Question 1

The child tax credit is based on the number of the taxpayer's qualifying children under age 17.

Accepted Answer

The child tax credit is indeed based on the number of qualifying children under the age of 17.

Question 2

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

Accepted Answer

The disabled access credit is computed at the rate of 50% of the eligible access expenditures for the year that exceed $250 and do not exceed $10,250.

Question 3

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 4

The maximum child tax credit under current law is $1,500 per qualifying child.

Accepted Answer

The maximum child tax credit under current law is $2,000 per qualifying child.

Question 5

Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours. Assuming Cardinal claims the credit for employer-provided child care this year, its basis in the newly constructed facility is $640,000.

Accepted Answer

The answer of Cardinal Company incurs $800,000 during the year...

Question 6

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Accepted Answer

The answer of An individual generally may claim a credit...

Question 7

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

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

Question 8

The earned income credit, a form of a negative income tax, is a refundable credit.

Accepted Answer

The earned income credit is a refundable credit, which means that if the credit amount is greater than the taxes owed, the taxpayer will receive the excess amount as a refund.

Question 9

The earned income credit is available only if the taxpayer has at least one qualifying child in the household.

Accepted Answer

The earned income credit is available to taxpayers without any qualifying children, but the credit amount is lower than for those with qualifying children.

Question 10

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

Accepted Answer

The answer of A taxpayer who meets the age requirement...

Question 11

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...

Question 12

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. 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. The credit amount decreases as the income of the household increases.

Question 13

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

Accepted Answer

Expenses reimbursed by an employer under a dependent care assistance program do not qualify for the credit for child and dependent care expenses because they are already excluded from the taxpayer's gross income, thus avoiding double benefit.

Question 14

A taxpayer's earned income credit is dependent on the number of his or her qualifying children.

Accepted Answer

The amount of earned income credit a taxpayer can receive is based on the number of qualifying children they have. The more qualifying children a taxpayer has, the higher their earned income credit will be.

Question 15

A small employer incurs $1,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees. As a result, the employer may claim the credit for small employer pension plan startup costs for $750.

Accepted Answer

The answer of A small employer incurs $1,500 for consulting...

Question 16

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, the cost of the ramp qualifies for the disabled access credit.

Accepted Answer

The answer of If the cost of a building constructed...

Question 17

BlueCo incurs $900,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours. The credit for employer-provided child care available to BlueCo this year is $225,000.

Accepted Answer

The credit for employer-provided child care facilities is limited to 25% of the qualified expenses, plus 10% of qualified resource and referral expenditures, with an overall limit of $150,000 per year. Therefore, 25% of $900,000 is $225,000, but the credit cannot exceed $150,000.

Question 18

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 of the taxpayer (under age 19) are not eligible for the credit for child and dependent care expenses.

Question 19

Unless a taxpayer is disabled, the tax credit for the elderly or disabled is available only if the taxpayer is at least 59 1/2 years old.

Accepted Answer

The statement is incorrect. The tax credit for the elderly or disabled is available for taxpayers who are at least 65 years old, or under 65 and retired on permanent and total disability. There is no requirement for the taxpayer to be 59 1/2 years old.

Question 20

Only married taxpayers with children are qualified to receive the earned income credit.

Accepted Answer

Married and single taxpayers without children may also be eligible for the earned income credit.

Quiz 13: Tax Credits and Payment Procedures