Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 6, Problem 10P
To determine
Concept Introduction:
Unearned Income: Unearned income is an income that arises from other sources or investments that are not related to employment. The dividend, stock, and interest from a bank account are examples of unearned income.
To explain: The ways of reporting the tax on unearned income on minor children
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In connection with the application of the kiddie tax, comment on the following.
A. The child has only earned income .
B. The child has a modest amount of unearned income.
C. The child is age 20, is not a student, and is not disabled.
D. The child is married
E. Effect of the parental election.
F. The result when the parental election is made and the married parents file separate returns.
From the following list of tax credits, which credits help to reduce the tax liability on a
taxpayer's taxable income?
1. Personal tax credit
2. Earned income credit
3. Child savers credit
4. Student loan interest credit
1, 2, and 3.
2 and 3.
2, 3, and 4.
1, 2, 3, and 4.
You pay personal taxes on your calculated _________________ income.
Group of answer choices
A.marginal
B.taxable
C.adjusted gross
D. gross
Chapter 6 Solutions
Income Tax Fundamentals 2020
Ch. 6 - E Corporation is a subchapter S corporation owned...Ch. 6 - Income and loss from which of the following...Ch. 6 - Which of the following entities is likely to have...Ch. 6 - Which of the following is an acceptable method of...Ch. 6 - Which of the following entities is required to...Ch. 6 - Prob. 6MCQCh. 6 - B Corporation, a calendar year-end, accrual basis...Ch. 6 - Prob. 8MCQCh. 6 - Prob. 9MCQCh. 6 - Prob. 10MCQ
Ch. 6 - Prob. 11MCQCh. 6 - Prob. 12MCQCh. 6 - For 2019, Roberta is a self-employed truck driver...Ch. 6 - Prob. 14MCQCh. 6 - Prob. 15MCQCh. 6 - Which of the following employees would not be...Ch. 6 - Prob. 17MCQCh. 6 - Prob. 18MCQCh. 6 - Prob. 19MCQCh. 6 - Christine and Doug are married. In 2019, Christine...Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Geraldine is an accrual basis taxpayer who has the...Ch. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - Refer to the previous problem 8. If Stan's parents...Ch. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Otto and Monica are married taxpayers who file a...Ch. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Sally hires a maid to work in her home for $280...Ch. 6 - Prob. 18PCh. 6 - Rachel is single and has wages of $150,000 and...Ch. 6 - Married taxpayers Otto and Ruth are both...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Refer to the previous problem 8. If Stan's parents elected to report Stan's income on his parents' return, what would the tax on Stan's income be?arrow_forwardIn connection with the application of the kiddie tax, comment on the following: The child has only earned income. The child has a modest amount of unearned income. The child is age 20, is not a student, and is not disabled. The child is married. Effect of the parental election. The result is when the parental election is made and the married parents file separate returns. show answers with explanationarrow_forwardWhen determining earnings subject to SE tax, the taxpayer may want to use one of the optional methods whether if they have a small net profit or loss and which of the following conditions applies A. They are eligible to receive the Additional Child Tax Credit B. They can claim a Credit for Dependent or Child Care Expenses C. Taxpayer wants to receive a Credit for Social Security Benefit Coverage D. All of the abovearrow_forward
- How is the unearned income of children treated for tax purposes? Can parents include the children’s earned (salaries and wages) income on their own returnarrow_forwardDescribe each of the various tax credits: Child Tax Credit, Earned Income Credit (EIC), Child and Dependent Care Credit, Premium Tax Credit, American Opportunity Credit, Lifetime Learning Credit, Foreign Tax Credit, and the Adoption Credit. For each of the tax credits listed above, are there limitations, such as those on filing status, ages of children, and income levels? Can they be used for the taxpayer, spouse, and/or dependents? Are there specific criteria used to determine if a taxpayer qualifies for the credit?arrow_forwardBasic community tax is an example of _______ while income tax is a kind of _______.arrow_forward
- What are allowable deductions against gross income for purposes of computing regular income tax? Business expenses Family support Personal expenses by the taxpayer Expenses of employmentarrow_forwardGary and Wendy are married and file a joint tax return claiming their seven children, ages 7,9, 11, 13, 15, 17 and 19, as dependents. They pay Susan Smith $20,000 per year to care for their children after school and provide some house cleaning (you can ignore household employment taxes). Information for 2020 includes the following (cut & past table into Excel): ZOOM AGI including earned and unearned income 490,000 Gary's earned income 415,000 Wendy's earned income 55,000 Federal income taxes (all paid in 2020) State and local income taxes (all paid in 2020) Real estate property taxes Home mortgage interest Charitable contributions 108,000 25,000 8,900 14,200 7,900 Pay Susan Smith for childcare 20,000 (You can ignore any possible additional medicare tax and net investment income tax.) Starting with AGI, show each step of the tax formula and calculate taxable income, tax (before credits), child tax credit, child & dependent care credit, total tax credits, total tax (after credits), tax…arrow_forwardWhich of the following statements is false regarding the earned income credit (EIC)? Multiple Choice If certain requirements are met, a taxpayer may receive advance payments of EIC. Maximum amount of the credit depends on the earned income and number of children. A taxpayer without children cannot claim the credit. The credit is refundable.arrow_forward
- explain in detail regarding the following topics 1. Define the tax Filing Statuses 2. Innocent Spouse VS. Injured Spouse 3. Medical and Dental Expenses (Include Limitations)arrow_forwardWhat would be the marginal and average tax rates for a married couple with taxable income of $89,600? For an unmarried taxpayer with the same income? Use Table 3.7. (Do not round intermediate calculations. Enter the marginal tax rate as a percent rounded to 1 decimal place. Enter the average tax rate as a percent rounded to 1 decimal place.) a. What would be the marginal tax rate for a married couple with income of $89,600? Marginal tax rate for a married couple b. What would be the average tax rate for a married couple with income of $89,600? Average tax rate for a married couple % Marginal tax rate for an unmarried taxpayer c. What would be the marginal tax rate for an unmarried taxpayer with income of $89,600? % Average tax rate for an unmarried taxpayer % d. What would be the average tax rate for an unmarried taxpayer with income of $89,600? %arrow_forward5. What type of tax goes to help pay for medical care of people over 65 years old? a. Income tax b. Property tax c. Sales Tax d. Social Security tax e. Medicare tax 6. What type of tax takes a percentage of the money you make on a job? a. Income tax b. Property tax c. Sales Tax d. Social Security tax e. Medicare tax 7. What type of tax goes to help pay for retirement? a. Income tax b. Property tax c. Sales Tax d. Social Security tax e. Medicare tax 8. True or False: Businesses don't have to pay any taxes in the United States. a. TRUE b. FALSE 9. According to the article, where does the United States rank worldwide in highest income taxes? a. 1st b. 7th c. 25th d. 100th e. 150th 10. What is the name of the agency that collects taxes in the United States? a. Secret Service b. Federal Bureau of Investigation c. Internal Revenue Service d. Department of Energy e. Department of the Interiorarrow_forward
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