Question 1

Which of the following is not a qualifying child for purposes of calculating the EIC?

Accepted Answer

All the options listed (foster child, son or daughter, grandson or granddaughter) qualify as a qualifying child for the Earned Income Credit (EIC) if they meet the other criteria such as age, residency, and relationship.

Question 2

Arturo and Deena are married with two dependents.They enrolled in a qualified plan through the Marketplace at a cost of $2,700 per year.Their household income was $31,000.Their SLCSP premium is $3,600.What is their premium tax credit?

Accepted Answer

The answer of Arturo and Deena are married with two...

Question 3

George is a single father who has 2 qualifying children.His AGI is $22,000.How much is his EIC use the EIC formula)? Round your answer to the nearest dollar.)

Accepted Answer

The EIC formula for taxpayers with qualifying children is: EIC = (Earned Income Credit Percentage) x (Earned Income Credit Amount) x (Phase-out Rate)The Earned Income Credit Percentage is 34% for taxpayers with 2 qualifying children.The Earned Income Credit Amount is $6,431 for taxpayers with 2 qualifying children.The Phase-out Rate is 15.98% for taxpayers with 2 qualifying children.Therefore, George's EIC is: EIC = (0.34) x ($6,431) x (1 - 0.1598) = $4,770.

Question 4

Which of the following statements is false regarding the earned income credit EIC)?

Accepted Answer

A taxpayer without children can still claim the earned income credit, although the maximum amount of the credit would be lower than for taxpayers with children.

Question 5

Which of the following statements is correct?

Accepted Answer

The statement that is correct is D. The premium tax credit is designed to help eligible taxpayers pay some of their health insurance premium. A is incorrect because taxpayers with household income which is more than 400% of the Federal Poverty Level are not eligible to claim the premium tax credit. B is incorrect because the premium tax credit can be paid in advance to reduce the monthly premium cost, and C is incorrect because taxpayers who receive a credit are required to file a federal tax return.

Question 6

Conner and Matsuko paid $1,000 and $2,000,in qualifying expenses for their two sons,Jason and Justin,respectively,to attend Montana State University.Jason is a sophomore and Justin is a freshman.Conner and Matsuko's AGI is $195,000.What is their allowable American opportunity tax credit?

Accepted Answer

The American Opportunity Tax Credit phases out for married couples with an AGI over $160,000, and is completely phased out at $180,000. Since Conner and Matsuko's AGI is $195,000, they are not eligible for the credit.

Question 7

Sam is a single father with two dependent twin daughters,Amy and Amanda,ages 4.He has AGI of $31,000 and paid $5,300 to a qualified day care center.What amount of credit can Sam receive for child and dependent care credit?

Accepted Answer

To calculate the child and dependent care credit, we need to apply the following formula:

Credit = Qualified expenses x Percentage based on AGI

The qualified expenses are limited to $3,000 for one dependent and $6,000 for two or more dependents. In this case, Sam has two dependents, and he paid $5,300 to a qualified day care center, which is higher than the limit of $3,000 per dependent. Therefore, we can calculate the credit based on the $6,000 limit.

Percentage based on AGI is determined by the AGI of the taxpayer. In this case, Sam's AGI is $31,000, which falls into the 20% bracket. So, the percentage is 20%.

Credit = $6,000 x 20% = $1,200

Therefore, Sam can receive a child and dependent care credit of $1,200. However, this credit is limited to the tax liability, so if Sam's tax liability is less than $1,200, he will only receive a credit for the tax liability amount.

Question 8

Which of the following statements is true with regard to child and dependent care expense credit?

Accepted Answer

The answer of Which of the following statements is true...

Question 9

Chris and Sarah are married with three qualifying children.Their AGI is $25,000.How much is their EIC use the EIC formula)? Round your answer to the nearest dollar)

Accepted Answer

The EIC formula for married couples with three or more qualifying children is:EIC = $6,269 - (0.1579 x (AGI - $25,000))EIC = $6,269 - (0.1579 x ($25,000 - $25,000))EIC = $6,269 - (0.1579 x $0)EIC = $6,269

Question 10

Juan paid $1,750 in qualifying expenses for his daughter who attended a community college.How much is Juan's lifetime learning credit without regard to AGI limitations or other credits?

Accepted Answer

The answer of Juan paid $1,750 in qualifying expenses for...

