Question 1

A taxpayer's tentative minimum tax exceeds his net income tax so he will be paying the alternative minimum tax this year. The taxpayer has a sole proprietorship through which he has earned general business credits. The taxpayer can reduce his AMT to the extent of his general business credits.

Accepted Answer

The answer of A taxpayer's tentative minimum tax exceeds his...

Question 2

The nonrefundable disabled access credit is available to eligible small businesses for expenditures incurred to make existing business facilities accessible to disabled individuals.

Accepted Answer

The statement accurately describes the nonrefundable disabled access credit.

Question 3

The earned income credit is available only to taxpayers with qualifying children.

Accepted Answer

The earned income credit is available to taxpayers with or without qualifying children. However, the credit amount is greater for taxpayers with qualifying children.

Question 4

A credit for rehabilitation expenditures is available to a business for the purchase price of a building originally placed in service before 1936.

Accepted Answer

The credit is available for renovation and restoration costs after purchase,not for the purchase price.

Question 5

To claim the Lifetime Learning Credit, a student must take at least one-half of a full-time course load during the year.

Accepted Answer

To claim the Lifetime Learning Credit, a student does not need to take at least one-half of a full-time course load. They can take any number of courses, including just one course per year.

Question 6

If an employee has more than one employer during the year, all employers must withhold federal income taxes but only one employer must withhold FICA tax.

Accepted Answer

All employers must withhold FICA tax from an employee's wages, regardless of whether they have more than one employer during the year.

Question 7

The foreign tax credit is equal to the smaller of foreign taxes paid or accrued in the tax year or the portion of the U.S. income tax liability attributable to the income earned in all foreign countries.

Accepted Answer

The statement is true as per the rules of the foreign tax credit.

Question 8

Nonrefundable personal tax credits are allowed against the taxpayer's tax liability before other credits are claimed.

Accepted Answer

Nonrefundable personal tax credits such as the child tax credit, education credits, and retirement savings contribution credit can reduce the taxpayer's tax liability but cannot result in a tax refund. They are applied before other credits that may be refundable.

Question 9

The earned income credit is refundable only if a tax has been withheld.

Accepted Answer

The earned income credit is refundable even if no taxes were withheld. It is based on a taxpayer's income and family size, and can result in a refund even if the taxpayer did not owe any taxes.

Question 10

Brad and Shelly's daughter is starting her freshman year of college. Brad and Shelly will be able to claim the American Opportunity Tax Credit for a percentage of the cost of tuition and room and board.

Accepted Answer

The answer of Brad and Shelly's daughter is starting her...

Question 11

Research expenses eligible for the research credit include costs that are incident to the development or improvement of a product or component.

Accepted Answer

Research expenses eligible for the research credit include costs that are incident to the development or improvement of a product or component, as well as activities to discover information that is technological in nature and the application of that information for future use in developing a new or improved business component.

Question 12

The qualified retirement savings contributions credit is based on a maximum contribution of $2,000.

Accepted Answer

The maximum contribution used to calculate the retirement savings contributions credit is indeed $2,000.

Question 13

Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education.

Accepted Answer

The answer of Qualified tuition and related expenses eligible for...

Question 14

If estimated tax payments equal or exceed 100% of the actual tax liability for the prior year, there is generally (assuming AGI less than or equal to $150,000)no penalty for underpayment of estimated taxes.

Accepted Answer

If estimated tax payments equal or exceed 100% of the actual tax liability for the prior year, there is generally no penalty for underpayment of estimated taxes, as long as the taxpayer's AGI is less than or equal to $150,000.

Question 15

Taxpayers with income below phase-out amounts are allowed a child credit of $1,000 for each qualifying child under age 17.

Accepted Answer

This statement is true. Taxpayers with income below the phase-out amounts are eligible for the full child tax credit of $1,000 per qualifying child under age 17. However, the child tax credit begins to phase out for taxpayers with adjusted gross income above $200,000 for single filers and $400,000 for joint filers, and is reduced by $50 for each $1,000 above this threshold.

Question 16

The health insurance premium assistance credit is designed to help lower and middle income taxpayers who purchase their own health insurance insurance directly from an insurance company or through a state or federal exchange.

Accepted Answer

The answer of The health insurance premium assistance credit is...

Question 17

The general business credits are refundable credits.

Accepted Answer

The answer of The general business credits are refundable credits....

Question 18

Jake and Christina are married and file a joint return for 2014 with taxable income of $100,000 and tax preferences and adjustments of $20,000 for AMT purposes. Their regular tax liability is $16,713. What is the amount of their total tax liability?
A)$6,859
B)$9,854
C)$16,713
D)$26,567

Accepted Answer

The answer of Jake and Christina are married and file...

Question 19

In lieu of a foreign tax credit, a taxpayer may elect to take a deduction for foreign taxes paid or accrued.

Accepted Answer

This is true. A taxpayer may choose to take a deduction for foreign taxes paid or accrued instead of claiming a foreign tax credit. However, the taxpayer cannot take both a credit and a deduction for the same taxes.

Question 20

Bob's income can vary widely from year-to-year because much of his compensation comes from sales commissions and bonuses. It generally is in the $200,000 to $300,000 range. To minimize the risk of underpayment penalties for estimated tax he should pay in, through payroll withholding and estimated tax payments, 100% of the prior year tax liability.

Accepted Answer

The answer of Bob's income can vary widely from year-to-year...

Quiz 14: Special Tax Computation Methods, Tax Credits, and Payment of Tax