Chapter 8

Question 1

true/false
the tax rate schedules and tax tables are set up to tax higher levels of income at higher tax rates than lower levels of income

Answer 1

true

Question 2

true/false
capital gains are always taxed at a higher rate than ordinary income

Answer 2

false

Question 3

The AOTC applies to:

Answer 3

qualifying education expenses for the first four years of postsecondary education

Question 4

capital gains is taxed at ____ for a single taxpayer with income up to $44,625

Answer 4

0%

Question 5

the child tax credit is ______ per QC and _____ per QD

Answer 5

$2,500
$500

Question 6

for the child tax credit, a QC has to be ______ at YE and a QD has to be _______ at YE

Answer 6

under 17
17 or older

Question 7

formula for excess AGI in child tax credit

Answer 7

[(AGI - 200,000)/1,000]50
subtracted from the CTC before phase-out
*400,000 if MFJ

Question 8

order in which tax credits are applied

Answer 8

nonrefundable, business, refundable

Question 9

is it refundable?
child tax credit

Answer 9

partially

Question 10

is it refundable?
child and dependent care credit

Answer 10

no

Question 11

is it refundable?
earned income credit

Answer 11

yes

Question 12

is it refundable?
AOTC

Answer 12

partially (40%)

Question 13

is it refundable?
Lifetime Learning Credit

Answer 13

no

Question 14

how much is the child and dependent care credit?

Answer 14

20% to 35% of childcare expenses, depending on AGI

Question 15

which tax credits phase out based on AGI?

Answer 15

child tax credit
AOTC
lifetime learning credit

Question 16

qualifications for the EIC

Answer 16

must have earned income AND must have a QC, or be between 25 and 65

Question 17

the child and dependent care credit is for:

Answer 17

children under 13 or those permanently disabled

Question 18

qualifications to claim the child and dependent care credit:

Answer 18

must work (earned income) or be a full-time student

Question 19

AOTC maximum

Answer 19

$2,500 per year

Question 20

formula to find LLC

Answer 20

20% of up to $10,000 qualifying expenses

Question 21

formula to find AOTC

Answer 21

100% of first $2,000 qualified expenses + 25% in excess, up to $2,500

Question 22

when are taxpayers required to file a return?

Answer 22

when their gross income exceeds their standard deduction