Question 11

Dane is a single father with two dependent children,Elle,age 7 and Eva,age 5.He has AGI of $61,000 and paid $6,100 to a qualified day care center for the two children.What amount of child and dependent care credit can Dane receive this year?

Accepted Answer

The answer of Dane is a single father with two...

Question 12

Cooper is a single dad with 1 child and his TOTAL tax liability for the current tax year is $2,100.His EIC amount is $3,094 and he had no withholdings during the year.What amount of tax refund or tax owed would be on Cooper's tax return?

Accepted Answer

Since Cooper's EIC amount is higher than his total tax liability and he had no withholdings during the year, he is eligible for a tax refund.

To calculate the refund, we subtract his total tax liability from the EIC amount:

$3,094 - $2,100 = $994

Therefore, the answer is C) $994 tax refund.

Question 13

Which of the following is a refundable credit?

Accepted Answer

The earned income credit (EIC) is a refundable credit, meaning that if the credit exceeds the tax liability, the taxpayer can receive a refund for the difference. The other options listed are non-refundable credits.

Question 14

Bob and Joyce are married,file a joint return,and have one dependent child,Dane,age 9.Bob has earned income of $72,000.Joyce was a full-time student for nine months)with no income.They paid a qualified day care center $4,000.What amount of child and dependent care credit can Bob and Joyce receive?

Accepted Answer

The answer of Bob and Joyce are married,file a joint...

Question 15

Sam and Edna are married with three dependents.They enrolled in a qualified plan through the Marketplace at a cost of $4,900 per year.Their household income was $64,500.Their SLCSP premium is $5,540.What is their premium tax credit?

Accepted Answer

The premium tax credit is calculated as the difference between the SLCSP premium ($5,540) and the amount they are expected to contribute based on their household income. The expected contribution is calculated using the federal poverty level and their income. The difference is $864.

Question 16

Ian and Jolene are ages 70 and 72,respectively,and file a joint return.They have AGI of $15,000 and received $1,000 in nontaxable social security benefits.How much can Ian and Jolene take as a credit for the elderly or the disabled?

Accepted Answer

Ian and Jolene qualify for the credit for the elderly or the disabled. The base amount for a joint return is $7,500. Their AGI plus nontaxable social security is $16,000 ($15,000 + $1,000). The excess over the base amount is $8,500 ($16,000 - $7,500). The credit is 15% of the base amount minus the excess, which is $600 [15% of ($7,500 - $8,500)].

Question 17

Kim paid the following expenses during November 2016 for her son Joshua's spring 2016 expenses,which begins in January 2016: Tuition $ 14,000
Housing 8,000
Meal plan 2,500
In addition,Kim's sister paid $800 for college fees on behalf of Joshua directly to the college.Joshua is claimed as Kim's dependent on her tax return.How much of the paid expenses qualify for purposes of the education credit deduction for Kim in 2016?

Accepted Answer

Only tuition and fees qualify for the education credit deduction. Therefore, the qualifying expenses are $14,000 (tuition) + $800 (college fees) = $14,800. Housing and meal plans do not qualify.

Question 18

Tuan and Marisa are married,file a joint return,and have two dependent children,Zack,age 6 and Aaron,age 5.Tuan has earned income of $72,000.Marisa was a full- time student for nine months)with no income.They paid a qualified day care center $5,000.How much is Tuan and Marisa's child and dependent care credit for the year?

Accepted Answer

The answer of Tuan and Marisa are married,file a joint...

Question 19

Guillermo and Felicia are married,file a joint return,and have one dependent child; Hannah,age 6.Guillermo has earned income of $38,000.Felicia was a full-time student for 8 months)with no income.They paid a qualified day care center $4,800.What is the amount of their child and dependent care credit for the year?

Accepted Answer

The answer of Guillermo and Felicia are married,file a joint...

Question 20

Edward and Ethel are ages 71 and 59,respectively,and file a joint return.They have AGI of $11,000 and received $2,000 in nontaxable social security benefits.How much can Edward and Ethel take as a credit for the elderly or the disabled?

Accepted Answer

The credit for the elderly or the disabled is calculated based on age, filing status, and income. For a joint return with one spouse 65 or older, the base amount is $5,000. Their AGI plus nontaxable social security is $13,000, which exceeds the base amount by $8,000. The excess reduces the credit by half, resulting in a credit of $375.

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