Chapter 6 discssions - They have enough foreign income from...

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2. How does the earned income credit produce a "negative" income tax? 9. Mary and John are married and have AGI of $100,000 and two young children.  John doesn't work, and they pay  $6,000 a year to day care providers so he can shop, clean, and read a little bit in peace.  How much child and  dependent care credit can Mary and John claim?  Why? 12. What is the reason there are education tax credits in the tax law: They are placed here to help the low and middle income individuals defray for the cost of higher learning.  The reason  they are a tax law is due to the fact that it helps the parents and students to offset part of the college expense, and  may get a maximum annual credit of $2,500 per student. 16. Martha and Lew are married taxpayers with $400 of foresight tax withholding from dividends in a mutual fund.  
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Unformatted text preview: They have enough foreign income from the mutual fund to claim the full $400 as a foreign tax credit. Their tax bracket is 25 percent and the itemize deductions. Should they claim the foreign tax credit or a deduction for foreign taxes on their Schedule A? Why? 22. Please list two common deductions which are allowed for regular tax purposes but are not deductible for alternative minimum tax (AMT) purposes. The standard deduction is allowed for regular tax but is not allowed for AMT Stated income tax refunds are not considered income for AMT since the state income tax deduction is not allowed for AMT Gain of asset sales such as rental real estate Personal and dependency exemptions are not allowed as deductions for AMT...
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Chapter 6 discssions - They have enough foreign income from...

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