Deck 9: Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Question 1

The American opportunity tax and lifetime learning credits are not available to taxpayers who are married filing separately.

Answer 1

True

Question 2

The maximum allowable American opportunity tax credit for the current tax year is $2,500 per eligible student.

Answer 2

True

Question 3

A qualifying child for the child tax credit must be a dependent and under the age of 14.

Answer 3

False

Question 4

A taxpayer can receive both American opportunity tax and lifetime learning credits for the same education expenses in the same tax year.

Question 5

The maximum allowable credit for the elderly or the disabled is equal to 30% of the taxpayer's base amount.

Question 6

Qualifying expenses for the American opportunity tax and lifetime learning credits include room and board.

Question 7

The maximum amount per year of dependent care expenses that can be used for calculating the credit for child and dependent care expenses is $6,000 for two or more qualifying individuals.

Question 8

A qualifying individual for purposes of the credit for child and dependent care expenses includes a dependent or a spouse of the taxpayer who is incapable of caring for himself or herself.

Question 9

The main goal of Congress in offering tax credits is to collect additional revenues.

Question 10

The retirement savings contributions credit is available regardless of the income level of the taxpayer.

Question 11

Credit for child and dependent care expenses can only be claimed on a Form 1040.

Question 12

If the modified AGI of a married filing joint taxpayer exceeds $132,000 in 2017,the lifetime learning credit phases out completely.

Question 13

The American opportunity tax credit phases out beginning at $80,000 of modified AGI for single taxpayers.

Question 14

A student can only receive the lifetime learning credit if he/she is enrolled in a degree program.

Question 15

The amount of foreign tax credit is equal to the amount paid to the foreign government but cannot exceed that portion of U.S.income tax attributable to the foreign income.

Question 16

The retirement savings contributions credit is available for married filing joint taxpayers only.

Question 17

The maximum lifetime learning credit per taxpayer is $3,000 per year.

Question 18

The maximum child tax credit is $1,000 per child.

Question 19

There are two types of education credits available,the American opportunity tax credit and the lifetime learning credit.

Question 20

All taxpayers must file Form 1116 to receive the foreign tax credit.

Question 21

The earned income credit (EIC)is a nonrefundable credit.

Question 22

There is no maximum amount for the adoption credit.

Question 23

The foreign tax credit is available only to individuals born in a foreign country.

Question 24

The Affordable Care Act requires all individuals to have health care coverage.

Question 25

The maximum amount per year of dependent care expenses that can be used for calculating the credit for child and dependent care expenses is $3,000 for one qualifying individual.

Question 26

A student can only receive the American opportunity tax credit if he/she is enrolled in the first four years of postsecondary education.

Question 27

The adoption credit is only available for domestic adoptions.

Question 28

The child tax credit of $1,000 per child is available for taxpayers with children under the age of 16.

Question 29

The maximum allowable lifetime learning credit per year is $2,000 per student.

Question 30

Taxpayers with household income between 100% and 400% of the Federal Poverty Level are generally eligible for a premium tax credit.

Question 31

The American opportunity tax and lifetime learning credits are available to taxpayers without any limitations due to AGI amounts.

Question 32

The maximum American opportunity tax credit is $2,500 per student per year.

Question 33

In order to be eligible for the credit for the elderly or the disabled,the taxpayer must be age 55 or older or have retired on permanent disability.

Question 34

The child tax credit is reduced if AGI exceeds $110,000 for married filing joint taxpayers.

Question 35

The earned income credit is available for taxpayers with children only.

Question 36

A taxpayer may become ineligible for earned income credit if he/she has excessive disqualified income such as dividends or interest.

Question 37

The two types of education credits available,American opportunity tax credit and lifetime learning credit,may be used in combination for the same student in any given year to give the taxpayer the greatest tax advantage.

Question 38

The earned income credit is adjusted each year for inflation.

Question 39

The credit for child and dependent care expenses can only be claimed if a taxpayer incurs employment-related expenses to care for one or more qualifying individuals.

