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Exam 13: Tax Credits and Payment Procedures

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Question 41

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Phil and Audrey,husband and wife,are both employed by Laurel Corporation.Phil earns $112,000 in salary in 2012,and Audrey earns $70,000.How much FICA tax must they pay for 2012?

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Phil will pay $6,248.20 [(4.2%...

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Question 42

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Roger is considering making a $3,000 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) $900.
C) $1,100.
D) $1,200.
E) None of the above.

F) A) and B)
G) A) and D)

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Question 43

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George and Jill are husband and wife,ages 67 and 65 respectively.During the year,they receive Social Security benefits of $4,000 and have adjusted gross income of $11,000.Assuming they file a joint return,their tax credit for the elderly,before considering any possible limitation due to their tax liability,is:

If a taxpayer chooses to claim a foreign tax credit,part of the foreign income taxes paid can also be claimed as a deduction.

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.

Rex and Dena are married and have two children,Michelle (age 7) and Nancy (age 5) .During 2012,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:

Several years ago,Tom purchased a structure for $300,000 that was originally placed in service in 1929.Three and one-half years ago he incurred qualifying rehabilitation expenditures of $600,000.In the current year,Tom sold the property in a taxable transaction.Calculate the amount of the recapture of the tax credit for rehabilitation expenditures.

Juan refuses to give the bank where he maintains a savings account his Social Security number.Juan is subject to backup withholding for the interest earned on the savings account.

Which of the following statements regarding the adoption expenses credit is not true?

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

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

Describe the withholding requirements applicable to employers.

In January 2012,Tammy acquired an office building in downtown Syracuse,New York for $400,000.The building was originally constructed in 1932.Of the $400,000 cost,$40,000 was allocated to the land.Tammy immediately placed the building into service,but quickly realized that substantial renovation would be required to keep and attract new tenants.The renovations,costing $600,000,were of the type that qualifies for the rehabilitation credit.The improvements were completed in October 2012.

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,2012,her business generates an additional $30,000 general business credit.In 2012,based on her tax liability before credits,she can utilize a general business credit of up to $40,000.After utilizing the carryforwards and the current year credits,how much of the general business credit generated in 2012 is available for future years?

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.

A small employer incurs $1,600 for consulting fees related to establishing a qualified retirement plan for its 75 employees.As a result,the employer may claim the credit for small employer pension plan startup costs for $800.

In computing the foreign tax credit,the greater of the foreign income taxes paid or the overall limitation is allowed.

In 2011,Juan and Juanita incur $9,800 in legal and adoption fees directly related to the adoption of an infant son born in a nearby state.Over the next year,they incur another $4,500 of adoption expenses.The adoption becomes final in 2012.Which of the following choices properly reflects the amounts and years in which the adoption expenses credit is available. 2011 2012

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Pat generated self-employment income in 2012 of $76,000.The self-employment tax is: