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Exam 12: Tax Credits and Payments

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Question 21

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How does the FICA tax compare to the self-employment tax? How are these two taxes similar and how do they differ?

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These taxes, commonly referred to as "pa...

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Question 22

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The earned income credit, a form of a negative income tax, is a refundable credit.

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Question 23

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

Which of the following best describes the treatment applicable to unused business credits?

During the year, Purple Corporation (a U.S. Corporation) has U.S.-source income of $1,800,000 and foreign income of $600,000. The foreign-source income generates foreign income taxes of $150,000. The U.S. income tax before the foreign tax credit is $816,000. Purple Corporation's foreign tax credit is:

Describe the withholding requirements applicable to employers.

Kevin and Sue have two children, ages 8 and 14. They spend $6,200 per year on eligible employment related expenses for the care of their children after school. Kevin earned a salary of $20,000 and Sue earned a salary of $18,000. What is the amount of the credit for child and dependent care expenses?

Refundable tax credits include the:

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas (i.e., inner city) to newer locations.

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

Realizing that providing for a comfortable retirement is up to them, Jim and Julie commit to making regular contributions to their IRAs, beginning this year. Consequently, they each make a $2,000 contribution to their traditional IRa. If their AGI is $35,000 on their joint return, what is the amount of their credit for certain retirement plan contributions?

Discuss the treatment of unused general business credits.

Which of the following correctly describes the tax credit for rehabilitation expenditures?

Some (or all) of the tax credit for rehabilitation expenditures will have to be recaptured if the rehabilitated property is disposed of prematurely or if it ceases to be qualifying property.

Molly has generated general business credits over the years that have not been utilized. The amounts generated and not utilized follow: In the current year, 2018, her business generates an additional $15,000 general business credit. In 2018, based on her tax liability before credits, she can utilize a general business credit of up to $20,000. After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2018 is available for future years?

All taxpayers are eligible to take the basic research credit.

The child tax credit is based on the number of the taxpayer's qualifying children under age 17.

A taxpayer's earned income credit is dependent on the number of his or her qualifying children.

Dabney and Nancy are married, both gainfully employed, and have two children who are 3 and 6 years old. Dabney's salary is $35,000 while Nancy's salary is $40,000. During the year, they spend $7,000 for child care expenses that are required so both of them can work outside of the home. Calculate the credit for child and dependent care expenses.