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Exam 12: Tax Credits and Payments

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Question 51

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The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

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B) False

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Question 52

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Steve has a tentative general business credit of $110,000 for the current year.His net regular tax liability before the general business credit is $125,000,and his tentative minimum tax is $100,000.Compute Steve's allowable general business credit for the year.

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Steve's allowable general business credi...

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Question 53

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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?

In May 2011,Blue Corporation hired Camilla,Jolene,and Tyrone,all of whom are certified as long-term family assistance recipients.Each employee is paid $12,000 during 2011.Camilla and Tyrone continued to work for Blue Corporation in 2012,earning $14,000 each.Blue hired no additional employees during 2012.

George and Martha are married and file a joint tax return claiming their two children,ages 10 and 8 as dependents.Assuming their AGI is $123,450,George and Martha's child tax credit is:

Rick spends $750,000 to build a qualified low-income housing project,which is placed in service on January 1,2011.He financed the project using his personal funds.What is the amount of the low-income housing credit that Rick may claim in 2011 (assuming a rate of 7.67%)? What is the total amount of the credit that Rick may claim as a result of the $750,000 expenditure?

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

The earned income credit is available only if the taxpayer has at least one qualifying child in the household.

An employer's tax deduction for wages is not affected by the work opportunity tax credit.

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

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Rex and Dena are married and have two children,Michelle (age 7) and Nancy (age 5) .During 2011,Rex earned a salary of $24,000,received interest income of $300,and filed a joint income tax return.Dena had $0 gross income.Their earned income credit for the year is:

The disabled access credit was enacted to encourage small businesses to make their businesses more accessible to disabled individuals.

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.