Multiple Choice Questions

1. Zunilda is a 77-year-old individual with an AGI of $25,000 in 2016. She began living in a nursing home in 2016 upon the recommendation of her primary care physician in order to receive medical care for a specific condition. She had the following unreimbursed expenses in 2016:

Expense Amount

Nursing home health care costs ........................$5,000

Nursing home meal and lodging costs ................. 8,000

Prescription drugs ........................................ 1,500

As a result of these unreimbursed expenses, how much may Zunilda deduct from AGI on her 2016 tax return? Assume Zunilda elects to itemize deductions.

a. $12,000

b. $4,000

c. $12,625

d. $4,625

2. Which of the following credits is not refundable?

a. Child Tax Credit

b. Child and Dependent Care Credit

c. American Opportunity Tax Credit

d. Earned Income Credit

3. Which of the following credits is refundable?

a. Child Tax Credit

b. Child and Dependent Care Credit

c. Lifetime Learning Credit

d. Foreign Tax Credit

4. Which of the following education-related expenses can be used to claim an education credit?

5. Michael and Kathy have one dependent, Dustin, who is in his third year of college. Additionally, Michael is taking classes in the evening towards an MBA. What credits can Michael and Kathy claim as to these amounts?
I. American Opportunity Tax Credit
II. Lifetime Learning Credit
a. I only
b. II only
c. I and II
d. I or II
6. Which of the following best describes the effect of a tax credit?
a. It reduces a person's gross income.
b. It reduces a person's adjusted gross income.
c. It reduces a person's taxable income.
d. It reduces a person's tax liability.

Transcribed Image Text:

Tuition Yes Yes Yes Yes Fees Room and Board Meals al. b. C. d. Yes CE Yes CE Yes CE Yes Yes Yes Yes No Yes No No