Question 40

The maximum amount of earned income credit for a joint taxpayer with one child in 2017 is $3,400.

Question 41

Sam paid the following expenses during October 2017 for his son Aaron's spring 2018 college expenses: Spring 2018 semester begins in January 2018: $$\begin{array} { l r r } \text { Tuition } & \$ & 18,000 \\\text { Housing } & & 8,000 \\\text { Meal plarn } & & 3,500\end{array}$$ In addition,Aaron's uncle paid $500 for college fees on behalf of Aaron directly to the college.Aaron is claimed as Sam's dependent on his tax return.How much of the paid expenses qualify for purposes of the education credit deduction for Sam in 2017?

A)$0.
B)$20,000.
C)$18,000.
D)$18,500.

Question 42

A qualifying individual for the purposes of the child and dependent care expenses credit includes all of the following except:

A)A dependent under the age of 13.
B)An adult child who is incapable of caring for himself/herself.
C)A dependent child,age of 17 who attends school full time.
D)A spouse who is incapable of caring for himself/herself.

Question 43

The maximum contribution amount for the retirement savings contributions credit for each tax year is 20% of a taxpayer's AGI.

Question 44

Tai and Song are ages 69 and 59,respectively,and file a joint return.They have AGI of $20,000 and received $2,000 in nontaxable social security benefits.How much can Tai and Song take as a credit for the elderly or the disabled?

A)$0.
B)$1,125.
C)$2,000.
D)$7,500.

Question 45

Which of the following statements is not true regarding the credit for the elderly or the disabled?

A)Base amount for the credit calculation for a single individual is $5,000.
B)Base amount for the credit calculation for joint returns is $5,000.
C)The maximum allowable credit is based on 15% of the taxpayer's base amount.
D)Base amount for the credit calculation for a joint individual where only one spouse qualifies is $5,000.

Question 46

April and Joey are both 74 years old and received $1,500 in nontaxable social security benefits.Their AGI for the year was $18,000.How much can April and Joey claim as a credit for the elderly or the disabled?

A)$300.
B)$1,125.
C)$1,500.
D)$2,000.

Question 47

Kylie is a single mom with two dependent children,Tanner,age 7 and Olivia,age 11.She has AGI of $36,000 and paid $5,300 to a qualified day care center for the two children.What amount of credit can Kylie receive for the child and dependent care credit?

A)$5,300.
B)$1,060.
C)$1,200.
D)$1,272.

Question 48

The retirement savings contributions credit is available for head of household taxpayers only.

Question 49

DJ and Nicolette paid $1,600 in qualifying expenses for their daughter Nicole to attend the University of Nevada.Nicole is a sophomore.DJ and Nicolette's AGI is $175,000.What is their maximum allowable American opportunity tax credit after the credit phase-out based on AGI is taken into account?

A)$0.
B)$400.
C)$600.
D)$1,600.

Question 50

The maximum adoption credit is 50% of all qualified expenses.

Question 51

Sean and Jenny are married,file a joint return and have two dependent children,Blake,age 9 and Jake,age 5.Sean has earned income of $72,000.Jenny was a full-time student (for nine months)with no income.They paid a qualified day care center $7,000.What amount of child and dependent care credit can Sean and Jenny receive?

A)$600.
B)$900.
C)$1,000.
D)$1,200.

Question 52

Which of the following statements is not true with regard to the child and dependent care expense credit?

A)The maximum amount of expenses for one dependent is $3,000.
B)Married taxpayers must file joint returns.
C)A non-working spouse attending school full-time is deemed to have earned income of $250 per month for one qualifying person.
D)The maximum amount of expenses for two or more dependents is $6,000.

Question 53

Which of the following statements is not true regarding the education credits?

A)The American opportunity tax credit is only available for the first two years of postsecondary education.
B)The lifetime learning credit is limited to $2,000 per taxpayer per year.
C)The American opportunity tax credit is limited to $2,500 per student per year.
D)A taxpayer cannot receive the American opportunity tax credit if he/she has a felony drug conviction.

