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Exam 13: Tax Credits and Payment Procedures

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Question 51

True/False

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Unless a taxpayer is disabled, the tax credit for the elderly or disabled is available only if the taxpayer is at least 59 1/2 years old.

A) True
B) False

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Question 52

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The ceiling amounts and percentages for 2017 for the two portions of the self-employment tax are: ​ Social Security portion Medicare portion

A) $127,200; 12.4% Unlimited; 2.9%
B) $127,200; 15.3% Unlimited; 2.9%
C) $118,500; 12.4% Unlimited; 2.9%
D) $118,500; 2.9% Unlimited; 13.3%

E) None of the above
F) A) and B)

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Question 53

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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.

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

All taxpayers are eligible to take the basic research credit.

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.

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

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

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?

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.

Nonrefundable credits are those that reduce the taxpayer's tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer's tax liability.

Unused foreign tax credits can be carried back three years and forward fifteen years.

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

Which, if any, of the following correctly describes the research activities credit?

Amber is in the process this year of renovating the office building (placed in service in 1976) used by her business. Because of current Federal Regulations that require the structure to be accessible to handicapped individuals, she incurs an additional $11,000 for various features, such as ramps and widened doorways, to make her office building more accessible. The $11,000 incurred will produce a disabled access credit of what amount?

Golden Corporation is an eligible small business for purposes of the disabled access credit. During the year, Golden makes the following expenditures on a structure originally placed in service in 1988. ​ In addition, $8,000 was expended by Golden on a building originally placed in service in the current year to ensure easy accessibility by disabled individuals. Calculate the amount of the disabled access credit available to Golden Corporation.

Julia is 30 years old, unmarried with a 9 year-old daughter, and has earnings during 2017 of $19,700. Does she qualify for the earned income credit? If so, calculate the amount of credit that is available to her.

Qualifying tuition expenses paid from the proceeds of a tax-exempt scholarship do not give rise to an education tax credit.

In 2016, 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 2017. Which of the following choices properly reflects the amounts and years in which the adoption expenses credit is available.2016 2017

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