What individuals are subject to the payroll taxes on household employees?
> Carl and Karina file a joint return. Karina earned a salary of $38,000 and received dividends of $3,000, taxable interest income of $2,000, and nontaxable interest of $1,000. Carl received $9,000 of social security benefits and a gift of $6,000 from his
> A married couple received $10,000 of social security benefits. Calculate the taxable amount of those benefits if the couple’s provisional income is (a) $20,000, (b) $41,000, and (c) $63,000.
> Each of the following taxpayers received a state income tax refund in 2017. In all cases, the taxpayer has a filing status of married filing jointly. What amount of the refund is properly included in 2017 income? a. Refund of $729; taxpayer did not item
> Nancy, who is 59 years old, is the beneficiary of a $200,000 life insurance policy. What amount of the insurance proceeds is taxable under each of the following scenarios? a. She receives the $200,000 proceeds as a lump-sum payment b. She receives the p
> A taxpayer who purchases a Series EE U.S. Savings Bond must report the interest income (i.e., increase in value) on the bond on the date the bond is redeemed, or the taxpayer can elect to report the interest currently in income. Under what circumstances
> Determine the amount of taxable income that should be reported by a cash-basis taxpayer in 2017 in each of the following independent cases: a. A taxpayer completes $500 of accounting services in December 2017 for a client who pays for the accounting wor
> In 2012, Marie borrowed $10,000. In 2017, the debt was forgiven. Marie does not believe she should report the forgiveness of debt as income because she received nothing at the time the debt was forgiven in 2017. Do you agree or disagree? Support your
> Burger Store is located near many large office buildings, so at lunch it is extremely busy. Burger Store management previously permitted lunchtime employees a half-hour off-premises lunch break. However, employees could not easily return in a timely ma
> When and at what rate is interest calculated on amounts owed to the IRS?
> Under what circumstances must a taxpayer use a tax rate schedule rather than using a tax table?
> What is the standard deduction for each filing status?
> What are the four specific tests necessary to be a qualifying relative of the taxpayer?
> What age must a child be at the end of the year to meet the age test under the qualifying child rules?
> What are the five specific tests necessary to be a qualifying child of the taxpayer?
> What are the three general tests that a qualifying person must meet to be a dependent of the taxpayer?
> What is the amount of the personal and dependency exemptions for 2017?
> George and Debbie were legally married on December 31, 2017. Can they file their 2017 income tax return using the status of married filing jointly? Why or why not? What other filing status choices do they have, if any?
> What are the five types of filing status?
> Itemized deductions are taken when a. The taxpayer wants to. b. They are less than the standard deduction. c. They are higher than the standard deduction. d. The standard deduction is limited by high AGI.
> For 2017, the high income taxpayer limitation percentage of the excess of AGI over the applicable threshold is: a. 3%. b. 2%. c. 1%. d. 0.
> In 2017, high-income individuals are required to forfeit part of their itemized deductions. This effectively: a. Reduces their overall tax rate. b. Does not affect their overall tax rate. c. Increases their overall tax rate. d. None of the above.
> All of the following would qualify as a deductible work or job related expense except: a. A doctor incurring expenses related to studying to become certified as a plastic surgeon. b. An accountant taking a CPA exam review course. c. A teacher taking cou
> Which of the following itemized deductions is not subject to the 2% limit on the Schedule A? a. Tax preparation fees. b. Safe deposit box fee. c. Gambling losses. d. Union dues and fees.
> A tax rate that decreases as the tax base decreases is an example of what kind of tax rate structure? Progressive. Proportional. Regressive. d. Recessive.
> Darren paid the following expenses during November 2017 for his son Sean’s college expenses for spring 2018 semester, which begins in January 2018: Tuition…………………..$12,000 Housing…………………….8,000 Books…………………………1,500 In addition, Sean’s uncle paid $500 i
> DJ and Gwen paid $3,200 in qualifying expenses for their son, Nikko, who is a freshman attending the University of Colorado. DJ and Gwen have AGI of $170,000 and file a joint return. What is their allowable American opportunity tax credit (AOTC) after
> Nathan paid $2,750 in qualifying expenses for his daughter who attended a community college. How much is Nathan’s lifetime learning credit without regard to AGI limitations or other credits? a. $250. b. $550. c. $825. d. $1,375.
