Question 1

Robert and Mary file a joint tax return for 2016 with adjusted gross income of $34,000. Robert and Mary earned income of $20,000 and $14,000, respectively, during 2016. In order for Mary to be gainfully employed, they pay the following child care expenses for their 4-year-old son, John: What is the amount of the child and dependent care credit they should report on their tax return for 2016?

Accepted Answer

The answer of Robert and Mary file a joint tax...

Question 2

​Phillip and Naydeen Rivers are married with two dependent children. The family has household income of $38,800 in 2016. They paid $11,000 for health care for the year. A designated silver plan would have cost $9,800. What is the Rivers' premium tax credit?

Accepted Answer

The answer of ​Phillip and Naydeen Rivers are married with...

Question 3

Jeff is a stay-at-home father who earns $600 from odd jobs and takes care of his daughter. His wife, Michelle, is the bread-winner and brings in $60,000 of income a year. In addition to the care provided by Jeff, Michelle pays $4,500 in child care.
​
In the current year, how much are Jeff and Michelle's qualifying expenses for the child and dependent care credit?

Accepted Answer

The answer of Jeff is a stay-at-home father who earns...

Question 4

Martin and Rachel are married and have a 3-year-old child. Martin is going to medical school full-time for 12 months of the year and Rachel earns $45,000. Their child is in day care so Martin can go to school while Rachel is at work. The cost of their day care is $10,000. What is their child and dependent care credit? Please show your calculations and explain.

Accepted Answer

The answer of Martin and Rachel are married and have...

Question 5

Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2016, Clark earned a salary of $32,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2016. How much can Clark claim as a child and dependent care credit in 2016?

Accepted Answer

Clark can claim a child and dependent care credit equal to 35% of his qualifying expenses up to $3,000 for one dependent and $6,000 for two or more dependents. In this case, Clark's qualifying expenses are $5,100 ($3,600+$1,500) for two dependents. Therefore, Clark can claim a credit equal to 35% of $5,100, which is $1,785. However, the credit is limited to the amount of Clark's earned income, which is $32,000. Therefore, Clark can claim a child and dependent care credit of $1,326 ($1,785 limited to $32,000 earned income). The correct answer choice is C.

Question 6

​Avery is a single 26 year old graduate student at State University with no children. She is a US citizen with a valid Social Security number. Her only income is from a part-time job on campus from which she earned wages of $6,000. Avery qualifies for the earned income credit.

Accepted Answer

Avery meets the requirements to qualify for the earned income credit, which provides a tax credit to low-income earners who work. Her age, student status, lack of children, citizenship, and Social Security number are all factors that contribute to her eligibility for this credit.

Question 7

Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $22,000 in 2016. What is their allowable child and dependent care credit?

Accepted Answer

The child and dependent care credit is calculated as a percentage of the qualified expenses. For an AGI of $22,000, the percentage is 30%. The maximum allowable expenses for two children is $6,000. Therefore, the credit is 30% of $6,000, which is $1,800.

Question 8

A taxpayer with earned income of $50,000 is not eligible to claim the credit for child and dependent care expenses.

Accepted Answer

This statement is false. A taxpayer with earned income of $50,000 is eligible to claim the credit for child and dependent care expenses, but the amount of the credit may be reduced based on income and other factors.

Question 9

​Which of the following is not a requirement to claim an earned income credit?
a.​Social Security number
b.​At least one child claimed as a dependent
c.​At least $1 of earned income
d.​US citizenship or resident alien status

Accepted Answer

The answer of ​Which of the following is not a...

Question 10

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Why is there an earned income credit in the law?

Accepted Answer

The answer of What is the maximum investment income a...

Question 11

The child and dependent care provisions:

Accepted Answer

The child and dependent care provisions are not limited to children under age 15 or only available to single parents. However, they do apply to dependent adults, including spouses who are incapable of self-care. The income limit for claiming this credit varies and is not a set amount like $43,000.

Question 12

Amounts paid to a relative generally do not qualify as child care expenses.

Accepted Answer

Amounts paid to a relative can qualify as child care expenses as long as the relative is not a dependent of the taxpayer or the child's parent, and other IRS requirements are met.

Question 13

Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives:
​
a.Marion pays $4,000 a year in day care costs.Her salary is $32,000.
b.Marion pays $8,000 a year in day care costs.Her salary is $80,000.

Accepted Answer

The answer of Marion has an 11-year-old daughter. Please calculate...

Question 14

Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?

Accepted Answer

The answer of Jeff and Geri are married and have...

Question 15

All taxpayers are required to have minimum essential health coverage.​

Accepted Answer

The requirement for individuals to have minimum essential health coverage was repealed through the Tax Cuts and Jobs Act of 2017, effective starting in 2019. However, some states may still have their own individual mandates for health insurance.

Question 16

Married taxpayers must generally file a joint tax return to claim the child and dependent care credit.

Accepted Answer

Married taxpayers must generally file a joint tax return to claim the child and dependent care credit.

Question 17

​Caprice is a single 42-year-old with income of $12,000 in 2016. She lacked minimum essential coverage for 7 months in 2016. What is her individual shared responsibility payment amount?

Accepted Answer

Caprice's individual shared responsibility payment for 2016 is the higher of: 
1) 2.5% of her household income ($300) or 
2) The flat fee of $695. 
Since $300 is less than $695, Caprice's payment would be $695. However, because she lacked minimum essential coverage for only 7 months (less than the full year), her payment will be prorated for those months.

