Question & Answer

In 2024, Laureen is currently single.  She paid $2,800 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,800 each for a total of $5,600).  Sheri and Meri qualify as Laureen’s dependents.  Laureen also paid $1,900 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University.  Finally, Laureen paid $1,200 for herself to attend seminars at a community college to help her improve her job skills.  What is the maximum amount of education credits Laureen can claim for these expenditures in each of the following alternative scenarios? 

a.  Laureen’s AGI is $45,000.    

In 2024, Elaine paid $2,800 of tuition and $600 for books for her dependent son to attend State University this past fall as a freshman.  Elaine files a joint return with her husband.  What is the maximum American opportunity tax credit Elaine can claim for the tuition payment and books in each of the following alternative situations?

a.  Elaine’s AGI is $80,000.

Julie paid a day care center to watch her two-year-old son this year while she worked as a computer programmer for a local start-up company.  What amount of child and dependent care credit can Julie claim in 2024 in each of the following alternative scenarios?

a.  Julie paid $2,000 to the day care center and her AGI is $50,000 (all salary).

Trey has two dependents, his two daughters, ages 14 and 18, at year-end.  Trey files a joint return with his spouse.  What amount of child tax credit (either as child or a qualifying dependent) will Trey be able to claim in 2024 for his daughters in each of the following alternative situations?

a. His AGI is $100,000.

Terry Hutchison worked as a self-employed lawyer until two years ago, when he retired.  He used the cash method of accounting in his business for tax purposes.  Five years ago, Terry represented his client ABC Corporation in an antitrust lawsuit against XYZ Corporation.  During that year, Terry paid self-employment taxes on all of his income.  ABC won the lawsuit, but Terry and ABC could not agree on the amount of his earnings.  Finally, this year, the issue got resolved and ABC paid Terry $90,000 for the services he provided five years ago.  Terry plans to include the payment in his gross income, but because he spends most of his time playing golf and absolutely no time working on legal matters, he does not intend to pay self-employment taxes on the income.  Is Terry subject to self-employment taxes on this income?

Eva received $60,000 in compensation payments from JAZZ Corp. during 2024.  Eva incurred $5,000 in business expenses relating to her work for JAZZ Corp.  JAZZ did not reimburse Eva for any of these expenses.  Eva is single and deducts a standard deduction of $14,600.  Based on these facts, answer the following questions:

a. Assume that Eva is considered to be an employee.  What amount of FICA taxes is she required to pay for the year?

Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2024.  During that time, he earned $44,000 of self-employment income.  On April 1, 2024, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc.  From April through the end of the year, Kyle earned $178,000 in salary.  What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year?  

Alice is single and self-employed in 2024.  Her net business profit on her Schedule C for the year is $190,000.  What are her self-employment tax liability and additional Medicare tax liability for 2024? 

Rasheed works for Company A, earning $350,000 in salary during 2024.  Assuming he is single and has no other sources of income, what amount of FICA tax will Rasheed pay for the year? 

Brooke, a single taxpayer, works for Company A for all of 2024, earning a salary of $50,000.  

a. What is her FICA tax obligation for the year? 

Henrich is a single taxpayer. In 2024, his taxable income is $530,000.  What are his income tax and net investment income tax liability in each of the following alternative scenarios?

In 2024, Deon and NeNe are married filing jointly.  Deon and NeNe’s taxable income is $1,390,000 (all ordinary), and they itemize their deductions as follows: real property taxes of $10,000, charitable contributions of $30,000, and mortgage interest expense of $40,000 ($700,000 acquisition debt for home).  What is Deon and NeNe’s AMT? Complete Form 6251 for Deon and NeNe.

In 2024, Janet and Ray are married filing jointly. They have five dependent children under 18 years of age. Janet and Ray’s taxable income (all ordinary) is $2,400,000 and they itemize their deductions as follows: state income taxes of $10,000 and mortgage interest expense of $25,000 (acquisition debt of $300,000).  What is Janet and Ray’s AMT? Complete Form 6251 for Janet and Ray. 

Steve’s tentative minimum tax (TMT) for 2024 is $245,000. What is his AMT if

a. His regular tax is $230,000?

In 2024, Juanita is married and files a joint tax return with her husband.  What is her tentative minimum tax in each of the following alternative circumstances?

Corbett’s AMTI is $650,000.  What is his AMT exemption under the following alternative circumstances? 

Olga is married and files a joint tax return with her husband.  What amount of AMT exemption may she deduct under each of the following alternative circumstances? 

a.  Her AMTI is $390,000.

In 2024, Sven is single and has $120,000 of regular taxable income.  He itemizes his deductions as follows: real property tax of $2,000, state income tax of $4,000, mortgage interest expense of $15,000 (acquisition debt of $300,000).  He also has a positive AMT depreciation adjustment of $500.  What is Sven’s alternative minimum taxable income (AMTI)? Complete Form 6251 (through line 4) for Sven.

} In 2024, Nadia is single and has $100,000 of regular taxable income.  She itemizes her deductions as follows: real property taxes of $1,500, state income taxes of $2,000, and mortgage interest expense of $10,000 (acquisition debt of $200,000).  In addition, she receives tax-exempt interest of $1,000 from a municipal bond (issued in 2006) that was used to fund a new business building for a (formerly) out-of-state employer. Finally, she received a state tax refund of $300 from the prior year.  

a. What is Nadia’s AMTI this year if she deducted $15,000 of itemized deductions last year (including a total of $4,000 of real property taxes and state income taxes) and did not owe any AMT last year? Complete Form 6251 (through line 4) for Nadia.

Sylvester files as a single taxpayer during 2024.  He itemizes deductions for regular tax purposes.  He paid charitable contributions of $7,000, real estate taxes of $1,000, state income taxes of $4,000, and mortgage interest of $2,000 on $30,000 of acquisition indebtedness on his home. Sylvester’s regular taxable income is $100,000. What is Sylvester’s AMTI?

Brooklyn files as a head of household for 2024.  They claimed the standard deduction of $21,900 for regular tax purposes.  Their regular taxable income was $80,000.  What is Brooklyn’s AMTI?

In 2024, Carson is claimed as a dependent on his parents’ tax return. His parents report taxable income of $200,000 (married filing jointly). Carson’s parents provided most of his support. What is Carson’s tax liability for the year in each of the following alternative circumstances?

In 2024, Sheryl is claimed as a dependent on her parents’ tax return.  Her parents report taxable income of $600,000 (married filing jointly). Sheryl did not provide more than half her own support.  What is Sheryl’s tax liability for the year in each of the following alternative circumstances?

Lacy is a single taxpayer. In 2024, her taxable income is $51,000.  What is her tax liability in each of the following alternative situations?

In 2024, Jasmine and Thomas, a married couple, had taxable income of $150,000.  If they were to file separate tax returns, Jasmine would have reported taxable income of $140,000 and Thomas would have reported taxable income of $10,000.  What is the couple’s marriage penalty or benefit?