Multiple Choice Questions
1. Which of the following expenses are qualifying expenses for purposes of the education credits?
a. Books (purchased at the institution as a condition of enrollment).
b. Tuition.
c. Room and Board.
d. Both (a) and (b).
2. Which of the following conditions must be met for a taxpayer to be able to claim the foreign tax credit (FTC) without filing Form 1116?
a. All of the foreign-source income is passive income.
b. All of the foreign-source income was reported on Form 1099.
c. Total foreign taxes paid were less than $300 (or $600 if married filing jointly).
d. All of the above must be met to claim the FTC without Form 1116.
3. Joyce has $83,000 total worldwide income, which includes $11,000 of taxable income from China. She paid $2,200 in foreign income taxes to China, and her U.S. tax liability is $21,610. Joyce’s foreign tax credit is:
a. $0.
b. $2,200.
c. $2,864.
d. $11,000.
4. Michael paid $3,350 in foreign income taxes to Argentina. His total worldwide income was $75,000, which included $9,800 of income from Argentina. His U.S. tax liability is $18,750. How much can Michael claim as a foreign tax credit?
a. $2,450.
b. $2,800.
c. $3,350.
d. $9,800.
5. Under which of the following situations would a taxpayer most likely take the foreign taxes paid as an itemized deduction rather than as a foreign tax credit?
a. The foreign tax paid was less than 15%.
b. The foreign tax paid was to a European country.
c. The foreign tax paid was a property tax.
d. The foreign tax paid was a tax on dividend income.
6. Justin and Janet, whose AGI is $156,000, have twin boys, Jake and Jaime, age 5. How much child tax credit can they take?
a. $0.
b. $1,000.
c. $2,000.
d. $2,300.
7. Julian is a single father with a son, Alex, who is 8 years old. If Julian’s AGI is $87,000, what is his child tax credit for Alex?
a. $0.
b. $400.
c. $600.
d. $1,000.