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

Nonrefundable personal tax credits are allowed against the taxpayer's tax liability before other credits are claimed.

The child and dependent care credit provides relief for working taxpayers who pay for care for younger children or an incapacitated dependent or spouse.

In computing the alternative minimum taxable income, no deduction is allowed for

In 2015 Rita is divorced with one child. She has AGI of $19,500 resulting in a federal income tax liability of $225 and an earned income credit of $3,137. She has had $550 of federal income taxes withheld from her pay. Rita will receive a federal income refund of

The adoption credit based on qualified adoption expenses is generally allowed in the year the adoption is finalized.

Marguerite and Josephus have two children, ages 13 and 10. Their modified AGI is $120,500.What is their child tax credit?

The foreign tax credit is equal to the smaller of foreign taxes paid or accrued in the tax year or the portion of the U.S. income tax liability attributable to the income earned in all foreign countries.

Nonrefundable personal credits cannot offset AMT.

A taxpayer's tentative minimum tax exceeds his net income tax so he will be paying the alternative minimum tax this year. The taxpayer has a sole proprietorship through which he has earned general business credits. The taxpayer can reduce his AMT to the extent of his general business credits.

For purposes of the limitation on qualifying expenses for the child and dependent care credit, a spouse who is either a full-time student or is incapacitated is deemed to have earned income of $250 per month, or $500 per month if there are two or more qualifying individuals in the household.