> Dennis and Vera are ages 69 and 59, respectively, and file a joint return. They have an AGI of $28,000 and received $2,000 in nontaxable Social Security benefits. How much can Dennis and Vera take as a credit for the elderly or the disabled? a. $0. b.
> Avril and John are ages 70 and 72, respectively, and file a joint return. They have an AGI of $18,000 and received $1,000 in nontaxable Social Security benefits. How much can Avril and John take as a credit for the elderly or the disabled? a. $2,700.
> Dwayne is single with one dependent. He enrolled in a qualified plan through the Marketplace at a cost of $4,200 per year. His household income was $40,000. The SLCSP premium is $4,700. What is Dwayne’s premium tax credit? a. $1,416 b. $3,264 c. $4,
> Which of the following statements is incorrect? a. Taxpayers who purchased qualified health insurance through the Marketplace may be eligible for a premium tax credit. b. Taxpayers must apply the credit towards their health insurance premium. c. The pre
> Which of the following credits is never a refundable credit? a. Earned Income Credit b. Foreign Tax Credit c. Child tax credit d. American opportunity tax credit
> Thomas and Stephani are married with four qualifying children. Their AGI is $26,500. Calculate their EIC using the EIC formula. a. $6,318. b. $5,777. c. $5,616. d. $4,600.
> Allie and Buddy are married, file a joint return, and have one son, Zack, age 5. Buddy has earned income of $42,000 and Allie was a full-time student for 8 months (with no income). They paid a qualified child care center $3,450. How much is Allie and
> Juan and Lydia both work, file a joint return, and have one qualifying child. They have AGI of $19,000. What is their EIC? a. $510. b. $3,400. c. $5,616. d. $10,000.
> Abel and Loni adopted a boy (a U.S. citizen), during the current tax year and incurred a total of $14,675 in qualified adoption expenses. Abel and Loni have modified AGI of $225,000. What is the amount of adoption credit they can take? a. $6,290. b. $
> After two and one-half years of working with the orphanage and the government, Jake and Nikki adopted a two-year-old girl from Korea. The adoption process, which became final in January 2017, incurred the following qualified adoption expenses. How much
> Marcia is a single filer and has AGI of $26,000. During the year, she contributed $800 to a Roth IRA. What amount of retirement savings contributions credit can Marcia take? a. $0. b. $80. c. $160. d. $800.
> Jerry and Ellen are married filing jointly with AGI of $45,000. They made a $1,500 contribution to a qualified retirement plan. How much is their retirement savings contributions credit? a. $0. b. $150. c. $300. d. $750.
> Julian is a single father with a son, Alex, who is 8 years old. If Julian’s AGI is $87,000, what is his child tax credit for Alex? a. $0. b. $400. c. $600. d. $1,000.
> Justin and Janet, whose AGI is $156,000, have twin boys, Jake and Jaime, age 5. How much child tax credit can they take? a. $0. b. $1,000. c. $2,000. d. $2,300.
> Who pays FICA? What are the percentages and limits on the payments?
> If a taxpayer works more than one job, will the withholding from the various jobs necessarily cover his or her tax liability? Explain.
> Explain the purpose of Form 1040-ES. Under what conditions are taxpayers required to file 1040-ES? When is Form 1040-ES filed?
> What is a Form W-9? Why must this form be filed?
> Explain the provisions of backup withholding and the conditions under which an employer must comply with these provisions.
> Explain the two methods for income tax withholding on supplemental wage payments.
> What are the penalties imposed on employers for filing incorrect W-2s?
> How does an employer report wages to the employee, the federal government, and the Social Security Administration? When is this notification due?
> If a business fails to make payroll deposits, who is held responsible?
> What are the penalties for not making timely payroll deposits?
> When must monthly and semiweekly schedule depositors make their deposits? What taxes must be deposited?
> What is a lookback period?
> Briefly explain when and how each of the two education credits is phased out.
> Explain what qualifies as education expenses for the purposes of educational tax credits.
> To determine the amount of credit for the elderly or the disabled, the appropriate base amount must be adjusted by the effect of two items. What are those two items, and in what way is the base amount adjusted?
