Ch. 7 Tax Credits Latest Exam Questions
And Already Passed Answers.
What is the purpose of Earned Income Credit(EIC)? - Answer It is meant to help struggling tax payers
with earned income and AGI below a certain level.
How many rules are there for a person to qualify for EIC, and must all the rules be met or just the
majority? - Answer All 7 of the rules must be met to qualify for EIC.
Do married individuals filing separately qualify for EIC? - Answer Married individuals filing separately
do not qualify for EIC.
What is the income limit on investments for qualifying EIC individuals? - Answer Investment income
must not be greater than 3,600 to qualify for EIC
List the 7 rules that all taxpayers must meet in order to claim the EIC. - Answer 1. AGI limit is met
2. Valid SSN
3. If Married, must file jointly
4. U.S. citizenship or resident alien status
5. No Foreign income
6. Investment income is less than 3,600
7. Must have some kind of earned income. For self employed tax payers, must meet the separate income
limit and income should be reported in schedule SE
, If a tax payer with no child meets all of the 7 requirements, is he then now qualified? - Answer Nope.
Tax payers with no qualifying child must also meet 4 more rules.
What are the additional rules for taxpayers who meet the previous 7 rules, but Do NOT have a qualifying
child? - Answer 1. You must be at least 25 yrs old but less than 65 for singles. If married then only 1
person must be 25yrs old.
2. You cannot be a claimed dependent.
3. You cannot be a qualified child to another person.
4. You must have lived in the U.S. for more than half of the tax year.
What are the additional rules for tax payers who meet the previous 7 rules, DO have a qualifying child? -
Answer 1. The child must pass the qualifying child test two exceptions:
a. Child does not need to meet support test.
b. The child must live in a U.S. home for more than half of the year.
2. Qualifying child cannot be claimed by more than one person.
3. The tax payer applying for EIC cannot be a qualifying child of another tax payer.
Diane is a single taxpayer who qualifies for the earned income credit. Diane has two qualifying children
who are 3 and 5 years old. During 2019, Diane's wages are $18,900 and she receives dividend income of
$900. Calculate Diane's earned income credit using the EIC table in Appendix B - Answer Earned
Income Credit = 5,661
Net income = 18,900 + 900 = 19,800
19,800 on Appendix B with 2 qualifying children = 5,661
And Already Passed Answers.
What is the purpose of Earned Income Credit(EIC)? - Answer It is meant to help struggling tax payers
with earned income and AGI below a certain level.
How many rules are there for a person to qualify for EIC, and must all the rules be met or just the
majority? - Answer All 7 of the rules must be met to qualify for EIC.
Do married individuals filing separately qualify for EIC? - Answer Married individuals filing separately
do not qualify for EIC.
What is the income limit on investments for qualifying EIC individuals? - Answer Investment income
must not be greater than 3,600 to qualify for EIC
List the 7 rules that all taxpayers must meet in order to claim the EIC. - Answer 1. AGI limit is met
2. Valid SSN
3. If Married, must file jointly
4. U.S. citizenship or resident alien status
5. No Foreign income
6. Investment income is less than 3,600
7. Must have some kind of earned income. For self employed tax payers, must meet the separate income
limit and income should be reported in schedule SE
, If a tax payer with no child meets all of the 7 requirements, is he then now qualified? - Answer Nope.
Tax payers with no qualifying child must also meet 4 more rules.
What are the additional rules for taxpayers who meet the previous 7 rules, but Do NOT have a qualifying
child? - Answer 1. You must be at least 25 yrs old but less than 65 for singles. If married then only 1
person must be 25yrs old.
2. You cannot be a claimed dependent.
3. You cannot be a qualified child to another person.
4. You must have lived in the U.S. for more than half of the tax year.
What are the additional rules for tax payers who meet the previous 7 rules, DO have a qualifying child? -
Answer 1. The child must pass the qualifying child test two exceptions:
a. Child does not need to meet support test.
b. The child must live in a U.S. home for more than half of the year.
2. Qualifying child cannot be claimed by more than one person.
3. The tax payer applying for EIC cannot be a qualifying child of another tax payer.
Diane is a single taxpayer who qualifies for the earned income credit. Diane has two qualifying children
who are 3 and 5 years old. During 2019, Diane's wages are $18,900 and she receives dividend income of
$900. Calculate Diane's earned income credit using the EIC table in Appendix B - Answer Earned
Income Credit = 5,661
Net income = 18,900 + 900 = 19,800
19,800 on Appendix B with 2 qualifying children = 5,661
