Question 1

Adrienne has total taxable income of $93,000 which includes $10,000 taxable income from India.She paid $2,800 in foreign income taxes,and her U.S.tax liability is $25,210.Adrienne's foreign tax credit is:

Accepted Answer

To calculate the foreign tax credit, we need to use Form 1116. 
First, we need to calculate the portion of Adrienne's U.S. tax liability that is attributable to her foreign income. 
The equation is: 
Foreign income / Total income x U.S. tax liability = Foreign tax credit 
10,000 / 93,000 x 25,210 = $2,711 
Adrienne's foreign tax credit is $2,711, which is less than the $2,800 she paid in foreign income taxes. Therefore, she can claim the full $2,711 as a foreign tax credit on her U.S. tax return.

Question 2

Mindy and Xavier had a tax liability of $475 before EIC.Their EIC for the current year is $2,578.What is their total tax refund or tax liability for the current year (assume they no other credits or additional tax liability)?

Accepted Answer

The Earned Income Credit (EIC) of $2,578 exceeds their tax liability of $475, resulting in a refund of $2,103 ($2,578 - $475).

Question 3

Vincent and Maria,whose modified AGI is $164,000,adopted a little girl from Mexico which was finalized in 2014.They incurred a total of $16,000 in qualified adoption expenses.What is the amount of adoption credit they can claim in 2014?

Accepted Answer

The adoption credit for 2014 is up to $13,190 per child for qualified adoption expenses. Since Vincent and Maria adopted only one child and incurred $16,000 in expenses, they can claim the full credit amount of $13,190. This credit will reduce their tax liability or increase their refund, depending on their tax situation. Option A is incorrect as they are eligible for the credit. Options C and D are incorrect as the maximum credit for one child with qualified adoption expenses is $13,190 in 2014.

Question 4

Jillian is single and her son,Parker is 12 years old.If her AGI is $76,200,what is her child tax credit for Parker?

Accepted Answer

The child tax credit for a qualifying child is up to $2,000, but it begins to phase out for single filers with an adjusted gross income (AGI) over $75,000. Since Jillian's AGI is $76,200, she is over the threshold, and her credit begins to phase out. The phase-out rate is $50 for each $1,000 (or fraction thereof) by which the taxpayer's AGI exceeds the threshold. Jillian's AGI exceeds the threshold by $1,200, which means her credit is reduced by $60 ($50 for each $1,000 over $75,000). Therefore, the child tax credit she can claim for Parker would be $2,000 - $60 = $1,940, but since the options provided do not include this amount, it seems there might be a misunderstanding in the question or in the interpretation of the tax rules as of the last update. Based on the options provided, none directly match the typical calculation for a child tax credit given the AGI provided. However, without the exact phase-out calculations or a mistake in the options, an accurate answer based on standard tax law cannot be selected from the provided choices.

Question 5

Andrew and Marina are married filing joint and have modified AGI of $77,500.Andrew made a contribution to a qualified retirement plan of $2,000 during the year.How much is their retirement savings contributions credit?

Accepted Answer

The answer of Andrew and Marina are married filing joint...

Question 6

Brian and Clara paid $4,350 in foreign income taxes to Mexico.Their total income was $105,000,which included $16,000 of foreign income.Their U.S.tax liability is $22,750.How much can Brian and Clara claim as foreign tax credit?

Accepted Answer

Brian and Clara can only claim a foreign tax credit for the portion of their foreign income that is subject to U.S. taxation. Therefore, they can claim a credit for the portion of the $4,350 foreign income taxes paid that corresponds to their foreign income that is subject to U.S. taxation. This portion is calculated as follows:

Foreign income subject to U.S. taxation = (Foreign income/Total income) x U.S. taxable income

Foreign income subject to U.S. taxation = ($16,000/$105,000) x ($105,000 - $16,000) = $13,320

So, the foreign tax credit is $4,350, but it is limited to the amount of U.S. tax liability that corresponds to the foreign income subject to U.S. taxation. This amount can be calculated as follows:

Foreign tax credit limit = (Foreign income taxes paid/Total foreign income) x U.S. tax liability

Foreign tax credit limit = ($4,350/$16,000) x $22,750 = $6,177.50

Therefore, Brian and Clara can claim a foreign tax credit of $3,467 ($4,350 - $6,177.50 = -$1,827.50, which is limited to $3,467).

Question 7

What are the requirements that the taxpayer must meet to receive a tax credit for child and dependent care expenses? Briefly discuss.

Accepted Answer

The answer of What are the requirements that the taxpayer...

Question 8

Thomas and Emma are married,file a joint return,and have three qualifying children.Their AGI was $21,000.What is their EIC?

Accepted Answer

For 2023, the Earned Income Credit (EIC) for a married couple filing jointly with three qualifying children and an AGI of $21,000 is $6,143.

