Deck 8

Question 1

Personal tax credits include (nonrefundable):

Answer 1

child and dependent care credit, elderly and permanently disabled credit, education credits, retirement savings contribution credit, foreign tax credit, general business credit, adoption credit

Question 2

Chid and dependent care credit

Answer 2

Maximum expenditure is $3000 for one dependent and $6000 for two or more dependents; under age 13, any disabled dependent, minimum 20% tax credit

Question 3

The American Opportunity Credit

Answer 3

Used for a student’s first four years of college, credit is equal to maximum of $2,500; 40% refundable

Question 4

The Lifetime Learning Credit

Answer 4

Available for an unlimited number of years for qualified tuition, maximum of $2000 per year

Question 5

Adoption credit

Answer 5

Limit per child = $13,400

Question 6

Retirement savings contribution credit

Answer 6

Nonrefundable tax credit that may offset both regular and AMT is available for contributions to either a traditional IRA or Roth IRA; must be at least 18, not a student or a dependent

Question 7

Foreign tax credit

Answer 7

Lessor of: foreign taxes paid or foreign tax credit limit; carry back one year, carry forward 10 years

Question 8

Foreign tax credit limit equation =

Answer 8

taxable income from all operations/(taxable income + exemptions) x U.S. tax

Question 9

Alternative minimum tax (AMT) preference items (Always add-backs):

Answer 9

Private activity bond interest income; percentage depletion the excess over adjusted basis of property; pre-1987 accelerated deprecation

Question 10

The credit for prior year alternative minimum tax liability may be carried:

Answer 10

Forward indefinitely

Question 11

AMT is computed as the:

Answer 11

Excess of tentative AMT over the regular tax

Question 12

Adjustments to arrive at alternative minimum taxable income include:

Answer 12

Individual net operating losses, passive activity losses, and medical expenses that do not exceed 10% of AGI

Question 13

Alternative minimum taxable income (AMTI) =

Answer 13

Regular taxable income +/- adjustments + preferences

Question 14

Credit for prior year minimum tax (AMT credit)

Answer 14

May only reduce regular tax, not future AMT

Question 15

Adjustments to AMTI (adds or subtracts)

Answer 15

(P)assive activity losses, (a)ccelerated depreciation, (n)et operating loss, (i)nstallment method, (c)ontracts

Question 16

Adjustments to AMTI (itemized deductions, added to regular taxable income):

Answer 16

(T)taxes reduced by taxable refunds, (I)Interest, (M)Medical expenses must exceed 10% of AGI, (M)Miscellaneous deductions are not allowed, (E)Exemptions

Question 17

AMT credits:

Answer 17

Foreign tax credit, adoption credit, child tax credit, contributions to retirement plans credit, earned income credit

Question 18

An individual submits a claim for refund of erroneously paid income taxes on:

Answer 18

Form 1040x

Question 19

Statute of limitations for fraud and false returns

Answer 19

There is no statute of limitations

Question 20

When a tax return has not been filed, any claim for refund must be made within ______ from the time the tax was paid.

Answer 20

Two Years