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Exam 13: Tax Credits and Payment Procedures

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Question 21

True/False

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The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

A) True
B) False

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Question 22

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Roger is considering making a $6,000 investment in a venture that its promoter promises will generate immediate tax benefits for him.Roger, who does not anticipate itemizing his deductions, is in the 30% marginal income tax bracket.If the investment is of a type that produces a tax credit of 40% of the amount of the expenditure, by how much will Roger's tax liability decline because of the investment?

A) $0
B) $1,800
C) $2,200
D) $2,400
E) None of these.

F) A) and D)
G) All of the above

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Question 23

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All taxpayers are eligible to take the basic research credit.

Certain high-income individuals are subject to three additional Medicare taxes on wages, unearned income, and tax credits claimed.

Nonrefundable credits are those that reduce the taxpayer's tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer's tax liability.

Child and dependent care expenses include amounts paid for general household services.

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

A LIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

The maximum child tax credit under current law is $1,500 per qualifying child.

In terms of the withholding procedures, which statement does not reflect current rules?

Amber is in the process this year of renovating the office building (placed in service in 1976) used by her business. Because of current Federal Regulations that require the structure to be accessible to handicapped individuals, she incurs an additional $11,000 for various features, such as ramps and widened doorways, to make her office building more accessible.The $11,000 incurred will produce a disabled access credit of what amount?

Only self-employed individuals are required to make estimated tax payments.

The components of the general business credit include all of the following except:

If an employee holds two jobs during the year, an overwithholding of FICA tax always results.

Cardinal Corporation hires two persons who are certified to be eligible employees for the work opportunity tax credit under the general rules (e.g., food stamp recipients) , each of whom is paid $9,000 during the year.As a result of this event, Cardinal Corporation may claim a work opportunity credit of:

Refundable tax credits include the:

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

Both education tax credits are available for qualified tuition expenses, and in certain instances, also may be available for room and board.

Bob and Sally are married, file a joint tax return, report AGI of $120,000, and have two children.Del is beginning her freshman year at State College during fall 2019, and Owen is beginning his senior year at Southwest University during fall 2019.Owen completed his junior year during the spring semester of 2018 (i.e., he took a "leave of absence" during the 2018-2019 school year) .Both Del and Owen are claimed as dependents on their parents' tax return. Del's qualifying tuition expenses and fees total $5,000 for the fall semester and Owen's qualifying tuition expenses were $6,100 for the fall 2019 semester.Del's room and board costs were $3,200 for the fall semester.Owen did not incur room and board costs because he lived with his aunt and uncle during the year. Full payment is made for the tuition and related expenses for both children at the beginning of each semester.In addition to the children's college expenses, Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist.Bob attended the seminars during July and August 2019.Compute the available education tax credits for Bob and Sally for 2019.