> A taxpayer maintains a household and is entitled to a dependency exemption for an incapacitated adult child. The child lives during the week at an adult day care center and on the weekends at home with the taxpayer. The taxpayer pays a fee to the cente
> Briefly explain the purpose of the premium tax credit.
> Briefly explain the difference between a refundable and a nonrefundable tax credit and give three examples of tax credits that may be refundable (or partly refundable) discussed in this chapter.
> Briefly explain the requirements that must be met to receive a tax credit for child and dependent care expenses.
> What is the definition of qualifying child for purposes of the Earned Income Credit?
> In the case of the adoption credit, what special rules apply when adopting a child who is a citizen of another country?
> In the case of the adoption credit, what special rules apply when adopting a child who is a child with special needs?
> What limitations are associated with the adoption credit, both in terms of dollar amounts and eligibility?
> Explain the limitations pertaining to the retirement savings contributions credit.
> Paul and Olivia filed a joint tax return and reported modified AGI of $92,000. They have two qualifying children for the purposes of the child tax credit. What is the amount of their child tax credit? What is the amount of their credit if their modifi
> Taxpayers can claim a child tax credit for a qualifying child. Define qualifying child.
> Explain how the foreign tax credit limitation works.
> Les’s personal residence is in uptown New Orleans. Every year during Mardi Gras, Les rents his house for 10 days to a large corporation that uses it to entertain clients. How does Les treat the rental income? Explain.
> When depreciation is deducted on a rental property, why is it beneficial for the taxpayer to allocate the cost of the property to other assets (furniture, appliances, etc.) connected with the property, rather than allocating the entire lump sum to the bu
> What is the difference between a deductible repair expense and a capital improvement of a rental property?
> How are the income and losses from a flow-through entity reported to the taxpayer (partner, shareholder or owner)? Are all of the items from the flow-through entity reported on the same form? Explain.
> What is meant by the term flow-through entity? Give some examples.
> Explain how gains (losses) from the sale of property acquired as a gift are taxed.
> Briefly describe the types of income that are reported on a Schedule E.
> How can a taxpayer determine the basis of units from a mutual fund?
> What is royalty income, and which forms are used to report it? What factors determine which forms should be used?
> Explain the terms recapture and unrecaptured provisions as they apply to §1250 assets.
> What is a §1250 asset? How is it related to a §1231 asset?
> What is a §1245 asset? How is it related to a §1231 asset?
> Discuss the netting process of capital gains and losses. What are the possible outcomes of the netting process, and how would each situation be taxed?
> What is a §1202 gain, and how is it taxed?
> Capital gains can be taxed at several different rates. What determines the rate?
> In what ways can a capital asset be acquired, and how is the holding period determined for each method of acquisition?
> How is a net capital loss treated? Include in your answer a discussion of how a net capital loss is treated in relation to other income.
> For rental expenses to be deductible, what criteria must be met? For this question, assume no personal use of the rental property.
> What factors affect the taxability of capital gains and losses?
> Stan has $20,000 in a traditional IRA at a bank. He decided to change trustees from a bank to a financial services firm. He requests, and receives, a check from the bank that he intends to take to the financial services firm to open a new account. He
> Tax-free distributions from a Coverdell Education Savings Account can be used for what purpose? Be specific.
> Briefly discuss the conditions necessary for a taxpayer to be permitted to make tax-deductible contributions to a traditional IRA.
> Anne, a single taxpayer under age 50, has wage income of $74,000 and is not covered under a retirement plan by her employer. She would like to start a retirement plan if possible. What options are available to her?
> What is the maximum annual contribution that can be made to a Roth IRA, and how is the maximum calculated?
> What is the maximum annual contribution that can be made to a SIMPLE plan, and how is the maximum calculated?
> What is the maximum annual contribution that can be made to a traditional IRA, and how is the maximum calculated?
> Why were the hobby loss rules established? What factors determine whether an activity is a trade or business or a hobby? Is any one factor controlling?
> Discuss the limits on home office expense deductibility.
> Discuss the limits on meals and entertainment. Are meals and entertainment expenses always limited to 50%?
> What is considered personal use of a vacation rental property?
> When can a taxpayer use the standard mileage rate? Is the standard mileage rate better than the actual auto costs?
> Briefly discuss the conditions necessary for a taxpayer to be permitted to make tax-deductible contributions to a SIMPLE plan.
