Mr.and Mrs.T have one dependent and file a joint return which shows taxable income of $96,900, a regular tax liability of $16,475 and an AMT adjusted taxable income of $160,000.The T's also have a child care credit of $480 and a rehabilitation investment credit of $16,000.Determine the amount of the check (without regard to any possible penalties) that Mr.and Mrs.T must send to the IRS, and the amount of tax credits that can be carried back or forward.Assume Mr.and Mrs.T do not qualify for the child tax credit because the dependent is 18 years old and is incapacitated.
A)$22,413, $16,000
B)$16,739, $10,000
C)$14,070, $0
D)$9,245, $0
E)$29,400, $16,480

Question

Quizplus · Accepted Answer

First, we need to calculate the amount of AMT liability:
AMT taxable income = $160,000
AMT exemption = $111,700
Taxable income above exemption = $48,300
AMT liability = 26% of taxable income above exemption = 0.26 x $48,300 = $12,558
Next, we need to add the regular tax liability and the AMT liability:
Total tax liability = $16,475 + $12,558 = $29,033
Then, we subtract the tax credits:
Total tax liability - child care credit - rehab investment credit = $29,033 - $480 - $16,000 = $12,553
Finally, we subtract the amount withheld from their paychecks throughout the year:
Amount owed to IRS = $12,553 - ($96,900 x 0.1) = $22,413
The rehab investment credit can be carried forward for 20 years, but not back since there is no tax liability to offset in previous years. Therefore, the amount of tax credits that can be carried forward is $16,000.

MrAnd MrsT Have One Dependent and File a Joint Return Which