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Exam 9: Tax Credits

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Question 41

Multiple Choice

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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.

E) A) and C)
F) B) and C)

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Question 42

Multiple Choice

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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?

A) $450.
B) $600.
C) $800.
D) $1,200.

E) A) and C)
F) A) and D)

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Question 43

Short Answer

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Brooke is single with earned income of $19,354 and one qualifying child. Calculate Brooke's earned income credit using the EIC formula. (Round your answer to the nearest dollar)

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?

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:

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)

Qualifying expenses for the American opportunity tax and lifetime learning credits include room and board.

What are the requirements that the taxpayer must meet to receive a tax credit for child and dependent care expenses? Briefly discuss.

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?

The Affordable Care Act requires all individuals to have health care coverage.

Donna and Walt paid $3,000 in qualified expenses for their son, Jimmy, to attend the South Coast Business College. Jimmy is a business major in his first year. A year ago, Jimmy was arrested and convicted of felony drug possession. He has not been in any trouble since then. What education credits are available for Donna and Walt and how much can they claim?

Brian and Clara paid $4,350 in foreign income taxes to Mexico. Their total income was $105,000, which included $16,000 of foreign income. Their U.S. tax liability is $22,750. How much can Brian and Clara claim as foreign tax credit?

Kim paid the following expenses during November 2015 for her son Joshua's spring 2015 expenses, which begins in January 2016: 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 2015?

The maximum amount per year of dependent care expenses that can be used for calculating the credit for child and dependent care expenses is $3,000 for one qualifying individual.

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?

Taxpayers can claim a child tax credit for each qualifying child. How is a qualifying child defined?

The earned income credit (EIC) is only available for taxpayers with children.

All taxpayers must file Form 1116 to receive the foreign tax credit.

Name the two credits that are available as education credits and briefly discuss the criteria to claim the credits.

The maximum child tax credit is $1,000 per child.