Question 1

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

Accepted Answer

The answer of Which of the following conditions must be...

Question 2

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?

Accepted Answer

The adoption credit begins to phase out for modified AGI above $223,410 and is completely phased out at $263,410. Since Angelina's modified AGI is $275,000, she cannot claim any adoption credit.

Question 3

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)

Accepted Answer

To calculate the foreign tax credit, we need to determine the total foreign taxes paid, and then compare them to the foreign-source income that was included in the taxpayer's total taxable income.

In this case, Waseem had $11,000 of taxable income from India and paid $4,000 in taxes to India. To figure out how much of his U.S. tax liability can be credited to foreign taxes, we need to calculate the ratio of foreign-source income to total taxable income:

$11,000 / $103,000 = 0.1068

This means that 10.68% of Waseem's total taxable income came from foreign sources. To calculate his foreign tax credit, we multiply his U.S. tax liability by this percentage:

$21,610 x 0.1068 = $2,308.29

Therefore, Waseem's foreign tax credit is $2,308.

Question 4

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?

Accepted Answer

Sandra is eligible for the full child tax credit of $2,000 because her AGI is below the phase-out income limit of $200,000 for single filers.

Question 5

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)

Accepted Answer

The foreign tax credit is calculated as the lesser of the foreign taxes paid ($1,200) or the U.S. tax liability on the foreign income. The U.S. tax liability on the foreign income is calculated as ($6,000/$39,000) * $3,610 = $555. Therefore, the foreign tax credit is $555.

Question 6

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

Accepted Answer

The statement that adoption credit may be claimed regardless of the taxpayer's modified AGI amounts is not true. The adoption credit is subject to income limitations, and the credit amount phase-outs for taxpayers with modified adjusted gross income (MAGI) above a certain threshold.

Question 7

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?

Accepted Answer

The retirement savings contributions credit is calculated based on the taxpayer's AGI and the amount contributed to a qualified retirement plan. In this case, Dean and Sue's AGI is $28,000 and their contribution is $1,500, which puts them in the 50% credit rate category. The maximum credit for their filing status is $1,000 which means they are eligible to claim a credit of $750 (50% of $1,500). Therefore, the correct answer is (C) $750.

Question 8

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?

Accepted Answer

The answer of Julia and Omar are married and file...

Question 9

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

Accepted Answer

All of the mentioned account contributions (401k, SEP and IRA) qualify for the retirement savings contributions credit. This credit helps individuals with low to moderate income to save for retirement by reducing the amount of tax they owe on their contributions. Therefore, all of these options are good choices for individuals looking to maximize their retirement savings while receiving a tax benefit.

Question 10

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?

Accepted Answer

The child tax credit is $2,000 per qualifying child under the age of 17. Presley and Jake have two qualifying children, so they can claim a total of $4,000 in child tax credit. However, the child tax credit is phased out for taxpayers with AGIs above certain levels. For taxpayers filing jointly, the phase-out begins at an AGI of $118,000. Presley and Jake's AGI is $116,950, which is below the phase-out threshold. Therefore, they can claim the full $4,000 in child tax credit.

Question 11

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

Accepted Answer

The answer of Shawn and Dahlia are married; both work...

Question 12

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)

Accepted Answer

The adoption credit for 2021 is a maximum of $14,440 per child for taxpayers with a modified AGI of less than $216,660, and it gradually phases out for taxpayers with modified AGI between $216,660 and $256,660. Since Jesus and Mindy's modified AGI is $210,000, they are under the phase-out range and can claim the full credit of $18,000 for their adopted daughter. Therefore, the adoption credit they can claim in the current year is $18,000.

Question 13

Debbie files as head of household and has AGI of $35,500.During the year,she contributed $1,000 to a 401k).What amount of retirement savings contributions credit can Debbie take?

Accepted Answer

Debbie's AGI qualifies her for a 10% credit rate for contributions to a retirement plan. Therefore, she can take a credit of 10% of her $1,000 contribution, which is $100.

Question 14

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?

Accepted Answer

The American Opportunity Tax Credit provides a maximum annual credit of $2,500 per eligible student for the first four years of post-secondary education. In this case, Cash is in his first year of college and attended full-time, and Warren and Erika paid $9,300 in qualified expenses, which is less than the maximum credit amount. Therefore, they are eligible for the full credit amount of $2,500. The option A is the only choice that matches the eligibility of the couple.

Question 15

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?

Accepted Answer

The answer of Rudy and Rebecca have AGI of $156,000.They...

Question 16

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 2016,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. 2015 $ 12,500
2016 2,800

Accepted Answer

The answer of After years of working with the orphanage...

Question 17

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?

Accepted Answer

A taxpayer would be better off taking the foreign taxes paid as an itemized deduction if the foreign tax paid was a property tax, as property taxes are not eligible for the foreign tax credit.

Question 18

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

Accepted Answer

The adoption of foreign country children does qualify for the credit. The other options are true statements about adoption credits.

Question 19

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.)

Accepted Answer

To calculate the foreign tax credit, we first need to calculate the ratio of foreign income to total income:
Foreign income/Total income = $9,000/$65,000 = 0.1385
Next, we use that ratio to calculate the foreign tax credit:
Foreign tax credit = Foreign taxes paid x Foreign income ratio
Foreign tax credit = $2,500 x 0.1385 = $346.25
However, this credit cannot exceed the U.S. tax liability on the foreign income. Therefore, the maximum foreign tax credit Max can claim is $2,458 ($17,750 x 0.1385). So the correct answer is C.

Question 20

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.)

Accepted Answer

The answer of Tina has $93,000 total taxable income,which includes...

Quiz 9: Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

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

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?

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)

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?

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)

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

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?

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?

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

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?

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

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)

Debbie files as head of household and has AGI of $35,500.During the year,she contributed $1,000 to a 401k) .What amount of retirement savings contributions credit can Debbie take?

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?

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?

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?

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

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.)

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.)