Taxation Expert Answers & Study Resources

  116) Andrew and Marina are married filing joint and have modified AGI of $77,500. Andrew made a contribution to a qualified retirement plan of $2,000 during the year. How much is their retirement savings contributions credit? A) $0. B) $1,000. C) $1,250. D) $2,500. 117) Max and Nora have modified AGI of $75,000, and adopted.

  21) The adoption credit is only available for domestic adoptions. 22) There is no maximum amount for the adoption credit. 23) The earned income credit (EIC) is a nonrefundable credit. 24) The earned income credit is available only for taxpayers with children. 25) The maximum amount of earned income credit for a joint taxpayer.

  96) 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? A) $375. B) $1,125. C) $2,000. D) $2,500. 97) Ian and.

  76) Jesus and Mindy have modified AGI of $210,000, adopted a girl from Miami, Florida, and incurred a total of $18,000 in qualified adoption expenses. What is the amount of adoption credit they can claim in the current year? (Do not round interim calculations) A) $987. B) $12,823. C) $13,810. D) $18,000. 77) Angelina is.

114) Explain what is considered personal use of a rental property.     .

  41) The retirement savings contributions credit is available for head of household taxpayers only. 42) The maximum contribution amount for the retirement savings contributions credit for each tax year is 20% of a taxpayer's AGI. 43) The maximum adoption credit is 50% of all qualified expenses. 44) The earned income credit (EIC) is.

58. Determine the amount of Earned Income Credit in each of the following cases. Assume that the person or persons is/are eligible to take the credit. Calculate the credit using the formulas. a) A single person with earned income of $7,554 and no qualifying children. b) A single person with earned income.

  66) In which of the following situations would a taxpayer be better off to take the foreign taxes paid as an itemized deduction rather than as a foreign tax credit? A) The foreign tax paid was less than 10% of AGI. B) The foreign tax paid was to a South American country. C).

  26) A taxpayer may become ineligible for earned income credit if he/she has excessive disqualified income such as dividends or interest. 27) The earned income credit is adjusted each year for inflation. 28) The Affordable Care Act requires all individuals to have health care coverage. 29) Taxpayers with household income between 100% and.

20. Briefly explain the difference between a refundable and a nonrefundable tax credit and give three examples of tax credits that may be refundable (or partly refundable) discussed in this chapter.     .

  6) The maximum allowable American opportunity tax credit for the current tax year is $2,500 per eligible student. 7) A student can only receive the lifetime learning credit if he/she is enrolled in a degree program. 8) The American opportunity tax credit phases out beginning at $80,000 of modified AGI for single.

  86) 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? A) $0. B) $994.

57. Niles and Marsha adopted an infant boy (a U.S. citizen). They paid $14,500 in 2017 for adoption-related expenses. The adoption was finalized in early 2018. Marsha received $3,000 of employer-provided adoption benefits. For question (a) assume that any adoption credit is not limited by modified AGI or by the.

  61) Warren and Erika paid $9,300 in qualified expenses for their son, Cash, to attend the University of Washington. Cash is in his first year of college and attended full-time. How much is Warren and Erika's American opportunity tax credit, without regard to any AGI limitation? A) $0. B) $1,800. C) $2,500. D) $9,300. 62).

108) What are the criteria that determine an amount as capital improvement rather than repair and maintenance expense? What is the proper tax treatment of a capital improvement for rental properties?     .

53. In 2018, Jeremy and Celeste who file a joint return, paid the following amounts for their daughter, Alyssa, to attend University of Colorado, during academic year 2018-2019. Alyssa was in her first year of college and attended full-time: The spring semester at University of Colorado begins in January. In addition.

  16) The amount of foreign tax credit is equal to the amount paid to the foreign government but cannot exceed that portion of U.S. income tax attributable to the foreign income. 17) The maximum child tax credit is $1,000 per child. 18) A qualifying child for the child tax credit must be.

56. Determine the retirement savings contributions credit in each of the following cases. a) A married couple filing jointly with modified AGI of $37,500 and an IRA contribution of $1,600. b) A married couple filing jointly with modified AGI of $58,000 and an IRA contribution of $1,500. c) A head of household taxpayer.

  106) Brendan paid $950 to Brazil in foreign income taxes. His total income was $52,500, which included $12,000 of investment income from Brazil. His U.S. tax liability is $8,000. Brendan's foreign tax credit is: A) $0. B) $950. C) $1,829. D) $12,000. 107) Adrienne has total taxable income of $93,000 which includes $10,000 taxable income.

115) Meredith has a vacation rental house in the Sierra Mountains. During the year, she and her immediate family used the house for 12 days for a personal vacation. Meredith spent two more weekends (4 days in total) repairing the deck. The house was rented for 120 days. How should.

14. Explain the limitations pertaining to the retirement savings contributions credit.     .

  31) The credit for child and dependent care expenses can only be claimed if a taxpayer incurs employment-related expenses to care for one or more qualifying individuals. 32) In order to be eligible for the credit for the elderly or the disabled, the taxpayer must be age 55 or older or.

  121) Thomas and Emma are married, file a joint return, and have three qualifying children. Their AGI was $21,000. What is their EIC? A) $0. B) $3,461. C) $5,716. D) $6,431. 122) Victoria is single with two qualifying children and AGI of $24,000. What is her EIC? A) $3,461. B) $4,591. C) $5,601. D) $5,716. 123) Andy and Delilah both.

  51) Tai and Song are ages 69 and 59, respectively, and file a joint return. They have AGI of $20,000 and received $2,000 in nontaxable social security benefits. How much can Tai and Song take as a credit for the elderly or the disabled? A) $0. B) $1,125. C) $2,000. D) $7,500. 52) Which of.

110) What criteria determine a personal and rental use property as personal/rental? How is net income or loss treated for tax purposes for a personal/rental property? 111) What are the rules concerning the deductibility of travel as it relates to rental properties? How are travel expenses to and from rental properties.

51. Walt and Deloris, who file a joint return, have two dependent children, Bill and Tiffany. Bill is a freshman at State University and Tiffany is working on her graduate degree. The couple paid qualified expenses of $3,900 for Bill (who is a half-time student) and $7,800 for Tiffany. What.

55. Determine the amount of child tax credit in each of the following cases. a) A single parent with modified AGI of $213,400 and one child. b) A single parent with modified AGI of $77,058 and three children. c) A married couple, filing jointly, with modified AGI of $407,933 and two children.     .

  81) Chris and Sarah are married with three qualifying children. Their AGI is $26,000. How much is their EIC (use the EIC formula)? (Round your answer to the nearest dollar) A) $1,650. B) $3,461. C) $6,084. D) $6,431. 82) George is a single father who has 2 qualifying children. His AGI is $22,000. How much.

109) Explain the three categories that a rental activity may fall under if used for both personal and rental purposes. How are the categories determined?     .

54. Jenna paid foreign income tax of $1,326 on foreign income of $8,112. Her worldwide taxable income was $91,400, and her U.S. tax liability was $23,000. What is the amount of foreign tax credit (FTC) allowed? What would be the allowed FTC if Jenna had paid foreign income tax of.

50. In each of the following cases, certain qualifying education expenses were paid during the tax year for individuals who were the taxpayer, spouse, or dependent. The taxpayer has a tax liability and no other credits. Determine the amount of American opportunity tax credit (AOTC) and/or lifetime learning credit that.

15. Leonardo’s filing status is head of household. He has modified Adjusted Gross Income of $29,500, and he made a $3,000 contribution to his IRA. What is the amount of his retirement savings contributions credit? What would the credit be if he had a filing status of single? 16. What limitations.

17. In the case of the adoption credit, what special rules apply when adopting a child who is a child with special needs? 18. In the case of the adoption credit, what special rules apply when adopting a child who is a citizen of another country?     .

52. Use the information in Problem 51. What education tax credits are available if Walt and Deloris report modified AGI of $117,300? Does your answer change if Tiffany is taking one class a semester (is less than a half-time student) and not taking classes in a degree program? Why or.

