Question

In: Accounting

The benefits of many deductions, credits, or other benefits are limited to taxpayers with Adjusted Gross...

The benefits of many deductions, credits, or other benefits are limited to taxpayers with Adjusted Gross Income below certain limits.

Required:

a. Select statements from the below that explains how the limitation (phaseout) process works.

  • Taxpayers with AGI in excess of certain specified amounts can utilize the full amount of many deductions, credits, or other tax benefits.

  • Taxpayers with AGI less than certain specified amounts can utilize the full amount of many deductions, credits, or other tax benefits.

  • Taxpayers with AGI less than certain specified amounts are prohibited from utilizing the full amount of many deductions, credits, or other tax benefits.

  • Taxpayers with AGI in excess of certain specified amounts can fully utilize deductions, but not credits, or other tax benefits.

b. Select examples of deductions, credits, or other benefits that are limited from the given list. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answers and double click the box with the question mark to empty the box for a wrong answers. Any boxes left with a question mark will be automatically graded as incorrect.)

  • Earned income tax credit
  • Alimony credit
  • Self employed tax deduction
  • Child care credit
  • Child tax credit
  • IRA deductions
  • Dividend income deductions

Solutions

Expert Solution

a)Tax Payers with AGI less than certain specified amounts can utilize the full amount of many deductions,credits or other tax benefits.

Explanation:There is specific income range that the U.S. Internal Revenue Service (IRS) uses to determine what tax payers may be eligible for a specific tax credit.Under the phase out process there is a gradual reduction of the tax benefits that a tax payer is eligible for as their income approaches the upper limit to qualify for that credit.A tax payer with an income at the lowest end of the range may be eligible for the maximum amount of the tax credit whereas a tax payer whose income falls on the highest end is eligible for the minimum amount.When a tax payer income exceeds the upper limit they may become ineligible for the tax benefits.

b)Examples of deductions,credits or other benefits that are limited from the given list are given below:

Earned Income Tax Credit

Child Care Credit

Child Tax credit

IRA deductions


Related Solutions

The Wall Street Journal reported that of taxpayers with adjusted gross incomes between and itemized deductions...
The Wall Street Journal reported that of taxpayers with adjusted gross incomes between and itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was . Assume that the standard deviation is . Use z-table. a. What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within of the population mean for each of the following sample sizes: , ,...
The Wall Street Journal reported that of taxpayers with adjusted gross incomes between and itemized deductions...
The Wall Street Journal reported that of taxpayers with adjusted gross incomes between and itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was . Assume that the standard deviation is . Use z-table. a. What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within of the population mean for each of the following sample sizes: , ,...
The Wall Street Journal reported that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return
The Wall Street Journal reported that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was $17,190. Assume that the standard deviation is σ = $2,603. Use z-table. a. What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within $166 of the population mean for each of the...
The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return.
  The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was $16,642. Assume the standard deviation is σ = $2,400. (a) What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within $200 of the population mean for each of the following...
Data are given below on the adjusted gross income x and the amount of itemized deductions...
Data are given below on the adjusted gross income x and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation  = 4.68 + .16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52.5 thousand is $13.08 thousand. Adjusted Gross Income ($1000s) Reasonable Amount of Itemized Deductions ($1000s) 22 9.6 27 9.6 32 10.1 48 11.1 65 13.5 85...
Mark and Patricia report adjusted gross income of $410,000 and itemized deductions of $31,000 for the...
Mark and Patricia report adjusted gross income of $410,000 and itemized deductions of $31,000 for the interest on their home acquisition mortgage (principal amount of $890,000 acquired in 2015), $14,000 in state and local taxes, and $38,000 in charitable contributions. They file a joint income tax return and have four dependent children under age 16. What is their taxable income for 2019 and allowable tax credits?
Data are given below on the adjusted gross income x and the amount of itemized deductions...
Data are given below on the adjusted gross income x and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation  = 4.68 + .16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52.5 thousand is $13.08 thousand. Adjusted Gross Income ($1000s) Reasonable Amount of Itemized Deductions ($1000s) 22 9.6 27 9.6 32 10.1 48 11.1 65 13.5 85...
Data are given below on the adjusted gross income x and the amount of itemized deductions...
Data are given below on the adjusted gross income x and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation  = 4.68 + .16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52.5 thousand is $13.08 thousand. Adjusted Gross Income ($1000s) Reasonable Amount of Itemized Deductions ($1000s) 22 9.6 27 9.6 32 10.1 48 11.1 65 13.5 85...
Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions. Explain and illustrate...
Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions. Explain and illustrate what this statement means.
The Wall Street Journal reported that 33% of taxpayers with adjusted gross incomes between $30,000 and...
The Wall Street Journal reported that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was $15,071. Assume that the standard deviation is 82,790. Use 2-table. a. What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within $200 of the population mean for each of the following sample...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT