Exam 28: Special Tax Computation Methods, tax Credits, and Payment of Tax

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

Tyne is single and has AGI of $25,000 in 2014.During the year,she contributes $3,000 to her Roth IRA.What is the amount of Tyne's qualified retirement savings contributions credit?

Refundable tax credits

Hawaii,Inc.,began a child care facility for its employees during the year.The corporation incurred the following expenses: What is the amount of Hawaii's credit for employer-provided child care?

In the fall of 2014,James went back to school to earn a master of accountancy degree.He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000.His Lifetime Learning Credit is

Lavonne has a regular tax liability of $13,356 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 $3,950 personal exemption for herself only. Lavonne's alternative minimum tax for 2014 is

Self-employed individuals are subject to the self-employment tax if their net earnings are more than the personal exemption amount.

Bob's income can vary widely from year-to-year because much of his compensation comes from sales commissions and bonuses.It generally is in the $200,000 to $300,000 range.To minimize the risk of underpayment penalties for estimated tax he should pay in,through payroll withholding and estimated tax payments,100% of the prior year tax liability.

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

All tax-exempt bond interest income is classified as an AMT preference.

The earned income credit is available only to taxpayers with qualifying children.

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

Lara started a self-employed consulting business in the last part of the year and earned $60,000 of self- employment income.She had been employed as manager in a consulting firm prior to starting her own business and had earned $175,000. (a)What is Lara's Additional Medicare Tax for 2014,if any? (b)What is Lara's deduction for AGI for the Additional Medicare Tax?

Tom and Anita are married,file a joint return with an AGI of $165,000,and have one dependent child,Tim,who is a first-time freshman in college.The following expenses are incurred and paid in 2014: What is the maximum education credit allowed to Tom and Anita?

Tyler and Molly,who are married filing jointly with $210,000 of AGI in 2014,incurred the following expenses in their efforts to adopt a child: The adoption was finalized in 2014.What is the amount of the allowable adoption credit in 2014?

ChocoHealth Inc.is developing new chocolate products providing abundant health benefits at low calorie counts.For the past three years,it spent an average of $500,000 per year on research.ChocoHealth has spent $900,000 on research.The company has elected the simplified credit.For the current year,it will earn a research credit of

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.

Suzanne,a single taxpayer,has the following tax information for the current year. • Charitable contribution of real property with a FMV of $25,000 (adjusted basis $20,000)for which a $25,000 deduction was taken. • Research and experimental expenses of $40,000 deducted in full for regular tax. Suzanne's total tax preferences and adjustments equals

With respect to estimated tax payments for a taxpayer with AGI of $150,000 or lower in the prior year,all of the following are generally true with the exception of

Lee and Whitney incurred qualified adoption expenses in 2013 of $2,000,and then incurred $7,000 more in 2014 when the adoption of their child became final.Their 2013 AGI was $120,000 and their 2014 AGI was $140,000.The allowable adoption credit is