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Exam 12: Tax Credits and Payments

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Question 41

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Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program also can qualify for the credit for child and dependent care expenses.

A) True
B) False

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Question 42

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Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit. The disabled access credit is:

A) $8,750.
B) $4,500.
C) $4,375.
D) $4,250.

E) B) and C)
F) All of the above

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Question 43

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The base amount for the Social Security portion (old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.

For purposes of computing the credit for child and dependent care expenses, the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

Identify the statement below that is false.

Which, if any, of the following correctly describes the earned income credit?

In May 2018, 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 2018. a. Compute Blue Corporation's work opportunity tax credits for 2018. b. Assume Blue Corporation pays total wages of $500,000 to its employees during 2018. How much may Blue Corporation claim as a wage deduction for 2018 if the work opportunity tax credit is claimed?

Phil and Audrey, husband and wife, both are employed by Laurel Corporation. Phil earns $135,000 in salary in 2018, and Audrey earns $70,000. How much FICA tax must they pay for 2018?

During the year, Green, Inc., incurs the following research expenditures: Green's qualifying research expenditures for the year are:

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

Which of the following issues does not need resolution in an employer's effort to comply with employment tax payment requirements?

The credit for child and dependent care expenses is an example of a refundable credit.

Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

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

Julia is 30 years old, unmarried with a 9 year-old daughter, and has earnings during 2018 of $19,700. Does she qualify for the earned income credit? If so, calculate the amount of credit that is available to her.

Bradley has two college-age children, Clint, a freshman at State University, and Abigail, a junior at Northwest University. Both Clint and Abigail are full-time students. Clint's expenses during the 2018 fall semester are as follows: $2,400 tuition, $250 books and course materials, and $1,600 room and board. Abigail's expenses for the 2018 calendar year are as follows: $10,200 tuition, $1,200 books and course materials, and $3,600 room and board. Tuition and the applicable room and board costs are paid at the beginning of each semester. Bradley is married, files a joint tax return, claims both children as dependents, and reports a combined AGI with his wife Allie of $114,000 for 2018. Determine Bradley's available education tax credit for 2018.

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit, but also can be expensed in the year incurred.

Harry and Wilma are married and file a joint income tax return. On their tax return, they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wilma) and claim two exemptions for their dependent children. During the year, they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work. Harry and Wilma may claim a credit for child and dependent care expenses of:

Several years ago, Sarah purchased a certified historic structure for $150,000 that was placed in service in 1929. In the current year, she incurred qualifying rehabilitation expenditures of $200,000. The amount of the tax credit for rehabilitation expenditures, and the amount by which the building's basis for cost recovery would increase as a result of the rehabilitation expenditures are the following amounts.

Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours. Assuming Cardinal claims the credit for employer-provided child care this year, its basis in the newly constructed facility is $640,000.