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Exam 13: Tax Credits and Payment Procedures

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Question 61

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John owns and operates a real estate agency as a sole proprietor.On a full-time basis,he employs his 17-year old daughter as a receptionist and his 22-year old son as a bookkeeper.Only the son is subject to FICA withholding.

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Question 62

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

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Question 63

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

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.

In describing FICA taxes,which (if any) of the following statements is incorrect?

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

Bradley has two college-age children,Clint,a freshman at State University,and Abigail,a junior at Northwest University.Both Clint and Abigail are full-time students.Clint's expenses during the 2012 fall semester are as follows: $2,400 tuition,$250 books and course materials,and $1,600 room and board.Abigail's expenses for the 2012 calendar year are as follows: $10,200 tuition,$1,200 books and course materials,and $3,600 room and board.Tuition and the applicable room and board costs are paid at the beginning of each semester.Bradley is married,files a joint tax return,claims both children as dependents,and has a combined AGI with his wife of $114,000 for 2012.Determine Bradley's available education tax credit for 2012.

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:

On October 2,2012,Ross quits his job with Blue Corporation.If requested by Ross,Blue Corporation must furnish a Form W-2 to Ross within 60 days after the date of the request or the final wage payment,whichever is later.

Rick spends $750,000 to build a qualified low-income housing project,which is placed in service on January 1,2012.He financed the project using his personal funds.What is the amount of the low-income housing credit that Rick may claim in 2012 (assuming a rate of 7.42%)? What is the total amount of the credit that Rick may claim as a result of the $750,000 expenditure?

Susan generated $55,000 of net earnings from the conduct of a tax preparation business that she operated during the tax-filing season.She also received wages of $60,000 from her full-time job.Compute the self-employment taxes due for 2012.

Black Company paid wages of $360,000,of which $80,000 was qualified wages for the work opportunity tax credit under the general rules.Black Company's deduction for wages for the year is:

The disabled access credit was enacted to encourage small businesses to make their businesses more accessible to disabled individuals.

In terms of the withholding procedures,which statement does not reflect current rules?

Certain high-income individuals are subject to three additional Medicare taxes beginning in 2013-on wages,unearned income,and tax credits claimed.

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.

Dabney and Nancy are married,both gainfully employed,and have two children who are 3 and 6 years old.Dabney's salary is $35,000 while Nancy's salary is $40,000.During the year,they spend $7,000 for child care expenses that are required so both of them can work outside of the home.Calculate the credit for child and dependent care expenses.

The child tax credit is based on the number of the taxpayer's qualifying children under age 17.

In the event that overwithholding of FICA tax occurs because the taxpayer has more than one employer,the excess amount should be claimed as a credit on the Federal income tax return of the employee.

Amber is in the process this year of renovating the office building (originally 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?