Transcript CREDITS: EIC, CTC, Education & dependent care

EXERCISES
CTC and EIC
Exercise 1


Denise will file as Head of Household for 2009. She
has a modified AGI of $44,000. She has three
dependent qualifying children. Is she eligible for the
full $1,000 child tax credit?
True or False? A taxpayer's nonrefundable child tax
credit will be zero if the taxpayer has no tax
liability.
Exercise 2

Mary and Ralph got divorced in 2002. They have
one child together, Amy, who lives with Mary. All
are U.S. citizens and have SSNs. Mary and Ralph
provide more than half of Amy’s support. Mary’s
AGI is $31,000 and Ralph’s AGI is $39,000. Amy is
12 years old. The divorce decree does not state
who can claim the child. Mary signed Form 8332 to
give the dependency exemption to Ralph.
Exercise 2-options
a.
b.
c.
d.
Ralph can claim Amy as a dependent along with the tax
benefits.
Ralph and Mary need to choose who can claim Amy as a
dependent and any other tax benefits.
Ralph can claim Amy as a dependent and the child tax
credit. Mary can use Amy to file as Head of Household
and claim the earned income credit and the child and
dependent care credit as long as she meets the
requirements for those specific benefits.
Neither Ralph nor Mary can claim Amy as a dependent
or any of the other benefits.
Exercise 3

Stan files as Head of Household and has three
children who qualify for purposes of the child tax
credit. Stan's MAGI is $54,000 and his tax liability
is $4,680. Is Stan eligible to take the full credit of
$1,000 per child ($3,000)?
Exercise 4

Which of the following would prevent a taxpayer
from being eligible for the EIC?
a.
b.
c.
d.
Being married to a nonresident alien
Using the Head of Household filing status
Using the Married Filing Separately status
Filing a joint return with a spouse who does not
have a SSN
Exercise 5

For the purposes of EIC, which of the following
types of income are considered to be earned
income?
a.
b.
c.
d.
Alimony
Household employee income reported on Form W-2
Child support
Interest and dividends
Exercise 6

A taxpayer's earned income is only $7,000. He has
interest income of $3,200. He is single, has a valid
social security number and is not the qualifying child
of anyone else. Can he qualify for the EIC?
Exercise 7

Roger is single and has two qualifying children. His
earned income of $23,247 and his AGI of $26,928
are both within the limits for EIC eligibility. Before
deciding whether Roger can claim the EIC, you need
to check all of the following EXCEPT _____.
a.
b.
c.
Filing status
His two children have valid social security numbers
Roger's investment income
Exercise 8

Sharon has an eligible foster child, Eric, who is 12
years old and began living with Sharon in August of
the tax year. Sharon's earned income and her
adjusted gross income are each $14,275. Can
Sharon claim the earned income credit?
Exercise 9

The following children live with Mira, who takes
care of all of them as if they were her own. Which
child meets the EIC tests?
a.
b.
c.
d.
Ann, the 3-year-old daughter of Mira's cousin
Billy, the 10-year-old son of Mira's stepdaughter
Chez, Mira's newly adopted 2-year-old son from
Europe, who has lived with Mira since September
Dione, Mira's 20-year-old son, who attends
community college part time
Exercise 10

Three taxpayers have claimed the EIC for the same
child. One is the child's parent, another provided
the child's home for the longest period of time
during the tax year, and the third is a member of
the household who had the highest AGI. Which
taxpayer would be entitled to the credit?
a.
b.
c.
d.
The taxpayer the child lived with longest during the
tax year
The taxpayer with the highest AGI
The taxpayer with the lowest AGI
The parent
Exercise 11

Randy and Cara are U.S. citizens who were married
and lived together until August when they divorced.
They have two children, Jimmy, 7, and Anna, 5. The
children lived with both of their parents until August,
and then they lived with their mother after the divorce.
Randy's earned income and adjusted gross income are
$19,251. Cara's earned income is $14,751, and her
adjusted gross income is $15,362.For the purposes of
the EIC, Jimmy and Anna might be qualifying children
for _____.
a.
b.
c.
d.
Their mother, Cara
Their father, Randy
Either parent
Neither parent
Exercise 11-options

What are Randy and Cara's options?
a.
b.
c.
d.
One can claim the credit on the basis of both
children
Each can claim the credit on the basis of a different
child
Either of the above
Both parents can claim the credit for both children
Exercise 12

Benjamin, age 26, lives alone, is single, and earns
$10,250. His adjusted gross income is $10,950.
Can Benjamin claim the earned income credit?
Exercise 13

Larry and Lucille are married and live together. Their
combined earned income is $22,222. Larry reports
adjusted gross income of $10,728 on his separate tax
return, and Lucille reports adjusted gross income of
$11,514 on her separate return. Peter, their 4-year-old
son, lives with them. Can Larry and/or Lucille claim the
earned income credit?
a.
b.
c.
Yes, either Larry or Lucy can claim the EIC
Yes, Larry and Lucy can both claim the EIC
No, neither Larry nor Lucy can claim the EIC
Exercise 14

Antonio has $23,050 in earned income and his
adjusted gross income is $23,175. His filing status is
single. Antonio's 20-year-old daughter, Maria, lived
with him for eight months of the year. Maria is not
married and is a full-time college student. Can
Antonio claim the earned income credit?