Question 54

Kyle and Alyssa paid $1,000 and $2,800 in qualifying expenses for their two daughters Jane and Jill,respectively,to attend the University of California.Jane is a sophomore and Jill is a freshman.Kyle and Alyssa's AGI is $135,000 and they file a joint return.What is their allowable American opportunity tax credit after the credit phase-out based on AGI is taken into account?

A)$0.
B)$2,000.
C)$3,800.
D)$3,500.

Question 55

Kobe is a single dad with two dependent children,Lizzie,age 7 and Leslie,age 3.He has AGI of $51,000 and paid $3,700 to a qualified day care center.What amount of credit can Kobe receive for the child and dependent care credit?

A)$0.
B)$740.
C)$3,700.
D)$10,200.

Question 56

Which of the following statements is true about education credits?

A)A taxpayer may be eligible to claim the education credits regardless of their AGI amount.
B)A taxpayer can use the same qualifying expenses for both the American opportunity tax and lifetime learning credits.
C)A taxpayer cannot claim an American opportunity tax credit or lifetime learning credit in the same year he/she takes a tax-free distribution from a Coverdell Education Savings Account.
D)The lifetime learning credit may be limited by AGI levels and may completely phase out when modified AGI exceeds a certain amount (the amount depending on the tax year).

Question 57

The earned income credit (EIC)is only available for taxpayers with children.

Question 58

Joseph paid $1,750 in qualifying expenses for his daughter who attended a community college.How much is Joseph's lifetime learning credit without regard to AGI limitations or other credits?

A)$250.
B)$350.
C)$825.
D)$1,750.

Question 59

Which of the following statements is not true regarding the credit for the elderly or the disabled?

A)Taxpayer may not have earned income.
B)Taxpayer may receive social security benefits.
C)Taxpayer must be age 65 or older.
D)Taxpayer must be retired or on permanent and total disability.

Question 60

Which of the following statements is not true regarding the education credits?

A)If a dependent pays for qualified expenses,the expenses are deemed paid by the taxpayer.
B)If a relative makes payments for qualified expenses directly to the institution on behalf of the student,the expenses are deemed paid by the student.
C)If a student receives a scholarship that is excluded from gross income,that amount should reduce qualified expenses.
D)Payments made using borrowed funds are not considered qualified expenses.

Question 61

Shawn and Dahlia are married;both work and have one qualifying child.They had AGI of $19,000.What is their Earned Income Credit?

A)$0.
B)$5,616.
C)$3,400.
D)$6,460.

Question 62

Debbie files as head of household and has AGI of $36,500.During the year,she contributed $1,000 to a 401(k).What amount of retirement savings contributions credit can Debbie take?

A)$0.
B)$100.
C)$200.
D)$1,000.

Question 63

Julia and Omar are married and file a joint tax return.They have two dependent daughters,ages 14 and 18.If their AGI is $98,000,what amount of child tax credit can they claim?

A)$0.
B)$1,000.
C)$1,650.
D)$2,000.

Question 64

Angelina is single and has modified AGI of $275,000.She adopted a boy from San Antonio,Texas,and incurred a total of $16,000 in qualified adoption expenses.What is the amount of adoption credit she can take?

A)$0.
B)$6,805.
C)$13,460.
D)$16,000.

Question 65

Presley and Jake are married filing joint taxpayers.They have twin sons,ages 7.If their AGI is $116,950,what amount of child tax credit can they claim?

A)$0.
B)$1,000.
C)$1,650.
D)$2,000.

Question 66

In which of the following situations would a taxpayer be better off to take the foreign taxes paid as an itemized deduction rather than as a foreign tax credit?

A)The foreign tax paid was less than 10% of AGI.
B)The foreign tax paid was to a South American country.
C)The foreign tax paid was a property tax.
D)The foreign tax paid was an income tax.

