Questions from Federal Taxation

Q: Is the earned income credit a form of negative income tax?

Is the earned income credit a form of negative income tax? Why or why not?

Q: Barbara incurred the following expenses during 2021: $840 dues at

Barbara incurred the following expenses during 2021: $840 dues at a health club she joined at the suggestion of her physician to improve her general physical condition, $240 for multiple vitamins and...

Q: The IRS provides a web-based tool to help taxpayers determine

The IRS provides a web-based tool to help taxpayers determine whether they are eligible for the earned income tax credit. Locate the EITC Assistant at the IRS website. Then apply the facts related to...

Q: Kathy, a sole proprietor, owns and operates a grocery store

Kathy, a sole proprietor, owns and operates a grocery store. Kathy’s husband and her 16-year-old daughter work in the business and are paid wages. Will the husband and daughter be subject to FICA? Exp...

Q: Describe the exposure (i.e., wage base and tax

Describe the exposure (i.e., wage base and tax rate) of a self-employed individual to the self employment tax for 2021.

Q: During 2021, Lincoln Company hires seven individuals who are certified to

During 2021, Lincoln Company hires seven individuals who are certified to be members of a qualifying targeted group. Each employee works in excess of 600 hours and is paid wages of $7,500 during the y...

Q: Alison incurs the following research expenditures. In-house wages

Alison incurs the following research expenditures. In-house wages …………………………..$60,000 In-house supplies …………………………….5,000 Payment to ABC, Inc., for research …..80,000 a. Determine the amount of qualif...

Q: Samuel and Annamaria are married, file a joint return, and

Samuel and Annamaria are married, file a joint return, and have three qualifying children. In 2021, they earn wages of $34,000 and no other income. Determine the amount of their earned income credit f...

Q: Jesse, an engineer, operates a separate business that he acquired

Jesse, an engineer, operates a separate business that he acquired eight years ago. If he participates 85 hours in the business and it incurs a loss of $34,000, under what circumstances can Jesse claim...

Q: Derek, a cash basis, unmarried taxpayer, had $610

Derek, a cash basis, unmarried taxpayer, had $610 of state income tax withheld during 2021. Also in 2021, Derek paid $50 that was due when he filed his 2020 state income tax return and made estimated...