1. In 2016, Lisa and Fred, a married couple, have taxable income of $490,000. If they were to file separate tax returns, Lisa would have reported taxable income of $210,000 and Fred would have reported taxable income of $280,000.What is the couple's marriage penalty or benefit? USE 2016 TAX RATE SCHEDULE
2. Lacy is a single taxpayer. In 2016, her taxable income is $40,800. What is her tax liability in each of the following alternative situations?USE 2016 TAX RATE SCHEDULE
a. All of her income is salary from her employer.
b. Her $40,800 of taxable income includes $2,300 of qualified dividends.
c. Her $40,800 of taxable income includes $6,000 of qualified dividends.
3. In 2016, Carson is claimed as a dependent on his parent's tax return. His parents' ordinary income marginal tax rate is 28 percent. Carson's parents provided most of his support.
What is Carson's tax liability for the year in each of the following alternative circumstances?USE 2016 TAX RATE SCHEDULE
a. Carson is 17 years old at year-end and earned $12,150 from his summer job and part-time job after school. This was his only source of income
b. Carson is 23 years old at year-end. He is a full-time student and earned $12,150 from his summer internship and part-time job. He also received $6,900 of qualified dividend income.
4. Brooklyn files as a head of household for 2016 and claims a total of two exemptions (2 × $4,050 = $8,100). She claimed the standard deduction of $9,300 for regular tax purposes. Her regular taxable income was $86,250.What is Brooklyn's AMTI?
5. Sylvester files as a single taxpayer during 2016 and claims one personal exemption. He itemizes deductions for regular tax purposes. He paid charitable contributions of $7,700, real estate taxes of $1,100, state income taxes of $6,450, and interest on a home-equity loan of $2,900. Sylvester's regular taxable income is $132,000.
a. What is Sylvester's AMTI if he used the home-equity proceeds to purchase a car?
b. What is Sylvester's AMTI if he used the home-equity loan proceeds to build a new garage next to his home?
6. Olga is married and files a joint tax return with her husband.What amount of AMT exemption may she deduct under each of the following alternative circumstances? (Use 2016 AMT exemption amounts.) (Leave no answer blank. Enter zero if applicable.)
a. Her AMTI is $112,500
b. Her AMTI is $216,000
c. Her AMTI is $535,000
7. In 2016, Juanita is married and files a joint tax return with her husband. What is her tentative minimum tax in each of the following alternative circumstances? (Input all values as positive. Leave no answer blank. Enter zero if applicable.)
a. Her AMT base is $129,000, all ordinary income
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Description
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Amount
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(1)
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AMT base
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(2)
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Dividends taxed at preferential rate
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(3)
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Tax rate applicable to dividends
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15%
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(4)
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Tax on dividends
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(5)
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AMT base taxed at regular AMT rates
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(6)
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Tax on AMT base taxed at 26% rate
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(7)
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Tax on AMT base taxed at 28% rate
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Tentative minimum tax
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b. Her AMT base is $487,500, all ordinary income.
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Description
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Amount
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(1)
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AMT base
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(2)
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Dividends taxed at preferential rate
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(3)
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Tax rate applicable to dividends
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15%
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(4)
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Tax on dividends
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(5)
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AMT base taxed at regular AMT rates
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(6)
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Tax on AMT base taxed at 26% rate
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(7)
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Tax on AMT base taxed at 28% rate
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Tentative minimum tax
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c. Her AMT base is $129,000, which includes $21,200 of qualified dividends
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Description
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Amount
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(1)
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AMT base
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(2)
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Dividends taxed at preferential rate
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(3)
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Tax rate applicable to dividends
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15%
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(4)
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Tax on dividends
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(5)
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AMT base taxed at regular AMT rates
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(6)
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Tax on AMT base taxed at 26% rate
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(7)
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Tax on AMT base taxed at 28% rate
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Tentative minimum tax
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d. Her AMT base is $487,500, which includes $21,200 of qualified dividends
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Description
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Amount
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(1)
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AMT base
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|
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(2)
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Dividends taxed at preferential rate
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|
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(3)
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Tax rate applicable to dividends
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15%
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(4)
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Tax on dividends
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(5)
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AMT base taxed at regular AMT rates
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(6)
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Tax on AMT base taxed at 26% rate
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(7)
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Tax on AMT base taxed at 28% rate
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Tentative minimum tax
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8. Steve's tentative minimum tax (TMT) for 2016 is $23,900
a. What is his AMT if his regular tax is $17,300?
b. What is his AMT if his regular tax is $26,000?
9. Rasheed works for Company A, earning $395,000 in salary during 2016. Assuming he has no other sources of income, what amount of FICA tax will Rasheed pay for the year?
10. Kyle worked as a free-lance software engineer for the first three months of 2016. During that time, he earned $62,000 of self-employment income. On April 1, 2016, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc. From April through the end of the year, Kyle earned $172,000 in salary.What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year?
11. Trey claims a dependency exemption for both of his daughters, ages 14 and 17, at year-end. Trey files a joint return with his wife.What amount of child credit will Trey be able to claim for his daughters under each of the following alternative situations?
a. His AGI is $103,100.
b. His AGI is $120,200.
c. His AGI is $125,500, and his daughters are ages 10 and 12.
12. In 2016, Elaine paid $2,760 of tuition and $1,060 for books for her dependent son to attend State University this past fall as a freshman. Elaine files a joint return with her husband. What is the maximum American opportunity credit that Elaine can claim for the tuition payment and books in each of the following alternative situations?
a. Elaine's AGI is $92,750
b. Elaine's AGI is $164,500
c. Elaine's AGI is $211,000
13. This year Lloyd, a single taxpayer, estimates that his tax liability will be $11,200. Last year, his total tax liability was $15,800.He estimates that his tax withholding from his employer will be $8,560
a. How much does Lloyd need to increase his withholding by (for the year), in order to avoid the underpayment penalty?
b. Assuming Lloyd does not make any additional payments, what is the amount of his underpayment penalty? Assume the federal short-term rate is 5 percent