2026/2027 Individual Tax Credits Practice
Exam: 100 MCQ with Explanations | CPA,
EA & University Tax Preparation
Description:
Master 2026/2027 tax credits with 100 exam-style MCQ covering Child & Dependent Care,
AOTC, Child Tax Credit, EIC, Saver's Credit & more. Full answer key with expert
explanations. Updated for OBBBA 2025 & IRS Notice 2025-67.
Download now and pass with confidence!
, 2026/2027 Tax Credits Exam: 100 MCQ Practice Test
Instructions
This examination consists of forty-five multiple-choice questions covering various individual tax
credits and deductions. Select the best answer for each question. Each question is worth one
point.
SECTION A: CREDIT FOR CHILD AND DEPENDENT CARE EXPENSES
Question 1
The maximum amount of qualifying dependent care expenses that can be used to calculate the
child and dependent care credit is $3,000 for one qualifying individual.
A) True
B) False
Answer: A) True
Explanation: For tax year 2026, the maximum eligible expenses for the child and dependent
care credit are $3,000 for one qualifying individual and $6,000 for two or more qualifying
individuals. These limits have remained unchanged since the Tax Cuts and Jobs Act of 2017.
Question 2
Tuan and Marisa are married, file a joint return, and have two dependent children, Zack (age 6)
and Aaron (age 5). Tuan has earned income of $72,000. Marisa was a full-time student for nine
months with no income. They paid a qualified day care center $5,000. What is the amount of
their child and dependent care credit for the year?
A) $600
B) $900
,C) $1,000
D) $1,200
Answer: B) $900
Explanation: Since Marisa was a full-time student for nine months, she is treated as having
earned income of $250 per month for one qualifying individual or $500 per month for two or
more qualifying individuals. For two children, her deemed earned income is $4,500 ($500 × 9
months). The credit is calculated using the lower of actual expenses ($5,000) or the earned
income limit ($4,500 for Marisa, but Tuan's income is higher). The maximum allowable expense
is $6,000 for two children, but limited to the lower earned income of $4,500. With an AGI of
$72,000, the applicable credit percentage is 20%, resulting in a credit of $900 ($4,500 × 20%).
Question 3
Dane is a single father with two dependent children, Elle (age 7) and Eva (age 5). He has AGI of
$61,000 and paid $6,100 to a qualified day care center for the two children. What amount of
child and dependent care credit can Dane receive this year?
A) $600
B) $1,000
C) $1,200
D) $1,220
Answer: C) $1,200
Explanation: The maximum qualifying expenses for two children are $6,000. With an AGI of
$61,000, the applicable credit percentage is 20% (the phaseout begins at $15,000 AGI and
reduces to 20% at $43,000 AGI and above). Therefore, the credit is $6,000 × 20% = $1,200. The
actual expenses of $6,100 exceed the limit, so the credit is based on the $6,000 maximum.
, Question 4
Guillermo and Felicia are married, file a joint return, and have one dependent child, Hannah (age
6). Guillermo has earned income of $38,000. Felicia was a full-time student for eight months
with no income. They paid a qualified day care center $4,800. What is the amount of their child
and dependent care credit for the year?
A) $0
B) $460
C) $600
D) $4,800
Answer: B) $460
Explanation: Felicia, as a full-time student for eight months, is deemed to have earned income
of $250 per month for one qualifying individual, totaling $2,000 ($250 × 8 months). The
maximum qualifying expense for one child is $3,000, but the credit is limited to Felicia's deemed
earned income of $2,000. With an AGI of $38,000, the applicable credit percentage is 23%. The
credit is $2,000 × 23% = $460.
Question 5
Which of the following statements is true with regard to the child and dependent care expense
credit?
A) The maximum amount of expenses for one dependent is 35% of all qualified expenses
B) Married taxpayers may file separate returns and still qualify for the credit
C) If a spouse is attending school full-time, the credit cannot be claimed
D) The credit phases out completely if the taxpayer's AGI exceeds certain amounts
Answer: B) Married taxpayers may file separate returns and still qualify for the credit
Explanation: Married taxpayers filing separately may qualify for the child and dependent care
credit only if they are legally separated or living apart for the entire year. The credit is calculated
Exam: 100 MCQ with Explanations | CPA,
EA & University Tax Preparation
Description:
Master 2026/2027 tax credits with 100 exam-style MCQ covering Child & Dependent Care,
AOTC, Child Tax Credit, EIC, Saver's Credit & more. Full answer key with expert
explanations. Updated for OBBBA 2025 & IRS Notice 2025-67.
