Care Credit and Tax Credits to Reduce Tax Liability Problems Questions Complete the following. In these problems, apply your knowledge of the variety of ta
Care Credit and Tax Credits to Reduce Tax Liability Problems Questions Complete the following. In these problems, apply your knowledge of the variety of tax credits designed to reduce a taxpayer’s tax liability.
Problem 47, on page 9-49.
Problem 51, on page 9-50.
Problem 53, on page 9-51.
Problem 54, on page 9-51.
Problem 55, on page 9-51.
Problem 56, on page 9-52.
Problem 57, on page 9-52.
Problem 58, on page 9-52.
Problems Attached Problem 47:
Adrienne is a single mother with a 6-year-old daughter who lived with her during the entire year.
Adrienne paid $2,900 in child care expenses so that she would be able to work. Of this amount, $500
was paid to Adriennes mother, whom Adrienne cannot claim as a dependent. Adrienne had net
earnings of $1,900 from her jewelry business. In addition, she received child support payments of
$21,000 from her ex-husband. What amount, if any, of child and dependent care credit can Adrienne
claim?
Problem 51:
Walt and Deloris, who file a joint return, have two dependent children, Bill and Tiffany. Bill is a freshman
at State University, and Tiffany is working on her graduate degree. The couple paid qualified expenses of
$3,900 for Bill (who is a half-time student) and $7,800 for Tiffany. What are the amount and type of
education tax credits that Walt and Deloris can take, assuming they have no modified AGI limitation?
Problem 53:
In 2018, Jeremy and Celeste, who file a joint return, paid the following amounts for their daughter,
Alyssa, to attend the University of Colorado during academic year 20182019. Alyssa was in her first
year of college and attended full-time.
Tuition and fees (for fall semester 2018)
Tuition and fees (for spring semester 2019)
Books
Room and board
$1,950
1,000
600
1,200
The spring semester at the University of Colorado begins in January. In addition to the above, Alyssas
Uncle Devin sent $800 for her tuition directly to the university. Jeremy and Celeste have modified AGI of
$168,000. What is the amount of qualifying expenses for the purposes of the American opportunity tax
credit (AOTC) in tax year 2018? What is the amount of the AOTC that Jeremy and Celeste can claim
based on their AGI?
Problem 54:
Jenna paid foreign income tax of $1,326 on foreign income of $8,112. Her worldwide taxable income
was $91,400, and her U.S. tax liability was $23,000. What is the amount of the foreign tax credit (FTC)
allowed? What would be the allowed FTC if Jenna had paid foreign income tax of $2,400 instead?
Problem 55:
Determine the amount of the child tax credit in each of the following cases:
a. A single parent with modified AGI of $213,400 and one child.
b. A single parent with modified AGI of $77,058 and three children.
c. A married couple, filing jointly, with modified AGI of $407,933 and two children.
Problem 56:
Determine the retirement savings contributions credit in each of the following cases:
a. A married couple filing jointly with modified AGI of $37,500 and an IRA contribution of $1,600.
b. A married couple filing jointly with modified AGI of $58,000 and an IRA contribution of $1,500.
c. A head of household taxpayer with modified AGI of $33,000 and Roth IRA contribution of
$2,000.
d. A single taxpayer with modified AGI of $12,000 and an IRA contribution of $2,300.
Problem 57:
Niles and Marsha adopted an infant boy (a U.S. citizen). They paid $14,500 in 2017 for adoption-related
expenses. The adoption was finalized in early 2018. Marsha received $3,000 of employer-provided
adoption benefits. For question (a), assume that any adoption credit is not limited by modified AGI or by
the amount of tax liability.
a. What amount of adoption credit, if any, can Niles and Marsha take in 2018?
b. Using the information in question (a), assume that their modified AGI was $223,000 in 2018.
What amount of adoption credit is allowed in 2018?
