7.Which of the following statements concerning tax credits is true?

None of these is a true statement.

Tax credits are generally more beneficial than tax deductions.

The tax benefit a taxpayer receives from a credit depends on the taxpayer's marginal tax rate.

Refundable tax credits are limited to a taxpayer's gross tax liability.

9.Harrison received a qualified dividend. Without knowing any additional facts, which of the following statements is true regarding the rate at which the dividend will be taxed to Harrison?

The entire dividend will be taxed at either 15% or the entire dividend will be taxed at 20% depending on Harrison's marginal ordinary income tax rate.

The dividend will be taxed at a 15% tax rate.

None of these.

The dividend will be taxed at a 20% tax rate. 10. What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?

The IRS will compute and assess the penalty

The taxpayer is immediately sent to the Tax Court

Nothing, unless the taxpayer is audited

The penalty is increased by five percentage points

11.During 2015, Montoya (age 15) received $2,200 from a corporate bond. He also received $600 interest from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

$2,200

$2,800

$0

$1,750

13. Why would a taxpayer file a tax return if not required to do so?

in order to claim the standard deduction

to claim a refund of taxes paid

to remain in favor with the IRS

all taxpayers are required to file returns

15. What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Federal short-term interest rate plus three percentage points.

Zero. The government does not pay interest on overpayments.

Federal long-term interest rate plus six percentage points.

Federal short-term interest rate.

16. if an employer withholds taxes from an employee, in general, when are these taxes treated as paid to the IRS?

As withheld

As the employee requests on his/her W-4 form

On April 15

Evenly throughout the year

19. The computation of the alternative minimum tax base begins with regular taxable income. Which of the following is not part of the formula for computing the alternative minimum tax base?

Add back tax exempt interest from a private activity bond not issued in 2009 or 2010

Subtract the AMT exemption amount (if any)

Subtract personal exemptions

Add the standard deduction amount if used for regular tax

20. Which of the following suggests that a working taxpayer is an independent contractor rather than an employee?

May realize a loss from business activities.

Works for more than one firm.

Sets own working hours.

All of these suggest independent contractor status.

Works somewhere other than on employer premises