tax exam final 2
CHAPTER 4
David and Lilly Fernandez have determined their tax liability on their joint tax return to be $1,740. They have made prepayments of $1,100 and also have a child tax credit of $1,000. What is the amount of their tax refund or taxes due?
(1)Total tax$1,740
(2)Child tax credit1,000
(3)Prepayments1,100
Tax refund $(360) Explanation:
David and Lilly will receive a tax refund of $360 calculated as follows: Tax refund = $1,740 − $1,100 − $1,000 = −$360
Prepayments are fully refundable when payments exceed the taxes after credits because the refundable amount is essentially an overpayment of taxes.
2.
Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income causing the joint return year 2 tax liability to be understated by $9,000 and Crewella’s year 3 separate return tax liability to be understated by $6,950. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank - be certain to enter "0" wherever required.)
a.
What amount of tax can the IRS require Jasper to pay for the Dahvill’s year 2 joint return?
b.
What amount of tax can the IRS require Jasper to pay for Crewella’s year 3 separate tax return?
Explanation:
a.
Because Jasper is jointly and severally liable for the year 2 return, he is responsible to pay the entire $9,000.
b.
Because they filed separately in year 3, Jasper is not responsible for any of the
David and Lilly Fernandez have determined their tax liability on their joint tax return to be $1,740. They have made prepayments of $1,100 and also have a child tax credit of $1,000. What is the amount of their tax refund or taxes due?
(1)Total tax$1,740
(2)Child tax credit1,000
(3)Prepayments1,100
Tax refund $(360) Explanation:
David and Lilly will receive a tax refund of $360 calculated as follows: Tax refund = $1,740 − $1,100 − $1,000 = −$360
Prepayments are fully refundable when payments exceed the taxes after credits because the refundable amount is essentially an overpayment of taxes.
2.
Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income causing the joint return year 2 tax liability to be understated by $9,000 and Crewella’s year 3 separate return tax liability to be understated by $6,950. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank - be certain to enter "0" wherever required.)
a.
What amount of tax can the IRS require Jasper to pay for the Dahvill’s year 2 joint return?
b.
What amount of tax can the IRS require Jasper to pay for Crewella’s year 3 separate tax return?
Explanation:
a.
Because Jasper is jointly and severally liable for the year 2 return, he is responsible to pay the entire $9,000.
b.
Because they filed separately in year 3, Jasper is not responsible for any of the