Question 1

Summer Corporation's business is international in scope and is subject to income taxes in several countries.
Summer's earnings and income taxes paid in the relevant foreign countries are:
  
If Summer Corporation's worldwide income subject to taxation in the United States is $2,400,000 and the U.S. income tax due prior to the foreign tax credit is $504,000, compute the allowable foreign tax credit. If, instead, the total foreign income taxes paid were $250,000, compute the allowable foreign tax credit.

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Question 2

Phil and Audrey, husband and wife, both are employed by Laurel Corporation. Phil earns $135,000 in salary in 2018, and Audrey earns $70,000. How much FICA tax must they pay for 2018?

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Question 3

Jack and Jill are married, have three children, and they report earnings during 2018 of $28,500. Do they qualify for the earned income credit? If so, calculate the amount of credit that is available to them.

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Question 4

Dabney and Nancy are married, both gainfully employed, and have two children who are 3 and 6 years old.
Dabney's salary is $35,000 while Nancy's salary is $40,000. During the year, they spend $7,000 for child care expenses that are required so both of them can work outside of the home. Calculate the credit for child and dependent care expenses.

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Question 5

In May 2018, Blue Corporation hired Camilla, Jolene, and Tyrone, all of whom are certified as long-term family assistance recipients. Each employee is paid $12,000 during 2018.
a. Compute Blue Corporation's work opportunity tax credits for 2018.
b. Assume Blue Corporation pays total wages of $500,000 to its employees during 2018. How much may Blue Corporation claim as a wage deduction for 2018 if the work opportunity tax credit is claimed?

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Question 6

Susan generated $55,000 of net earnings from the conduct of a tax preparation business that she operated during the tax-filing season. She also received wages of $78,200 from her full-time job. Compute the self-employment taxes due for 2018.

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Question 7

Discuss the treatment of unused general business credits.

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Question 8

Bradley has two college-age children, Clint, a freshman at State University, and Abigail, a junior at Northwest University. Both Clint and Abigail are full-time students. Clint's expenses during the 2018 fall semester are as follows: $2,400 tuition, $250 books and course materials, and $1,600 room and board. Abigail's expenses for the 2018 calendar year are as follows: $10,200 tuition, $1,200 books and course materials, and $3,600 room and board. Tuition and the applicable room and board costs are paid at the beginning of each semester.
Bradley is married, files a joint tax return, claims both children as dependents, and reports a combined AGI with his wife Allie of $114,000 for 2018. Determine Bradley's available education tax credit for 2018.

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Question 9

Describe the withholding requirements applicable to employers.

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Question 10

Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

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Question 11

How does the FICA tax compare to the self-employment tax? How are these two taxes similar and how do they differ?

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Quiz 12: Tax Credits and Payments