The monthly payment is calculated as: 
$695 / 12 months = $57.92

So, Caprice's individual shared responsibility payment for 2016 is $57.92 x 7 months = $405.44.

Question 18

For 2016, the maximum amount of expenses that qualify for the child and dependent care credit is the same for three dependents as it is for two dependents.

Accepted Answer

For 2016, the maximum amount of expenses that qualify for the child and dependent care credit is $3,000 for one dependent, $6,000 for two or more dependents.

Question 19

In determining the amount of the child and dependent care credit, there is a limit of $2,000 on the amount of qualified expenses for one dependent.

Accepted Answer

The limit on qualified expenses for one dependent is actually $3,000 for the child and dependent care credit.

Question 20

Arthur is divorced with two dependent children, ages 8 and 13. His adjusted gross income is $28,000, and he incurs qualified child care expenses of $6,000, $3,000 for each child.
a.What is the amount of Arthur's qualified child care expenses after any limitation?
b.Calculate the amount of Arthur's child and dependent care credit.

Accepted Answer

The answer of Arthur is divorced with two dependent children,...

Quiz 6: Credits and Special Taxes

Phillip and Naydeen Rivers are married with two dependent children. The family has household income of $38,800 in 2016. They paid $11,000 for health care for the year. A designated silver plan would have cost $9,800. What is the Rivers' premium tax credit?

Avery is a single 26 year old graduate student at State University with no children. She is a US citizen with a valid Social Security number. Her only income is from a part-time job on campus from which she earned wages of $6,000. Avery qualifies for the earned income credit.

Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $22,000 in 2016. What is their allowable child and dependent care credit?

A taxpayer with earned income of $50,000 is not eligible to claim the credit for child and dependent care expenses.

Which of the following is not a requirement to claim an earned income credit? a.Social Security number b.At least one child claimed as a dependent c.At least $1 of earned income d.US citizenship or resident alien status

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Why is there an earned income credit in the law?

The child and dependent care provisions:

Amounts paid to a relative generally do not qualify as child care expenses.

Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives: a.Marion pays $4,000 a year in day care costs.Her salary is $32,000. b.Marion pays $8,000 a year in day care costs.Her salary is $80,000.

Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?

All taxpayers are required to have minimum essential health coverage.

Married taxpayers must generally file a joint tax return to claim the child and dependent care credit.

Caprice is a single 42-year-old with income of $12,000 in 2016. She lacked minimum essential coverage for 7 months in 2016. What is her individual shared responsibility payment amount?

For 2016, the maximum amount of expenses that qualify for the child and dependent care credit is the same for three dependents as it is for two dependents.

In determining the amount of the child and dependent care credit, there is a limit of $2,000 on the amount of qualified expenses for one dependent.

Quiz 6: Credits and Special Taxes

​Phillip and Naydeen Rivers are married with two dependent children. The family has household income of $38,800 in 2016. They paid $11,000 for health care for the year. A designated silver plan would have cost $9,800. What is the Rivers' premium tax credit?

​Avery is a single 26 year old graduate student at State University with no children. She is a US citizen with a valid Social Security number. Her only income is from a part-time job on campus from which she earned wages of $6,000. Avery qualifies for the earned income credit.

Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $22,000 in 2016. What is their allowable child and dependent care credit?

A taxpayer with earned income of $50,000 is not eligible to claim the credit for child and dependent care expenses.

​Which of the following is not a requirement to claim an earned income credit? a.​Social Security number b.​At least one child claimed as a dependent c.​At least $1 of earned income d.​US citizenship or resident alien status

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Why is there an earned income credit in the law?

The child and dependent care provisions:

Amounts paid to a relative generally do not qualify as child care expenses.

Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives: ​ a.Marion pays $4,000 a year in day care costs.Her salary is $32,000. b.Marion pays $8,000 a year in day care costs.Her salary is $80,000.

Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?

All taxpayers are required to have minimum essential health coverage.​

Married taxpayers must generally file a joint tax return to claim the child and dependent care credit.

​Caprice is a single 42-year-old with income of $12,000 in 2016. She lacked minimum essential coverage for 7 months in 2016. What is her individual shared responsibility payment amount?

For 2016, the maximum amount of expenses that qualify for the child and dependent care credit is the same for three dependents as it is for two dependents.

In determining the amount of the child and dependent care credit, there is a limit of $2,000 on the amount of qualified expenses for one dependent.

Phillip and Naydeen Rivers are married with two dependent children. The family has household income of $38,800 in 2016. They paid $11,000 for health care for the year. A designated silver plan would have cost $9,800. What is the Rivers' premium tax credit?

Avery is a single 26 year old graduate student at State University with no children. She is a US citizen with a valid Social Security number. Her only income is from a part-time job on campus from which she earned wages of $6,000. Avery qualifies for the earned income credit.

Which of the following is not a requirement to claim an earned income credit? a.Social Security number b.At least one child claimed as a dependent c.At least $1 of earned income d.US citizenship or resident alien status

Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives: a.Marion pays $4,000 a year in day care costs.Her salary is $32,000. b.Marion pays $8,000 a year in day care costs.Her salary is $80,000.

All taxpayers are required to have minimum essential health coverage.

Caprice is a single 42-year-old with income of $12,000 in 2016. She lacked minimum essential coverage for 7 months in 2016. What is her individual shared responsibility payment amount?