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A payment to a nursing home for the care of a disabled, dependent parent qualifies as an “employment related” expense for the household and dependent care credit.

1. A payment to a nursing home for the care of a disabled,
dependent parent qualifies as an “employment related” expense for
the household and dependent care credit.
A) True
B) False
2. Payments made to dependent household members may be included in
the computation of dependent care expenses.
A) True
B) False
3. Transportation costs for a child between the taxpayer’s
household and the child care location are allowable child care
A) True
B) False
4. The credit for outside dependent care applies only to dependents
under 13 years of age.
A) True
B) False
5. The credit for the elderly applies only to individuals age 65 or
A) True
B) False
6. Foreign income taxes paid to a foreign country may be claimed as
a credit against United States income tax or deducted as an
itemized deduction.
A) True
B) False
7. Taxpayers may elect to carry forward unused general business
credit for 10 years rather than back one year and forward 20
A) True
B) False
8. The work opportunity credit is allowed for up to $2,400.
A) True
B) False
9. Although a work opportunity credit usually is available only for
qualified first-year wages, qualified second-year wages paid to a
long-term family recipient can qualify for the credit.
A) True
B) False
10. The deduction for foreign taxes is only allowed in the year in
which the foreign taxes are paid or incurred.
A) True
B) False
11. What is the amount of dependent care credit for a couple with
two children where they spend $5,000 for dependent care and the
husband earns $40,000 for the year and the wife earns $4,500?
A) $1,000
B) $990
C) $900
D) $0
E) None of the above
12. Joe College is married and attends State University for 12
months. Joe and his wife have two children. Mrs. College works to
help put Joe through school. The children, who are four and five
years old, are kept at Sleepy Time Day Care School. The Colleges
paid the school $4,600 this year to keep the children. The Colleges
had adjusted gross income of $10,000 this year, all of which was
earned by Mrs. College. What amount may the Colleges claim as a
child care credit?
A) $920
B) $480
C) $1,610
D) $1,200
E) None of the above
13. Mr. and Mrs. Gumball are both over age 65. They had income this
year consisting of $8,500 earned income and $1,500 in social
security benefits. What amount may they claim as a credit for the
elderly? They file a joint return.
A) $900
B) $1,165
C) $1,275
D) $0
E) None of the above
14. On July 10, 2007, Test Corporation purchased energy equipment
for $15,000. The equipment has a 5-year cost recovery period. The
corporation took the appropriate investment credit for 2007. On
August 15, 2011, the corporation sold the asset for $10,000. What
is the amount of investment credit recapture that is due to the
A) $300
B) $900
C) $1,000
D) $1,500
E) None of the above
15. What is the earned income credit allowed Don Andersen assuming
he has adjusted gross income of $8,500 and earned income of $5,000?
He maintains a household for his daughter.
A) $2,890
B) $3,094
C) $1,700
D) $0
16. Ron Ryder worked for both Boilerworks and Diemakers during the
year. His total wages from Boilerworks were $49,000. His total
wages from Diemakers were $20,000. Ron’s wife worked for
Stenographers during the year and earned total wages of $28,000.
What amount can Ron and his wife claim as a credit against their
income tax for the year because of excess social security tax
withheld if they file a joint return?
A) $290

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