Question

A. Tony purchased a house in 2018 and received a mortgage credit certificate (MCC) issued by the local government. The original amount of the mortgage is $150,000, the certified indebtedness amount on the MCC is $100,000, and the mortgage interest paid during the year is $6,500. Determine the interest paid on the certified indebtedness amount. a) $9,750 b) $6,500 c) $4,333 d) $2,167

B. In 2018, Jason and Ester, a married couple, were employed all year. They each worked for only one employer for the entire year. Jason paid Social Security taxes in the amount of $4,373, and Ester paid $8,588.80. What is the amount of their excess SST which they can claim as a credit on Schedule 5 (Form 1040), line 72? a) $ 628.00 b) $5,001.00 c) $ 0.00 d) $ 702.40

C. Tom and Darla are married and have three children, ages 5, 11, and 18 years old. Their modified AGI is $68,000, and their tax liability on Form 1040, line 11 is $4,902. They claim $510 of child and dependent care credit and $1,200 of education credits on Schedule 3 (Form 1040), lines 49 and 50. What is the amount of their child tax credit/credit for other dependents? a) $2,290 b) $4,500 c) $3,192 d) $2,790

D. Aria and Logan Johnson have two children, Sara, age 2, and Mia, age 4. Logan is an engineer and Aria is a homemaker. The Johnsons paid $8,800 for Sara and Mia to attend daycare during the year. Logan received dependent care benefits from his employer of $2,000. Their AGI is $65,000, and their tax liability is $4,542. How much of the childcare expenses can be used to claim the child and dependent care credit? a) $6,800 b) $4,000 c) $6,000 d)$ 0

Answer 1

1. option c) $ 4,333

Total mortgage amount = $ 1,50,000

Total amount of certified indebtedness = $ 1,00,000

Total mortgage interest paid = $ 6,500

So, interest paid on certified indebtedness = $ 6,500 X 1,00,000/ 1,50,000 = $ 4,333

2) option c) $ 0.00

Married couple filed separately, can't claim any excess SST paid. Married couple filed jointly also can't claim the excess amount of SST, they only ask their company to refund the surplus of SST.

3) option d) $ 2,790

child tax credit up-to $ 2,000 per child under age 17

Education credit up-to $ 500 per child age between 17- 18.

So the child tax credit for other child = [$2,000 X 2] + $ 500 - $ 510 - $ 1,200 = $ 2,790

4) option b) $ 4,000

Maximum child care expenses he will be allowed to claim for two children amounted to $ 6,000. Employer provided child care benefits $ 2,000. So, final child care expenses can be used to claim the child and dependent care credit is $ 6,000 - $ 2,000 = $ 4,000.