Exam 30: Special Tax Computation Methods, tax Credits, and Payment of Tax

Claire accepts a new job.She will have access to health insurance coverage through her employer.The employer's policy meets the criteria for affordable minimum essential coverage.Claire prefers to purchase her own insurance policy through the state or federal exchange so she can retain access to her doctor.Assuming Claire's income is within the parameters specified,she will be eligible for the health insurance premium assistance credit.

All of the following are self-employment income except

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.

Evan and Barbara incurred qualified adoption expenses in 2016 of $6,000,and then incurred $9,000 more in 2017 when the adoption of their child became final.Their 2016 AGI was $110,000 and their 2017 AGI was $100,000.The allowable adoption credit is

Amelida expects to earn $145,000 of AGI and $125,000 of taxable income this year.She is concerned about underpayment penalties.Because of a substantial bonus,her prior year AGI was $155,000 and her taxable income was $135,000.Based on her fact pattern,which of the following scenarios will not allow her to avoid underpayment penalties?

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

Mingming and Xavier,unrelated single taxpayers,have each incurred a $1,000 expenditure.Before considering this expenditure,Mingming has taxable income of $500,000 and Xavier has taxable income of $32,000.Assume the expenditure qualifies as either a tax deduction or a 25% credit.Which of the following statements is correct?

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?

If an individual is an employee and also has self-employment income,the maximum tax base for computing self-employment tax is reduced by the wages that are subject to the FICA tax.

Sam and Megan are married with two dependent children.Both Sam and Megan work,earning $50,000 and $55,000,respectively.Their AGI totals $110,000.They incur $6,500 of qualifying child care expenses of which $2,500 is reimbursed by Megan's dependent care program at work. What is the amount of their child and dependent care credit?

An individual taxpayer who is self-employed and an active investor has qualified for foreign tax credits,nonrefundable personal tax credits and general business credits.Because he knows there are differing limitations on the application of these credits,with resulting interrelated aspects,he wants to know the appropriate order for their application.The appropriate order of the application of these three classes of tax credits is as follow:

If an individual is classified as an employee,the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

A taxpayer acquired new equipment to be used in her business this year.For AMT purposes,depreciation must be recalculated using the straight-line method over the same recovery period used for regular tax purposes.

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

Nonrefundable tax credits

Mr.and Mrs.Lewis have an alternative minimum tax base of $312,000.Their tentative minimum tax will be

Individuals who do not have minimum essential health insurance coverage will pay an excise tax.

The itemized deduction phase-out,which has the effect of increasing regular taxable income for high income taxpayers,will also raise AMTI.

The Lifetime Learning Credit is partially refundable.

Burton and Kay are married,file a joint return with an AGI of $116,000,and have one dependent child,Tyler,who is a full-time student in a Master of Accountancy program.The following expenses relate to his costs of attendance in 2017: The tuition noted above is the gross amount charged before reduction for his $5,000 tuition scholarship.What is the maximum education credit allowed to Burton and Kay?