Problem 58:
Determine the amount of the Earned Income Credit in each of the following cases. Assume that the
person or persons are eligible to take the credit. Calculate the credit using the formulas.
a. A single person with earned income of $7,554 and no qualifying children.
b. A single person with earned income of $22,500 and two qualifying children.
c. A married couple filing jointly with earned income of $34,190 and one qualifying child.
Problem 47:
Adrienne is a single mother with a 6-year-old daughter who lived with her during the entire year.
Adrienne paid $2,900 in child care expenses so that she would be able to work. Of this amount, $500
was paid to Adriennes mother, whom Adrienne cannot claim as a dependent. Adrienne had net
earnings of $1,900 from her jewelry business. In addition, she received child support payments of
$21,000 from her ex-husband. What amount, if any, of child and dependent care credit can Adrienne
claim?
Problem 51:
Walt and Deloris, who file a joint return, have two dependent children, Bill and Tiffany. Bill is a freshman
at State University, and Tiffany is working on her graduate degree. The couple paid qualified expenses of
$3,900 for Bill (who is a half-time student) and $7,800 for Tiffany. What are the amount and type of
education tax credits that Walt and Deloris can take, assuming they have no modified AGI limitation?
Problem 53:
In 2018, Jeremy and Celeste, who file a joint return, paid the following amounts for their daughter,
Alyssa, to attend the University of Colorado during academic year 20182019. Alyssa was in her first
year of college and attended full-time.
Tuition and fees (for fall semester 2018)
Tuition and fees (for spring semester 2019)
Books
Room and board
$1,950
1,000
600
1,200
The spring semester at the University of Colorado begins in January. In addition to the above, Alyssas
Uncle Devin sent $800 for her tuition directly to the university. Jeremy and Celeste have modified AGI of
$168,000. What is the amount of qualifying expenses for the purposes of the American opportunity tax
credit (AOTC) in tax year 2018? What is the amount of the AOTC that Jeremy and Celeste can claim
based on their AGI?
Problem 54:
Jenna paid foreign income tax of $1,326 on foreign income of $8,112. Her worldwide taxable income
was $91,400, and her U.S. tax liability was $23,000. What is the amount of the foreign tax credit (FTC)
allowed? What would be the allowed FTC if Jenna had paid foreign income tax of $2,400 instead?
Problem 55:
Determine the amount of the child tax credit in each of the following cases:
a. A single parent with modified AGI of $213,400 and one child.
b. A single parent with modified AGI of $77,058 and three children.
c. A married couple, filing jointly, with modified AGI of $407,933 and two children.
Problem 56:
Determine the retirement savings contributions credit in each of the following cases:
a. A married couple filing jointly with modified AGI of $37,500 and an IRA contribution of $1,600.
b. A married couple filing jointly with modified AGI of $58,000 and an IRA contribution of $1,500.
c. A head of household taxpayer with modified AGI of $33,000 and Roth IRA contribution of
$2,000.
d. A single taxpayer with modified AGI of $12,000 and an IRA contribution of $2,300.
Problem 57:
Niles and Marsha adopted an infant boy (a U.S. citizen). They paid $14,500 in 2017 for adoption-related
expenses. The adoption was finalized in early 2018. Marsha received $3,000 of employer-provided
adoption benefits. For question (a), assume that any adoption credit is not limited by modified AGI or by
the amount of tax liability.
a. What amount of adoption credit, if any, can Niles and Marsha take in 2018?
b. Using the information in question (a), assume that their modified AGI was $223,000 in 2018.
What amount of adoption credit is allowed in 2018?
Problem 58:
Determine the amount of the Earned Income Credit in each of the following cases. Assume that the
person or persons are eligible to take the credit. Calculate the credit using the formulas.
a. A single person with earned income of $7,554 and no qualifying children.
b. A single person with earned income of $22,500 and two qualifying children.
c. A married couple filing jointly with earned income of $34,190 and one qualifying child.
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