Question 1

Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

Accepted Answer

The answer of Which one of the following conditions must...

Question 2

Which of the following is not a true statement regarding community property law?

Accepted Answer

Colorado, Ohio, and Florida are not community property states. The other statements are true regarding community property law. A) Income derived from separate property is taxable to the owner of the property in community property states. B) In Texas, income derived from separate property produces community income due to the community property law. C) In community property states, the salary of married spouses is generally allocated equally between the spouses. E) Property acquired before marriage in community property states is typically separate property, but there may be exceptions depending on how the property is managed during the marriage.

Question 3

Lee and Pat are married taxpayers living in Louisiana. Lee earns wages of $40,000 and has $5,000 of dividend income from separate property. Lee and Pat have interest income from community property of $10,000. If Lee and Pat file separate income tax returns, what amount of income must be included on Lee's separate tax return?

Accepted Answer

Under Louisiana community property laws, wages and interest income earned during the marriage are considered community property and are split equally between the spouses, regardless of who earned the income. However, separate property income, such as Lee's dividend income, belongs only to Lee.

Therefore, on Lee's separate tax return, he must report his wages of $40,000 and his separate property dividend income of $5,000, for a total of $45,000. He does not have to include any of the interest income earned from community property because it would be split equally between the spouses.

Therefore, the correct answer is $27,500, which is half of the $10,000 interest income earned from community property plus Lee's separate property income of $5,000. This amount should be reported on Pat's separate tax return.

Question 4

Calculate the child credits for the following taxpayers. Please show your work.
a. Ninfa is a single mother with 8-year-old and 9-year-old dependent sons and has $50,000 of AGI.
b. Sharon and Mark have one dependent 2-year-old child and $126,300 of AGI.
c. Carol is single and has one dependent 18-year-old son.

Accepted Answer

The answer of Calculate the child credits for the following...

Question 5

Arthur is divorced with two dependent children, ages 8 and 13. His adjusted gross income for 2014 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 care credit for 2014.

Accepted Answer

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

Question 6

Richard has $30,000 of income from a country that imposes a 40-percent income tax and $30,000 of income from a country that imposes a 34- percent income tax. In addition to the foreign income, he has taxable income from U.S. sources of $120,000 and a U.S. tax liability, before credits, of $45,575. The amount of Richard's foreign tax credit is:

Accepted Answer

The answer of Richard has $30,000 of income from a...

Question 7

Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

Accepted Answer

The answer of Molly and Steve are married and live...

Question 8

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 9

Edward has business operations in Country F and Country G. He pays tax to Country F of $12,000 on $30,000 of income and pays tax to Country G of $4,000 on $10,000 of income. In addition to the income from Country F and Country G, Edward has $100,000 of income from U.S. sources and a total U.S. tax liability, before the foreign tax credit, of $42,000.
​
What amount of foreign tax credit may Edward claim on his U.S. tax return?

Accepted Answer

The answer of Edward has business operations in Country F...

Question 10

Jasmine is a single marketing manager with a college degree. She continually updates her marketing knowledge and gets fresh ideas by taking classes at the local community college. This year she spent $1,500 on course tuition and fees. If Jasmine has AGI of $56,000, how much lifetime learning credit can she claim on her tax return? Explain.

Accepted Answer

The answer of Jasmine is a single marketing manager with...

Question 11

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 12

Maxine is a 29-year-old single mother. Her tax liability before credits is $1,000 and her earned income credit is $2,500. How much earned income credit will be refunded to Maxine? Explain.

Accepted Answer

The answer of Maxine is a 29-year-old single mother. Her...

Question 13

For 2014, Beatrice qualifies for the earned income credit. She has one daughter who is 7 years old. Her earned income and adjusted gross income for 2014 are $6,100.
a.Using the EIC tables, calculate the amount of her 2014 earned income credit.
b.​Calculate the amount of Beatrice's 2013 earned income credit assuming her earned income for 2014 is $8,400 and her adjusted gross income is $10,000.

Accepted Answer

The answer of For 2014, Beatrice qualifies for the earned...

Question 14

Jeff is a stay-at-home father who earns $500 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 care credit?

Accepted Answer

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

Question 15

a. Norm and Linda are married, file a joint return, and have one 5-year-old child. Their adjusted gross income is $136,000. What is their child credit for the current year?
b. If Norm and Linda had a 3-year-old as well as the 5-year-old and an 18-year-old from Linda's first marriage, what would their child credit be for the current year?
b. above, how many qualifying children do Norm and Linda have? Explain.
c. In

Accepted Answer

The answer of a. Norm and Linda are married, file...

Question 16

For 2014, Wilson and Virginia Todd qualify for the earned income credit. They have two dependent children, ages 6 months and 4 years at the end of the year.
a.​​Using the EIC tables, calculate the amount of Wilson and Virginia Todd's earned income credit assuming Wilson has earned income of $7,200 and Virginia has no earned income. Their adjusted gross income for 2014 is $9,000.
b.​​Calculate the amount of Wilson and Virginia Todd's earned income credit assuming Wilson has earned income of $14,300 and Virginia has earned income of $2,000. Their adjusted gross income for 2014 is $16,500.

Accepted Answer

The answer of For 2014, Wilson and Virginia Todd qualify...

Question 17

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 18

John graduates from high school in 2014 and enrolls in a private college in the fall. His parents pay $10,000 for his tuition and fees.
a. Assuming John's parents have AGI of $46,000, what is the American Opportunity credit they can claim for John? Explain.
b. Assuming John's parents have AGI of $175,000, what is the American Opportunity credit they can claim for John? Explain.

Accepted Answer

The answer of John graduates from high school in 2014...

Question 19

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 20

Explain what type of educational expenses qualify for the American Opportunity credit and what type of educational expenses qualify for the lifetime learning credit.

Accepted Answer

The answer of Explain what type of educational expenses qualify...

Quiz 6: Credits and Special Taxes

Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

Which of the following is not a true statement regarding community property law?

Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

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?

Maxine is a 29-year-old single mother. Her tax liability before credits is $1,000 and her earned income credit is $2,500. How much earned income credit will be refunded to Maxine? Explain.

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?

Explain what type of educational expenses qualify for the American Opportunity credit and what type of educational expenses qualify for the lifetime learning credit.

Quiz 6: Credits and Special Taxes

Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

Which of the following is not a true statement regarding community property law?

Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

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?

Maxine is a 29-year-old single mother. Her tax liability before credits is $1,000 and her earned income credit is $2,500. How much earned income credit will be refunded to Maxine? Explain.

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?

Explain what type of educational expenses qualify for the American Opportunity credit and what type of educational expenses qualify for the lifetime learning credit.

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.