A parent may elect to include a child’s income in the parent’s return if:A. The child is under age 18B. The child’s income is only from interest and dividend distributionsC. The child’s gross income is more than $950 and less than $9 500D. All of the above must be met for a parent to elect to include a child’s income in the parent’s return.Question 2 of 21 (worth 0.5 points)Choose the correct statement:A. A taxayer may receive a 30 percent credit for installing energy-efficient window shades..B. A taxpayer may receive a 30 percent credit for installing a windmill at his vacation home.C. A taxpayer may receive a 30 percent credit for installing a solar water-heating panel for his swimming pool.D. A taxpayer may receive a 30 percent credit for the purchase of a plug-in electric vehicle.Question 3 of 21 (worth 0.5 points)Denice is divorced and files a single tax return claiming her two children ages 7 and 9 as dependents. Her adjusted gross income for 2012 is $79 500. Denice’s Child Credit for 2012 is:A. $2 000B. $250C. $1 000D. $750E. $1 750Question 4 of 21 (worth 0.5 points)For the 2012 tax year Sally who is divorced reported the following items of income:Interest income$ 600Wages4 000Earnings from self-employment3 000She maintains a household for herself and her 1-year-old son who qualifies as her dependent. What is the earned income credit available to her for 2012 using the tables?A. $1 029B. $1 369C. $2 389D. $2 593E. None of the aboveQuestion 5 of 21 (worth 0.5 points)Jim has foreign income. He earns $25 000 from Country A which taxes the income at a 20 percent rate. He also has income from Country B of $15 000. Country B taxes the $15 000 at a 10 percent rate. His U.S. taxable income is $90 000 which includes the foreign income. His U.S. income tax on all sources of income before credits is $19 000. What is his foreign tax credit?A. $6 500B. $8 444C. $5 846D. $12 346E. Jim does not qualify for a foreign tax credit.Question 6 of 21 (worth 0.5 points)Keith has a 2012 tax liability of $2 250 before taking into account his American Opportunity credit. He paid $2 700 in qualifying expenses was a full-time student was not claimed as a dependent on his parents’ return and his American Opportunity credit was not subject to phase out. What is the amount of his American Opportunity credit allowed?A. $2 175B. $1 500C. $1 350D. $2 700E. $-0-Question 7 of 21 (worth 0.5 points)The American Opportunity creditA. Is 50 percent of the first $1 200 of tuition and fees paid and 100 percent of the next $1 200B. Is available for 2 years of post-secondary educationC. Is fully refundable even if the credit exceeds the tax liabilityD. Is available for qualifying expenses paid on behalf of the taxpayer and his or her spouse in addition to those paid for dependentsQuestion 8 of 21 (worth 0.5 points)The child and dependent care provisions:A. Apply only to children under age 15B. Are available only to single parentsC. Are available for spouses incapable of self-careD. Are allowed only for taxpayers earning less than $43 000The earned income credit:A. Must be calculated on adjusted gross income as well as earned income in some casesB. Can not exceed the amount of the tax liabilityC. Is available only if the taxpayer has qualifying childrenD. Is available to married taxpayers who file separate returnsWhich of the common deductions below are allowed for both regular tax purposes and for Alternative Minimum Tax (AMT) purposes?A. The standard deductionB. Personal and dependency exemptionsC. State income taxes property taxes and all other taxes deducted on Schedule AD. Mortgage interest from the acquisition of a residence costing less than $1 millionE. Miscellaneous itemized deductions taken on Schedule AQuestion 11 of 21 (worth 0.5 points)Which of the following is not a true statement regarding community property law?A. For a married couple living in California income derived from separate property is taxable to the owner of the propertyB. For a married couple living in Texas income derived from separate property produces community incomeC. In all community property states the salary of married spouses is allocated one-half to each spouseD. Colorado Ohio and Florida are community property statesE. Property acquired before marriage in a community property state continues to be separate propertyQuestion 12 of 21 (worth 0.5 points)Which of the following is not an adjustment or tax preference item for 2012 for purposes of the individual alternative minimum tax?A. State income tax refundsB. Certain passive lossesC. Miscellaneous itemized deductionsD. Cash charitable contributionsE. All of the above are adjustment or tax preference items for AMTQuestion 13 of 21 (worth 0.5 points)Which of the following is true of the alternative minimum tax?A. The alternative minimum tax is designed to ensure that high income taxpayers do not pay excessive amounts of income taxB. For 2012 the alternative minimum tax rates are 20 percent and 30 percent depending on the taxpayer’s incomeC. The amount of a taxpayer’s state income tax may not be deducted for the purpose of computing the alternative minimum taxD. All tax-exempt interest is a tax preference item for the alternative minimum taxE. None of the above are trueQuestion 14 of 21 (worth 0.5 points)Which of the following types of income is not subject to the “kiddie tax?”A. Interest incomeB. Dividend incomeC. Salary incomeD. Capital gains on stock salesE. All of the above are subject to the “kiddie tax”Question 15 of 21 (worth 0.5 points)Which one of the following taxpayers qualify for the earned income credit?A. A 70-year-old doctor whose practice had a net loss and who has an AGI of $5 000 in 2012B. An 18-year-old college student who earns $8 000 at a part-time job.C. A couple who have a combined AGI of $17 000 and three children but file separately.D. A 31-year-old construction worker with $22 000 of AGI and two children.E. None of the above qualifies for the earned income credit.Question 16 of 21 (worth 0.5 points)Assume Karen is 12 years old and her only income is $2 500 of interest income from a bank account with money her parents have given her to save for college. What are the options Karen has for filing her tax return?A. Karen must file a separate tax return and report all of her interest income at her separate rate of tax.B. Karen must file a separate tax return and report all of her interest income at her parents’ rate of tax.C. Karen can file a separate tax return or her parents can elect to include her in their tax return paying tax on $600 of her interest income at their rate of tax.D. Karen can file a separate return or her parents can elect to include her in their tax return paying tax on the full $2 500 of her interest income at their rate of tax.ReviewCheck to review before finishing (will be flagged in Table of Contents)Question 17 of 21 (worth 0.5 points)H and W are married taxpayers living in Louisiana. H earns wages of $40 000 and has $5 000 of dividend income from separate property. H and W have interest income from community property of $10 000. If H and W file separate income tax returns what amount of income must be included on H’s separate tax return?A. $50 000B. $30 000C. $27 500D. $25 000E. None of the aboveQuestion 18 of 21 (worth 0.5 points)In 2012 the child tax credit available to married taxpayers filing jointly is phased out beginning at:A. $55 000B. $75 000C. $95 000D. $110 000Question 19 of 21 (worth 0.5 points)In 2012 which of the following children would have income taxed at their parents’ rates?A. A child with salary income of $12 000 (age 13)B. A child with net unearned income of $2 000 (age 12)C. A non-student child with net unearned income of $12 000 (age 19)D. A child with salary income of $1 000 (age 9)E. All of the aboveQuestion 20 of 21 (worth 0.5 points)Jessica and Robert have two young children. They have $7 000 of qualified child care expenses and an AGI of $24 000 in 2012. What is their allowable child care credit?A. $7 000B. $6 000C. $2 100D. $1 800E. $900