  101) Nick and Katelyn paid $1,600 and $2,100 in qualifying expenses for their two daughters, Nicole and Naomi, respectively, to attend the University of Nevada. Nicole is a sophomore and Naomi is a freshman. Nick and Katelyn's AGI is $202,000. What is their allowable American opportunity tax credit? A) $0. B) $2,000. C).

  11) The American opportunity tax and lifetime learning credits are not available to taxpayers who are married filing separately. 12) If the modified AGI of a married filing joint taxpayer exceeds $134,000 in 2018, the lifetime learning credit phases out completely. 13) The maximum lifetime learning credit per taxpayer is $3,000 per.

  91) 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? A) $600. B) $1,000. C).

19. What is the definition of qualifying child for purposes of the Earned Income Credit?     .

  111) Casey and Lupe have AGI of $425,000. They have twin daughters, Ashley and Alley, ages 5. What amount of child tax credit can they claim? A) $0. B) $1,250. C) $2,750. D) $4,000. 112) Harrison is single and his son Jack is 12 years old. If his AGI is $195,000, what amount of child.

34. Under which of the following situations would a taxpayer most likely take the foreign taxes paid as an itemized deduction rather than as a foreign tax credit? a. The foreign tax paid was less than 15%. b. The foreign tax paid was to a European country. c. The foreign tax paid was.

107) What is meant by ordinary rental expenses and what criteria must be met to be deductible? Provide some examples of deductible rental expenses. For this question, assume no personal use of the rental property.     .

  36) The maximum allowable lifetime learning credit per year is $2,000 per student. 37) The American opportunity tax and lifetime learning credits are available to taxpayers without any limitations due to AGI amounts. 38) The foreign tax credit is available only to individuals born in a foreign country. 39) The child tax credit.

1) Credit for child and dependent care expenses can only be claimed for employment-related expenses. 2) A qualifying individual for purposes of the credit for child and dependent care expenses includes a dependent or a spouse of the taxpayer who is incapable of caring for himself or herself. 3) The maximum amount.

29. Darren paid the following expenses during November 2018 for his son Sean’s college expenses for spring 2019 semester, which begins in January 2019: Tuition $12,000 Housing 8,000 Books 1,500 In addition, Sean’s uncle paid $500 in fees on behalf of Sean directly to the college. Sean is claimed as Darren’s dependent on his.

13. Paul and Olivia filed a joint tax return and reported modified AGI of $192,000. They have two qualifying children for the purposes of the child tax credit. What is the amount of their child tax credit? What is the amount of their credit if their modified AGI is $432,000?     .

39. After two and one-half years of working with the orphanage and the government, Jake and Nikki adopted a two-year-old girl from Korea. The adoption process, which became final in January 2018, incurred the following qualified adoption expenses. For how much and in which year can Jake and Nikki take.

  56) Sam paid the following expenses during October 2018 for his son Aaron's spring 2019 college expenses: Spring 2019 semester begins in January 2019:   Tuition $ 18,000 Housing   8,000 Meal plan   3,500   In addition, Aaron's uncle paid $500 for college fees on behalf of Aaron directly to the college. Aaron is claimed as Sam's dependent on his tax.

112) Kirk and Amy live in Augusta, Georgia. Every year during the Masters Golf Tournament, they rent their primary personal residence for 10 days for $10,000 to a large corporation that uses it to entertain clients. The rest of year, they reside full-time in their home. How should Kirk and.

  71) Julia and Omar are married and file a joint tax return. They have two dependent daughters, ages 14 and 18. If their AGI is $98,000, what amount of child tax credit can they claim? A) $0. B) $1,000. C) $2,000. D) $4,000. 72) Dean and Sue are married filing jointly with AGI of $28,000..

  46) Sean and Jenny are married, file a joint return and have two dependent children, Blake, age 9 and Jake, age 5. Sean has earned income of $72,000. Jenny was a full-time student (for nine months) with no income. They paid a qualified day care center $7,000. What amount of.