Income Tax Chapter

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Chapter 07
Individual Income Tax Computation and Tax Credits

True / False Questions 1.
Both the width (or range) of the tax brackets (the amount of income taxed at a particular rate) in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate) vary by filing status. True False 2.
The tax rate schedules are set up to tax lower levels of income at higher tax rates than higher levels of income. True False 3.
Tax rate schedules are provided for use by (relatively) higher income taxpayers while the tax tables are provided for use by (relatively) lower income taxpayers. True False 4.
If a married couple has one primary
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Employees are not allowed to deduct FICA taxes they pay. True False 29.
Employees are allowed to deduct a portion of the FICA taxes they pay. True False 30.
Katlyn reported $300 of net income from her sole proprietorship. She is not required to pay self-employment tax. True False 31.
All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight. True False 32.
Tax credits reduce a taxpayer's taxable income dollar for dollar. True False 33.
The child tax credit is subject to phase-out based on the taxpayer's AGI. True False 34.
Parents may claim a child tax credit for a dependent child who is 22 years of age at the end of the year if the child is a full-time student. True False 35.
Parents may claim a child and dependent care credit for expenses incurred in providing for their dependents while the parents work as long as the children are over age 14 and under age 20 at year end. True False 36.
John and Sally pay Janet (Sally's older sister) to watch John and Sally's child Dexter during the day. Janet cares for Dexter in her home. John and Sally may claim a child and dependent care credit based on the amount they pay Janet to care for Dexter. True False 37.
The child and dependent care credit entitles qualifying taxpayers to a credit equal to the full amount of

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