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Exam 13: Tax Credits and Payment Procedures

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Question 1

Multiple Choice

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During 2016,Barry (who is single and has no children) earned a salary of $13,000.He is age 30.His earned income credit for the year is:

A) $0.
B) $144.
C) $362.
D) $506.

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

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B

Question 2

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The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

A) True
B) False

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Question 3

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Describe the withholding requirements applicable to employers.

Steve records 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.

Black Company paid wages of $180,000,of which $40,000 was qualified wages for the work opportunity tax credit under the general rules.Black Company's deduction for wages for the year is:

Cardinal Corporation hires two persons 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:

In May 2016,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 2016.Camilla and Tyrone continued to work for Blue Corporation in 2017,earning $14,000 each.Blue hired no additional employees during 2017. a.Compute Blue Corporation's work opportunity tax credits for 2016 and 2017. b.Assume Blue Corporation pays total wages of $500,000 to its employees during 2016 and $560,000 during 2017.How much may Blue Corporation claim as a wage deduction for 2016 and 2017 if the work opportunity tax credit is claimed in both years?

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

A taxpayer who qualifies for the low-income housing credit claims the credit over a 20-year period.

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

Cheryl is single,has one child (age 6) ,and files as head of household during 2016.Her salary for the year is $19,500.She qualifies for an earned income credit of the following amount.

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?

An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.

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

All foreign taxes qualify for the foreign tax credit.

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:

An expatriate who works in a country with an income tax rate higher than the U.S.rate probably will find the foreign earned income exclusion preferable to the foreign tax credit.

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.

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

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