Question 1

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

Accepted Answer

The ordering of application of tax credits allows the nonrefundable personal credits to be applied before other credits.

Question 2

Beth and Jay project the following taxes for the current year:  How much in estimated tax payments (including withholding from wages and quarterly estimated payments) should the taxpayers pay this year in order to avoid underpayment penalties under the following assumptions regarding the preceding tax year?
a. Preceding tax year-AGI of $140,000 and total taxes of $36,000.
b. Preceding tax year-AGI of $155,000 and total taxes of $50,000.

Accepted Answer

The answer of Beth and Jay project the following taxes...

Question 3

Assume a taxpayer determines that his total income tax for the year is $25,000 at the time he files his tax return. Given the fixed tax liability, a taxpayer with savings should prefer a tax refund of $2,500 over a tax due of $2,500.

Accepted Answer

For financial planning considerations, a taxpayer should prefer to owe taxes to the IRS rather than making an interest-free loan to the IRS. Amount owed should not so large that it will cause underpayment penalties.

Question 4

Discuss when Form 6251, Alternative Minimum Tax, must be filed.

Accepted Answer

The answer of Discuss when Form 6251, Alternative Minimum Tax,...

Question 5

If a taxpayer's AGI is greater than $150,000, no penalty will be imposed if the taxpayer pays estimated tax payments in 2014 equal to what percentage of 2013's income tax liability?

Accepted Answer

If the taxpayer's AGI is greater than $150,000, no penalty will be imposed if the taxpayer pays estimated tax payments in the current year equal to 110% of the preceding year's income tax liability.

Question 6

With respect to estimated tax payments for a taxpayer with AGI of $150,000 or lower in the prior year, all of the following are generally true with the exception of

Accepted Answer

No underpayment penalty is imposed if the estimated payments total at least 100% of the actual tax liability for the prior year.

Question 7

A taxpayer at risk for AMT should consider which of the following decisions?

Accepted Answer

Of the responses provided, only the state income taxes creates a preference or adjustment.

Question 8

Discuss actions a taxpayer can take if it is anticipated that his income taxes will be substantially underpaid in order to minimize penalties.

Accepted Answer

The answer of Discuss actions a taxpayer can take if...

Question 9

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

When AGI exceeds $150,000, the taxpayer needs to pay in 110% of prior year tax liability.

Question 10

Discuss the tax planning techniques available to a U.S. citizen who is on a foreign job assignment.

Accepted Answer

The answer of Discuss the tax planning techniques available to...

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