall semester are as follows: $2,400 tuition, $250 books and course materials, and $1,600 room and board. Abigail's expenses for the 2018 calendar year are as follows: $10,200 tuition, $1,200 books and course materials, and $3,600 room and board. Tuition and the applicable room and board costs are paid at the beginning of each semester. Bradley is married, files a joint tax return, claims both children as dependents, and reports a combined AGI with his wife Allie of $114,000 for 2018. Determine Bradley's available education tax credit for 2018.

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In 2018, both Clint and Abigail qualify ...

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Question 22

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The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

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B) False

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Question 23

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The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Black Company paid wages of $180,000, of which $40,000 was qualified wages for the work opportunity tax credit under the general rules. Black Company's deduction for wages for the year is:

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas i.e., inner city) to newer locations.

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program also can qualify for the credit for child and dependent care expenses.

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child under age 19) of the taxpayer.

Ahmad is considering making a $10,000 investment in a venture which its promoter promises will generate immediate tax benefits for him. Ahmad, who normally itemizes his deductions, is in the 28% marginal tax bracket. If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment, what treatment normally would be most beneficial to Ahmad and by how much will Ahmad's tax liability decline because of the investment?

Only married taxpayers with children are qualified to receive the earned income credit.

Harry and Wilma are married and file a joint income tax return. On their tax return, they report $44,000 of adjusted gross income $20,000 salary earned by Harry and $24,000 salary earned by Wilma) and claim two exemptions for their dependent children. During the year, they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work. ABC Day Care Center $3,200 Blue Ridge Housekeeping Services 2,000 Mrs) Mason Harry's mother) 1,000 Harry and Wilma may claim a credit for child and dependent care expenses of:

Which, if any, of the following correctly describes the research activities credit?

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Child and dependent care expenses include amounts paid for general household services.

Bob and Sally are married, file a joint tax return, report AGI of $118,000, and have two children. Del is beginning her freshman year at State College during Fall 2018, and Owen is beginning his senior year at Southwest University during Fall 2018. Owen completed his junior year during the Spring semester of 2017 i.e., he took a "leave of absence" during the 2017-2018 school year) . Both Del and Owen are claimed as dependents on their parents' tax return. Del's qualifying tuition expenses and fees total $5,000 for the Fall semester, while Owen's qualifying tuition expenses were $6,100 for the Fall 2018 semester. Del's room and board costs were $3,200 for the Fall semester. Owen did not incur room and board costs, as he lived with his aunt and uncle during the year. Full payment is made for the tuition and related expenses for both children at the beginning of each semester. In addition to the children's college expenses, Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist. Bob attended the seminars during July and August 2018. Compute the available education tax credits for Bob and Sally for 2018.

The base amount for the Social Security portion old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.

In terms of the withholding procedures, which statement does not reflect current rules?

Phil and Audrey, husband and wife, both are employed by Laurel Corporation. Phil earns $135,000 in salary in 2018, and Audrey earns $70,000. How much FICA tax must they pay for 2018?

Identify the statement below that is false.

An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.