Exam 14: Special Tax Computation Methods, Tax Credits, and Payment of Tax

Discuss the tax planning techniques available to a U.S. citizen who is on a foreign job assignment.

Max and Alexandra are married and incur $5,500 of qualifying expenses to care for their two children, ages 2 and 5. Max's earned income is $35,000 and Alexandra's earnings from a part-time job are $5,000. What is the amount of the qualifying expenses for purposes of computing the child and dependent care credit?

A self-employed individual has earnings from his business of $300,000. For the earnings in excess of the $118,500, he will only have to pay the 2.9% Medicare tax.

Evan and Barbara incurred qualified adoption expenses in 2014 of $6,000, and then incurred $9,000 more in 2015 when the adoption of their child became final. Their 2014 AGI was $110,000 and their 2015 AGI was $100,000. The allowable adoption credit is

For purposes of the child and dependent care credit, qualifying employment-related expenses cannot include payments to a relative.

Jay and Cara's daughter is starting her freshman year of college. Jay and Cara will be able to claim the American Opportunity Tax Credit for a percentage of the cost of tuition, required fees and course materials, but the room and board charges will not qualify for the credit.

Joan earns $110,000 in her job as a physician's assistant. She also has her own business selling cosmetics. This business generated $10,000 of earnings. What is Joan's self-employment tax for 2015?

Annie has taxable income of $100,000, a regular tax liability of $21,071, a positive AMT adjustment due to limitations on itemized deductions of $20,000, and tax preferences of $25,000 in 2015. Annie is single and takes a $4,000 personal exemption for herself only. What is Annie's AMT for 2015?

The health insurance premium assistance credit is designed to help lower and middle income taxpayers who purchase their own health insurance insurance directly from an insurance company or through a state or federal exchange.

An example of an AMT tax preference is the excess of MACRS depreciation on equipment over depreciation computed by using the the 150% declining balance method.

Lavonne has a regular tax liability of $13,294 on taxable income of $70,000. She also has tax preferences of $25,000 and positive adjustments attributable to limitations on itemized deductions of $15,000. Lavonne is single and takes a $4,000 personal exemption for herself only. Lavonne's alternative minimum tax for 2015 is

Medical expenses in excess of 10% of AGI are deductible when computing AMT.

If an individual is liable for self-employment tax, a portion of the self-employment tax is

Assume you plan to volunteer at a Volunteer Income Tax Assistance (VITA) program for low income taxpayers and wish to prepare so you can help your clients achieve the maximum tax savings. Briefly discuss tax credits with which you should become familiar.

Tanya has earnings from self-employment of $240,000, resulting in self-employment tax of $21,122 and Additional MedicareTax of $360. Due to these taxes, Tanya will be allowed a deduction for AGI of

If estimated tax payments equal or exceed 100% of the actual tax liability for the prior year, there is generally (assuming AGI less than or equal to $150,000) no penalty for underpayment of estimated taxes.

The earned income credit is refundable only if a tax has been withheld.

Margo and Jonah have two children, ages 13 and 17. Their modified AGI is $120,500.What is their child tax credit?

Mark and Stacy are married, file a joint return, and have one child, age 3. Their combined AGI is $55,000. Mark and Stacy incur $3,500 of child-care expenses during the current year. Mark's employer reimburses him $1,500 under a qualified dependent care assistance plan. The child and dependent care credit is

Runway Corporation has $2 million of gross receipts in the preceding year. For purposes of the disabled access credit, what is the maximum number of full-time employees the corporation can have in the preceding year?