Question 9

Max and Nora have modified AGI of $75,000,and adopted a little boy from San Antonio,Texas,in the current year and incurred a total of $13,000 in qualified adoption expenses.In addition,Max's employer provided the couple with adoption benefits of $4,000.What is the maximum amount of adoption credit they can take this year?

Accepted Answer

The maximum adoption credit for 2023 is $15,950. Max and Nora incurred $13,000 in expenses and received $4,000 from their employer, leaving $9,000 in expenses they can claim for the credit.

Question 10

Molly is single with AGI of $22,500.During the year,she contributed $900 to an IRA.What amount of retirement savings contributions credit can Molly claim?

Accepted Answer

The answer of Molly is single with AGI of $22,500.During...

Question 11

Andrew and Eunice are married filing jointly with AGI of $48,000.They contributed $1,800 to a qualified retirement plan.How much is their retirement savings contributions credit?

Accepted Answer

The retirement savings contributions credit, also known as the saver's credit, is a nonrefundable tax credit for eligible contributions to retirement plans. For a married couple filing jointly with an AGI of $48,000 and contributing $1,800 to a qualified retirement plan, the credit rate is 10%. Therefore, their credit amount is $1,800 * 10% = $180.

Question 12

Victoria is a single with two qualifying children and AGI of $24,000.What is her EIC?

Accepted Answer

Based on her filing status, number of qualifying children and AGI, Victoria qualifies for the maximum Earned Income Credit of $4,161 according to the 2020 EIC table.

Question 13

Noah and Olivia have two boys,Jordan,age 6 and Jack,age 5.Their AGI is $176,000.What amount of child tax credit can they claim?

Accepted Answer

The answer of Noah and Olivia have two boys,Jordan,age 6...

Question 14

Andy and Delilah both work and have one qualifying child.They had AGI of $21,000.What is their EIC?

Accepted Answer

Based on the EIC table for 2020, a married couple with one qualifying child and AGI of $21,000 qualifies for a maximum EIC of $3,305. Therefore, the correct answer is C.

Question 15

Brendan paid $950 to Brazil in foreign income taxes.His total income was $52,500,which included $12,000 of investment income from Brazil.His U.S.tax liability is $8,000.Brendan's foreign tax credit is:

Accepted Answer

Brendan's foreign tax credit is $950, which is the amount he paid in foreign income taxes to Brazil. The foreign tax credit is designed to prevent double taxation by allowing taxpayers to credit the amount of foreign taxes paid against their U.S. tax liability, up to the limit of their U.S. tax liability on foreign-earned income.

Question 16

Patricia is single and her son Quinn is age 11.If her AGI is $77,000,what amount of child tax credit can she claim?

Accepted Answer

For the tax year 2023, the Child Tax Credit reverts to $2,000 per qualifying child, with up to $1,500 of it being refundable. However, the credit begins to phase out for single filers with an Adjusted Gross Income (AGI) over $75,000. Given Patricia's AGI is $77,000, she is in the phase-out range, reducing her credit. The reduction calculation is not provided in the options, but based on the information and options given, the closest applicable amount reflecting a phase-out from the base amount would be $900.

Question 17

Harrison is single and his son Jack is 12 years old.If his AGI is $195,000,what amount of child tax credit can Harrison claim?

Accepted Answer

The child tax credit begins to phase out for single filers with an adjusted gross income (AGI) over $200,000. Since Harrison's AGI is $195,000, he is below this threshold and can claim the full child tax credit of $2,000 for his son Jack. However, my response was incorrect in the selection of the answer. The correct answer should have been that Harrison can claim the full child tax credit, but due to my error in processing the phase-out threshold information, I mistakenly indicated that he could not claim any credit. The correct answer, based on the provided AGI and the fact that Jack is 12 years old, would allow for the full child tax credit, which is $2,000, not $0.

Question 18

Casey and Lupe have AGI of $125,000.They have twin daughters,Ashley and Alley,ages 5.What amount of child tax credit can they claim?

Accepted Answer

The answer of Casey and Lupe have AGI of $125,000.They...

Question 19

Which of the following statements regarding adoption credits is true?

Accepted Answer

The adoption credit may be limited if AGI amounts exceed certain levels. The maximum credit allowed per adopted child is actually $14,300 for tax year 2020. Qualified expenses may include reimbursement from employer programs, and the adoption of foreign children may qualify for the credit.

Question 20

Rolando and Silvia have modified AGI of $230,000.They adopted a boy from Guatemala,whose adoption became final in the current year.They incurred a total of $15,000 in qualified adoption expenses.What is the amount of adoption credit they can claim in the current year?

Accepted Answer

The adoption credit is phased out for taxpayers with MAGIs over $214,160. Rolando and Silvia's MAGI is $230,000, so their adoption credit is reduced by $1,810 ($230,000 - $214,160 x $10). Their maximum adoption credit is $13,190 ($15,000 - $1,810).

Quiz 9: Tax Credits