Question 1

If an employee holds two jobs during the year,an overwithholding of FICA tax will result.

Accepted Answer

The answer of If an employee holds two jobs during...

Question 2

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.

Accepted Answer

According to IRS rules, child care payments to a relative who is a child (under age 19) of the taxpayer are not eligible for the credit for child and dependent care expenses.

Question 3

In the event that overwithholding of FICA tax occurs because the taxpayer has more than one employer,the excess amount should be claimed as a credit on the Federal income tax return of the employee.

Accepted Answer

Overwithholding of FICA tax due to having multiple employers can be claimed as a credit on the employee's federal income tax return using Form 1040. The excess amount cannot be refunded by the Social Security Administration or the IRS.

Question 4

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.

Accepted Answer

By increasing income tax withholdings from their employer, the employee can offset any potential underpayment of estimated tax and avoid the penalty.

Question 5

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

Accepted Answer

The base amount for Social Security portion and Medicare portion of FICA are different. For Social Security, the base amount for 2021 is $142,800, while for Medicare, there is no cap on earnings subject to Medicare tax.

Question 6

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

Accepted Answer

Child and dependent care expenses can include amounts paid for household services if those services are necessary for the well-being and protection of the qualifying individual, allowing the taxpayer to work or look for work.

Question 7

An expatriate who works in a country with an income tax rate higher than the U.S.rate probably will find the foreign earned income exclusion preferable to the foreign tax credit.

Accepted Answer

The answer of An expatriate who works in a country...

Question 8

Certain high-income individuals are subject to three additional Medicare taxes-on wages,unearned income,and tax credits claimed.

Accepted Answer

High-income individuals are subject to an additional Medicare tax on wages and unearned income, but not on tax credits claimed. The additional taxes are specifically a 0.9% Medicare tax on wages exceeding certain thresholds and a 3.8% Net Investment Income Tax (NIIT) on unearned income for high earners.

Question 9

Only self-employed individuals are required to make estimated tax payments.

Accepted Answer

Both self-employed individuals and individuals with income from other sources (such as investments or rental properties) may be required to make estimated tax payments if they expect to owe at least $1,000 in taxes for the year.

Question 10

Both education tax credits are available for qualified tuition expenses,and in certain instances,also may be available for room and board.

Accepted Answer

Education tax credits like the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) are available for qualified tuition and related expenses, but they do not cover room and board.

Question 11

John owns and operates a real estate agency as a sole proprietor.On a full-time basis,he employs his 17-year old daughter as a receptionist and his 22-year old son as a bookkeeper.Both children are subject to FICA withholding.

Accepted Answer

The answer of John owns and operates a real estate...

Question 12

The education tax credits (i.e. ,the American Opportunity credit and the lifetime learning credit)are available to help defray the cost of higher education regardless of the income level of the taxpayer.

Accepted Answer

The education tax credits phase out at higher income levels, meaning taxpayers with incomes above certain thresholds are not eligible for these credits.

Question 13

Juan refuses to give the bank where he maintains a savings account his Social Security number.Juan is subject to backup withholding for the interest earned on the savings account.

Accepted Answer

According to IRS regulations, individuals who receive interest income but do not provide their Social Security number to the payer may be subject to backup withholding, which is currently set at a rate of 24%. Since Juan refuses to give his Social Security number, he would be subject to backup withholding on the interest earned in his savings account.

Question 14

For purposes of computing the credit for child and dependent care expenses,the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

Accepted Answer

This is true according to the IRS guidelines for computing the credit for child and dependent care expenses. The maximum amount of qualifying expenses that can be considered is limited to the individual's actual or deemed earned income, whichever is less.

Question 15

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

Accepted Answer

The additional Medicare taxes assessed on high-income individuals have different tax rates depending on the tax base. For earned income, the tax rate is 0.9% on income over $200,000 for individuals and $250,000 for couples filing jointly. For investment income, the tax rate is 3.8% on income over those same thresholds.

Question 16

Qualifying tuition expenses paid from the proceeds of a tax-exempt scholarship do not give rise to an education tax credit.

Accepted Answer

The IRS does not allow taxpayers to claim an education tax credit for any qualified tuition expenses that were paid from tax-exempt scholarships or grants. Only out-of-pocket tuition and eligible expenses that were not covered by tax-free assistance can be used to claim an education credit.

Question 17

The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

Accepted Answer

This statement is true. If only one spouse is employed and the other spouse is a full-time student, the maximum credit for child and dependent care expenses is $2,100.

Question 18

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

Accepted Answer

The answer of Expenses that are reimbursed by a taxpayer's...

Question 19

On October 2,Ross quits his job with Blue Corporation.If requested by Ross,Blue Corporation must furnish a Form W-2 to Ross within 45 days after the date of the request or the final wage payment,whichever is later.

Accepted Answer

The answer of On October 2,Ross quits his job with...

Question 20

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

Accepted Answer

The answer of A taxpayer may qualify for the credit...

Quiz 13: Tax Credits and Payment Procedures