R2 Flashcards
The _________ is an education credit that can offset an individual taxpayer’s tax liability but does not result in a refund if the credit amount is more than the taxpayer’s tax liability.
lifetime learning credit
What is an example of a nonrefundable credit?
retirement savings contribution credit
What makes someone an eligible tax payer?
-at least 18 years old
-not a full time student
-not a dependent of another taxpayer
How should taxes paid by an individual to a foreign country be treated?
either as a credit against federal income taxes due or an itemized deduction
What kind of credit can result in a refund if the individual had no income tax liability?
earned income credit
T/F: An employee who has had Social Security tax withheld in an amount greater than the maximum for a particular year may claim the excess as a credit against income tax, if that excess resulted from correct withholding by two or more employers.
true
What is another way of saying “regular tax before tax credits”?
current year tax liability
What is the maximum amount of contributions to an IRA can be considered towards a credit?
$2,000; this is a nonrefundable credit
T/F: An employee who has had social security tax withheld in an amount greater than the maximum for a particular year may claim the excess as a credit against income tax, if that excess was correctly withheld by two or more employers.
true
What would be included on a W-2 for compensation?
-salary
-FMV of stock received as a bonus
-bargain deal [(FMV of stock - option price) * # of shares)
To avoid a penalty for underpayment of estimated tax, what is the minimum amount of the tax that should be paid?
if AGI is less than $150k, the lesser of:
-90% of current year tax liability
-100% of the prior year tax liability
if AGI is greater than $150k, it’s 110% of the prior year’s tax liability
