Question 1

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,...

Question 2

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 is the lesser of the qualified adoption expenses ($13,000) minus employer-provided benefits ($4,000), which equals $9,000.

Question 3

Vincent and Maria, whose modified AGI is $164,000, adopted a little girl from Mexico which was finalized in 2015. They incurred a total of $16,000 in qualified adoption expenses. What is the amount of adoption credit they can claim in 2015?

Accepted Answer

The maximum adoption credit for 2015 is $13,400 per child. As Vincent and Maria adopted one child, they can claim a credit of up to $13,400. However, the credit begins to phase out for taxpayers with modified AGI above $201,010 and is completely phased out for modified AGI of $241,010 or higher. Since Vincent and Maria's modified AGI is $164,000, they are eligible for the full credit of $13,400.

Question 4

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 maximum adoption credit for 2020 is $14,300. However, the credit begins to phase out for taxpayers with modified AGI of $214,520 or more and is completely phased out for taxpayers with modified AGI of $254,520 or more. In this case, the taxpayers' modified AGI is $230,000, which is within the phase-out range. To calculate the credit, we need to subtract the taxpayers' modified AGI from the upper limit of the phase-out range ($254,520) and then multiply that result by the maximum credit amount ($14,300). The result is $3,688, which is the amount of the adoption credit the taxpayers can claim.

Question 5

Nick and Katelyn paid $1,600 and $2,100 in qualifying expenses for their two daughters, Nicole and Naomi, respectively, to attend the University of Nevada. Nicole is a sophomore and Naomi is a freshman. Nick and Katelyn's AGI is $202,000. What is their allowable American opportunity tax credit?

Accepted Answer

Nick and Katelyn's AGI exceeds the phase-out threshold for the American Opportunity Tax Credit, which begins at $160,000 for married couples filing jointly and is completely phased out at $180,000. Therefore, they are not eligible for the credit.

Question 6

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 7

Matt is a single father. He paid $5,000 in qualifying expenses for his son, Kyle, to attend the University of Minnesota. Kyle is a sophomore. Matt's AGI is $47,000. What is his allowable American opportunity tax credit?

Accepted Answer

The American Opportunity Tax Credit allows for a maximum credit of $2,500 per eligible student, per year. In this case, Kyle is an eligible student and Matt's expenses qualify. However, the credit is calculated based on 100% of the first $2,000 of qualifying expenses and 25% of the next $2,000, so Matt's credit would be $2,500 - (($5,000 - $2,000) x 25%) = $2,500 - $750 = $1,750. However, since Matt's AGI is $47,000 and the credit is phased out for single filers with an AGI between $80,000 and $90,000, he is eligible for the full credit. Therefore, Matt's allowable American Opportunity Tax Credit is $2,500.

Question 8

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 9

Arin and Bo have $74,000 total taxable income, which includes $13,500 of taxable income from France. They paid $1,600 in foreign income taxes, and their U.S. tax liability is $17,610. Arin and Bo's foreign tax credit is:

Accepted Answer

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. Since Arin and Bo paid $1,600 in foreign income taxes, they can claim the full amount as a credit against their U.S. tax liability, assuming it does not exceed the limit based on their taxable income from foreign sources and their total U.S. tax liability.

Question 10

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 2020. Qualified expenses may include reimbursements from employer programs, and adoption of foreign children may also qualify for the credit.

Question 11

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 12

Lupe paid the following expenses during December 2015 for her son David's spring 2016 college expenses. The semester begins in February 2016.  In addition, David's grandfather paid $500 in fees on behalf of David directly to the college. David is claimed as a dependent on Lupe's tax return. How much of the above expenses qualify for purposes of Lupe's education credit deduction in 2015?

Accepted Answer

The expenses that qualify for the education credit deduction in 2015 are those paid for tuition, fees, and course materials that are required for enrollment or attendance at an eligible educational institution. Based on the information provided, the following expenses qualify:

- Tuition: $13,500
- Fees: $2,500
- Course materials: $500

Total qualified expenses: $16,500

The $500 paid by David's grandfather directly to the college is not considered a qualified expense for Lupe's education credit deduction since it was not paid by Lupe. Therefore, the correct answer is C) $16,500.

Question 13

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 14

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

Adrienne's foreign tax credit is limited to the lesser of the foreign taxes paid or the U.S. tax liability attributed to the foreign income. Her U.S. tax liability attributed to the foreign income is calculated by multiplying the total U.S. tax liability by the ratio of foreign taxable income to total taxable income. In this case, that ratio is $10,000/$93,000 = 0.1075. So, her U.S. tax liability attributed to the foreign income is $25,210 x 0.1075 = $2,711. Since her foreign taxes paid are greater than $2,711, her foreign tax credit is limited to $2,711. Therefore, the answer is B.

Question 15

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 16

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....

Question 17

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

The foreign tax credit is limited to the lesser of the foreign taxes paid or the U.S. tax liability on the foreign income. Brian and Clara paid $4,350 in foreign income taxes to Mexico, which is less than their U.S. tax liability of $22,750 on their total income of $105,000. Since the foreign tax credit is limited to the foreign taxes paid, the maximum foreign tax credit they can claim is $4,350. Therefore, choice C and D are incorrect because they exceed the maximum foreign tax credit limit, and choice A is incorrect because they actually paid foreign income taxes.

Question 18

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....

Question 19

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 20

Kevin paid $2,550 in qualifying expenses for his daughter, Jasmine, who attended a community college. What is Kevin's lifetime learning credit without regard to AGI limitations or other credits?

Accepted Answer

The answer of Kevin paid $2,550 in qualifying expenses for...

Quiz 9: Tax Credits