Download now and pass with confidence!
, 2026/2027 Tax Credits Exam: 100 MCQ Practice Test
Instructions
This examination consists of forty-five multiple-choice questions covering various individual tax
credits and deductions. Select the best answer for each question. Each question is worth one
point.
SECTION A: CREDIT FOR CHILD AND DEPENDENT CARE EXPENSES
Question 1
The maximum amount of qualifying dependent care expenses that can be used to calculate the
child and dependent care credit is $3,000 for one qualifying individual.
A) True
B) False
Answer: A) True
Explanation: For tax year 2026, the maximum eligible expenses for the child and dependent
care credit are $3,000 for one qualifying individual and $6,000 for two or more qualifying
individuals. These limits have remained unchanged since the Tax Cuts and Jobs Act of 2017.
Question 2
Tuan and Marisa are married, file a joint return, and have two dependent children, Zack (age 6)
and Aaron (age 5). Tuan has earned income of $72,000. Marisa was a full-time student for nine
months with no income. They paid a qualified day care center $5,000. What is the amount of
their child and dependent care credit for the year?
A) $600
B) $900
,C) $1,000
D) $1,200
Answer: B) $900
Explanation: Since Marisa was a full-time student for nine months, she is treated as having
earned income of $250 per month for one qualifying individual or $500 per month for two or
more qualifying individuals. For two children, her deemed earned income is $4,500 ($500 × 9
months). The credit is calculated using the lower of actual expenses ($5,000) or the earned
income limit ($4,500 for Marisa, but Tuan's income is higher). The maximum allowable expense
is $6,000 for two children, but limited to the lower earned income of $4,500. With an AGI of
$72,000, the applicable credit percentage is 20%, resulting in a credit of $900 ($4,500 × 20%).
Question 3
Dane is a single father with two dependent children, Elle (age 7) and Eva (age 5). He has AGI of
$61,000 and paid $6,100 to a qualified day care center for the two children. What amount of
child and dependent care credit can Dane receive this year?
A) $600
B) $1,000
C) $1,200
D) $1,220
Answer: C) $1,200
Explanation: The maximum qualifying expenses for two children are $6,000. With an AGI of
$61,000, the applicable credit percentage is 20% (the phaseout begins at $15,000 AGI and
reduces to 20% at $43,000 AGI and above). Therefore, the credit is $6,000 × 20% = $1,200. The
actual expenses of $6,100 exceed the limit, so the credit is based on the $6,000 maximum.
, Question 4
Guillermo and Felicia are married, file a joint return, and have one dependent child, Hannah (age
6). Guillermo has earned income of $38,000. Felicia was a full-time student for eight months
with no income. They paid a qualified day care center $4,800. What is the amount of their child
and dependent care credit for the year?
A) $0
B) $460
C) $600
D) $4,800
Answer: B) $460
Explanation: Felicia, as a full-time student for eight months, is deemed to have earned income
of $250 per month for one qualifying individual, totaling $2,000 ($250 × 8 months). The
maximum qualifying expense for one child is $3,000, but the credit is limited to Felicia's deemed
earned income of $2,000. With an AGI of $38,000, the applicable credit percentage is 23%. The
credit is $2,000 × 23% = $460.
Question 5
Which of the following statements is true with regard to the child and dependent care expense
credit?
A) The maximum amount of expenses for one dependent is 35% of all qualified expenses
B) Married taxpayers may file separate returns and still qualify for the credit
C) If a spouse is attending school full-time, the credit cannot be claimed
D) The credit phases out completely if the taxpayer's AGI exceeds certain amounts
Answer: B) Married taxpayers may file separate returns and still qualify for the credit
Explanation: Married taxpayers filing separately may qualify for the child and dependent care
credit only if they are legally separated or living apart for the entire year. The credit is calculated
