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Exam 13: Tax Credits and Payment Procedures

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Question 51

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Which of the following issues does not need resolution in an employer's effort to comply with employment tax payment requirements?

A) Ascertaining which employees and wages are covered by employment taxes and are subject to withholding for income taxes.
B) Arriving at the amount to be paid and/or withheld.
C) Reporting and paying employment taxes and income taxes withheld to the IRS on a timely basis through the use of proper forms.
D) Each of the above issues needs to be resolved.
E) None of the above is relevant to the employer.

F) B) and D)
G) B) and C)

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Question 52

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Any unused general business credit must be carried back 3 years and then forward for 20 years.

A) True
B) False

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Question 53

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A LIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

The education tax credits i.e., the American Opportunity credit and the lifetime learning credit) are available to help defray the cost of higher education regardless of the income level of the taxpayer.

During 2018, Barry who is single and has no children) earned a salary of $13,100. He is age 30. His earned income credit for the year is:

Discuss the treatment of unused general business credits.

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. Both children are subject to FICA withholding.

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.

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit, but also can be expensed in the year incurred.

Only self-employed individuals are required to make estimated tax payments.

If an employee holds two jobs during the year, an overwithholding of FICA tax always will result.

The credit for child and dependent care expenses is an example of a refundable credit.

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.

Qualified rehabilitation expenditures include the cost of acquiring the building, but not the cost of acquiring the land.

Qualifying tuition expenses paid from the proceeds of a tax-exempt scholarship do not give rise to an education tax credit.