Question 67

After years of working with the orphanage and the government,Walt and Kim adopted a little girl from China.The adoption process,which became final in January 2017,incurred the following qualified adoption expenses.What amount of adoption credit can Walt and Kim claim and in what year? Assume there is no credit limitation due to their AGI amount. $\begin{array}{rrr}2016 & \$ & 12,500 \\2017 & & 2,800\end{array}$

A)$15,300 in 2017.
B)$15,300 in 2016.
C)$12,500 in 2016 and $2,800 in 2017.
D)$13,570 in 2017.

Question 68

Which of the following statements regarding adoption credits is not true?

A)There is a dollar limit to the maximum credit allowed per adopted child.
B)Form 8839 must be filed to claim the credit.
C)Adoption of foreign country children does not qualify for the credit.
D)Adoption of a child of taxpayer's spouse does not qualify.

Question 69

Gina has $39,000 total taxable income,which includes $6,000 of taxable income from Argentina.She paid $1,200 in foreign income taxes and her U.S.tax liability is $3,610.Gina's foreign tax credit is: (Do not round interim calculations)

A)$0.
B)$450.
C)$555.
D)$1,200.

Question 70

Rudy and Rebecca have AGI of $156,000.They have twin daughters,Ashley and Amy,ages 5.What amount of child tax credit can they claim?

A)$0.
B)$1,000.
C)$2,000.
D)$2,300.

Question 71

Jesus and Mindy have modified AGI of $210,000,adopted a girl from Miami,Florida,and incurred a total of $18,000 in qualified adoption expenses.What is the amount of adoption credit they can claim in the current year? (Do not round interim calculations)

A)$2,719.
B)$11,378.
C)$13,460.
D)$18,000.

Question 72

Which of the account contributions qualify for the retirement savings contributions credit?

A)IRA.
B)401(k).
C)SEP.
D)All of these qualify.

Question 73

Warren and Erika paid $9,300 in qualified expenses for their son,Cash,to attend the University of Washington.Cash is in his first year of college and attended full-time.How much is Warren and Erika's American opportunity tax credit,without regard to any AGI limitation?

A)$0.
B)$1,800.
C)$2,500.
D)$9,300.

Question 74

Waseem has $103,000 total taxable income,which includes $11,000 of taxable income from India.He paid $4,000 in foreign income taxes and his U.S.tax liability is $21,610.Waseem's foreign tax credit is: (Do not round interim calculations)

A)$0.
B)$2,200.
C)$2,308.
D)$4,000.

Question 75

Which of the following statements regarding adoption credits is not true?

A)Qualified expenses do not include employer reimbursements.
B)An eligible child may be up to the age of 18.
C)The credit may be claimed regardless of the taxpayer's modified AGI amounts.
D)Qualified expenses include adoption fees,attorney fees and court costs.

Question 76

Dean and Sue are married filing jointly with AGI of $28,000.They made a $1,500 contribution to a qualified retirement plan.How much is their retirement savings contributions credit?

A)$0.
B)$150.
C)$300.
D)$750.

Question 77

Sandra is single and her son Julius is 12 years old.If her AGI is $79,000,what amount of child tax credit can Sandra claim?

A)$0.
B)$500.
C)$800.
D)$1,000.

Question 78

Max paid $2,500 in foreign income taxes to Peru.His total income was $65,000,which included $9,000 of foreign income.His U.S.tax liability is $17,750.How much can Max claim as foreign tax credit? (Do not round interim calculations. )

A)$2,458.
B)$2,500.
C)$3,350.
D)$9,000.

Question 79

Which of the following conditions must be met for a taxpayer to be able to claim the foreign tax credit without filing Form 1116?

A)All of the foreign-source income is passive income.
B)Total foreign taxes paid were less than $300 ($600 if married filing jointly).
C)Taxpayer is not subject to foreign tax limitation rules.
D)All of these must be met.

Question 80

Tina has $93,000 total taxable income,which includes $18,000 of taxable income from Japan.She paid $2,200 in foreign income taxes and her U.S.tax liability is $19,610.Tina's foreign tax credit is: (Do not round interim calculations)

A)$0.
B)$2,200.
C)$3,795.
D)$18,000.