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Exam 12: Tax Credits and Payments

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Question 31

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An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the:

A) Form W-2.
B) Form W-3.
C) Form W-4.
D) Form 941.

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

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Question 32

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The tax benefit received from a tax credit never is affected by the tax rate of the taxpayer.

A) True
B) False

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Question 33

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Qualified rehabilitation expenditures include the cost of acquiring a building, but not the cost of acquiring the land.

During 2019, Barry (who is single and has no children) earned a salary of $13,100. He is age 30. His earned income credit for the year is:

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

Molly has generated general business credits over the years that have not been utilized. The amounts generated and not utilized equal: 2015 $2,500 2016 7,500 2017 5,000 2018 4,000 In the current year, 2019, her business generates an additional $15,000 general business credit. In 2019, 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 2019 is available for future years?

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

A small employer incurs $31,500 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 $750.

Any unused general business credit must be carried back three years and then forward for 20 years.

Steve records a tentative general business credit of $110,000 for the current year. His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000. Compute Steve's allowable general business credit for the year.

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, which qualifies for the disabled access credit.

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.

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

Rex and Dena are married and have two children, Michelle (age seven) and Nancy (age five) . During 2019, Rex earned a salary of $26,500, received interest income of $300, and filed a joint income tax return with Dena. Dena had $0 gross income. Their earned income credit for the year is:

Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.

The maximum child tax credit under current law is $1,500 per qualifying child.

In 2019, George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents. Assuming their AGI is $119,650, George and Martha's child tax credit is:

Both education tax credits are available for qualified tuition expenses, and in certain instances, also may be available for room and board.

An employer's tax deduction for wages is affected by the work opportunity tax credit.

Only married taxpayers with children can claim the earned income credit.