Part 5 - California Tax Credits

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Please study California 540A/540 Booklet . Study this publication completely before you do the assignment.

1. You paid $5,100 in child care, you are single and earned $28,000 for the entire year, and you have one qualifying child. What is your child and dependent care expenses credit for tax year 2008?

A. $840    
B. $420
C. $1,428
D. $714
 

2. I want to file my return and have no tax liability.  If I claim the child and dependent care expenses credit, would I still get a refund for California based on my Child and dependent Care expenses credit?

A. Yes, tax liability can be zero, and you can still qualify because for California credit is refundable
B. No, the amount of credit is limited to the amount of tax liability and is non-refundable
C. No, even if you have tax, the child and dependent care credit would not cancel it and thus there is no reason to claim it
D. No, California does not have a Child and Dependent Care Expenses Credit

 

3. Juan and Maria Escobedo are married and keep up a home for their two pre-school children. In tax year 2008, they claimed their children as dependents. Juan earned $25,200 and Maria earned $8,200. They paid $5,900 in work related child care expenses. What is their credit?

A. $1,475
B. $737.50
C. $1,711
D. $738
 

4. To claim the Child and Dependent Care Expenses Credit for California, you must complete and attach to your California tax return the following:

A. Federal Form 2441 or Schedule 2.
B. FTB Form 3506
C. Federal Form 3102 or Schedule 3
D. Federal Form 2106 or Schedule C

 

5. In tax year 2008, if your gross income is $45,000 and your federal child and dependent care expenses credit amount was $480, then your California Credit is

A. $206
B. $-0-
C. $240
D. $163

 

6. For Federal the child and dependent care expenses credit is a non-refundable credit and for California the credit is

A. Not allowed
B. Amount of credit if is always greater than Federal credit
C. The same as federal
D. A refundable credit

 

7. What is the percentage of the federal Child and Dependent Expenses Care credit that is allowed for California for taxpayers who earned more than $100,000 in 2008?

A. 42%
B. 50%
C. 63%
D. 0%

 

8. In tax year 2008, to qualify for the California child and dependent care expenses credit, your federal adjusted gross income must be less than

A. $40,000
B. $70,000
C. $100,000
D. $15,000
 

9. In tax year 2008, if you are head of household and you would like to qualify for renter's credit, you would not qualify if your income is over what amount?

A. $34,936
B. $69,872
C. $66,544
D. $100,000

 

10. If for more than half of the year, you lived in the home of a parent, foster parent, or legal guardian in 2008 whom can claim you as a dependent

A. You do not qualify for the renter's credit.
B. You prepare a renter's qualification record and divide the credit accordingly.
C. You qualify to claim the credit because everyone in the household qualifies as long as you pay at least $1.00 of rent.
D. Since you are a dependent, you still qualify for $30 of renter's credit.

 

11. The non-refundable renter's credit qualification record must be kept with your records; therefore, you should not mail it.

True False
 

12. To qualify for Renter's credit, you must have paid rent for at least 6 months of the tax year and your principal residence must have been in California.

True False
 

13. If your filing status was married filing separate, you cannot claim the California renter's credit.

True False
 

14. If a single employer withheld California State Disability Insurance (SDI) from your wages at more than 0.8% of your gross wages,

A. Contact the employer for refund
B. Claim excess SDI on your Form 540/540A
C. Contact the state of California for a refund
D. You cannot get a refund because once W2 is filed it is too late. 
 

15. You may be entitled to claim a credit for excess SDI on Form 540/540A if

A. You had two or more employers during 2008.
B. You received more than $86,698 in wages
C. The amounts of SDI withheld appear on your forms W2.
D. All of the above

 

16. For California you claim the child and dependent care expenses credit on form

A. FTB 3506
B. FTB 3808
C. FTB 2441
D. FTB 2

 

17. For purposes of claiming the California Child and Dependent Care Expenses Credit, if your child turns age 13 during the year

A. The child is not a qualifying person because he has to have been under age 13 at the end of the year.
B. The child's age does not matter as long as he is your dependent.
C. The child is a qualifying person for the part of the year he or she was under 12 years old.
D. The child is not a qualifying child because the child has to be in pre-school.

 

18. In tax year 2008, my wife did not work all year because she was not able to care for herself for the entire year. I worked and earned $21,000. We have one qualifying child for the Child and Dependent care credit. We paid $2,000 for child care. How much credit can we qualify for?

A. $620
B. $310
C. $1,000
D. $744
 

19. You are single and only paid rent for one month in 2008. You qualify to claim the renter's credit.

True False

20. If there are no differences between your federal and California income or deductions, do not file a Schedule CA(540).

True False

21. What are the 2008 exemption amounts for California?

A. Personal $99.
B. Dependent $309.
C. Personal $3,692.
D. Both A and B are correct.
 

22. Who is a qualifying individual for the Child and Dependent Care Credit?

A. A dependent of the taxpayer under 13 years of age
B. A dependent of the taxpayer who is physically or mentally unable to care for him or herself.
C. Spouse of the taxpayer who is physically or mentally unable to care for him or herself.
D. Any of the above

23. One of the requirements to qualify to claim the Child and Dependent Care Credit for California is that

A. You paid for care so you (and your spouse/RDP) could work or look for work.
B. Your qualifying child is over 13 years of age just as long as he or she is not over 19.
C. Your adjusted gross income must be more than $100,000 for 2008.
D. You have no earned income for 2008.

24. If military personnel are not legal residents of California they do not qualify for the renter's credit.

True False

25. You qualify for the Nonrefundable Renter's Credit if you rented a property for more than half the year that was exempt from California property tax in 2008.

True False

26. Laura was 17 years of age in 2008. She lived with her parents and under their care in 2008. Laura can claim the Nonrefundable Renter's Credit for 2008.

True False

27. You may be entitled to claim a credit for excess SDI (or VPDI) only if

A. You had two or more employers during 2008.
B. You received more than $86,698 in wages.
C. The amounts of SDI (or VPDI) withheld appear on your Forms W-2.
D. All of the above.

28. The 2008 SDI (or VPDI) limit is

A. $100,000
B. $693.58
C. $86,698
D. 0.8%

29. The Nonrefundable Renter's Credit is $60 for individual taxpayers a (single or married filing a separate return) with an adjusted gross income of $34,936.00 or less and $120 for married couples (married filing jointly, head of household, or qualified widow (er)) with an adjusted gross income of $69,872.00 or less.

True False

30.  Attach a doctor's statement to the back of Form 540/540A indicating your or your spouse/RDP are visually impaired every time you file a tax return to claim the blind exemption credit.

True False

31. If you had no federal filing requirement, use the same filing status for California you would have used to file a federal income tax return. RDPs who file single for federal must file

32. To claim an exemption credit for each of your dependents, enter each dependent's name and relationship to you in the space provided. If there is not enough space

A. You don't need to name your dependents, just multiply the number of dependent exemptions.
B. Only include dependents that fit in the space provided.
C. Attach a separate sheet of paper to include all dependents.
D. None of the above.

33. For your California return you need to adjust your federal itemized miscellaneous deductions if you had

A. Gambling losses
B. Medical and Dental Expenses
C. Mortgage Interest Expenses
D. Contributions to Church

34. For your California return, you may need to adjust your itemized miscellaneous deductions if you have

A. A federal Mortgage Interest Credit
B. An investment interest expense deduction
C. Employee Business Expenses
D. Any of the above

35. California partially conforms to the Federal Mortgage Forgiveness Debt Relief Act of 2007 (P.L. 110-142) for the 2007 and 2008 tax years. California limits the amount of qualified principal residence indebtedness to

A. $800,000 ($400,000 Married/RDP filing separately).
B. $2,000,000 ($1,000,000 Married/RDP filing separately).
C. $250,000 ($125,000 Married/RDP filing separately).
D. $100,000 ($50,000 Married/RDP filing separately).

36. Servicemembers domiciled outside of California, and their spouses/RDPs, may exclude the servicemember's military compensation from gross income when computing the tax rate on nonmilitary income.

True False

37. The amount you can claim as a deduction for exemptions is phased out once your adjusted gross income (AGI) goes above a certain level for your filing status. For example, Estevan is a single man, age 39, who has two dependents. His dependents don't qualify him for the head of household filing status. Estevan's adjusted gross income is $167,000 for tax year 2008. What is the amount Estevan will enter on form 540/540A, line 21 as a deduction for his exemptions? 

A. $ 717.
B. $ 10,303.
C. $ 681.
D. $ 1,275.

38. The amount you can claim as a deduction for exemptions is phased out once your adjusted gross income (AGI) goes above a certain level for your filing status. For example, Cecilia is a single woman, age 32, who has three dependents. Her dependents don't qualify her for the head of household filing status. Cecilia's adjusted gross income is $182,000 for tax year 2008. What is the amount Cecilia will enter on form 540/540A, line 21 as a deduction for her exemptions? 

A. $ 927.
B. $ 834.
C. $ 1,026.
D. $ -0-.

39. Treat a prior unsuccessful attempt to adopt a child (even when the costs were incurred in a prior year) an a later successful adoption of a different child as one effort when computing the cost of adopting the child. Include the following cost if directly related to the adoption process:

A. Fees for Department of Social Services or a licensed adoption agency.
B. Medical expenses not reimbursed by insurance.
C. Travel expenses for the adoptive family.
D. Any of the above.

40. You may NOT claim the credit for Dependent Parent if you used the single, head of household, qualifying widow(er), or married/RDP filing jointly filing status. You can claim this credit only if

A. You were married/ or an RDP at the end of 2008 and you used the married/RDP filing separately filing status.
B. Your spouse/RDP was not a member of your household during the last six months of the year.
C. You furnished over one-half the household expenses for your dependent mother's or father's home, whether or not she or he lived in your home.
D. All of the above.