FEDERAL TAXES

Your client is a 10 year old child with $5,600 worth of investment income. Which of the following is an option for this child's 2021 tax return? Pay tax at the same rate as for estates and trusts Pay tax at her parent's marginal tax rate Use the standard deduction to wipe out any tax on the $5,600 Either Borc Which of the following taxpayers would qualify for Earned Income Credit for tax year 2021, assuming that all other EIC qualifications are met? Review Married Filing Separately taxpayer, with a qualifying child, who lived apart from her spouse for the last month of 2021 Head of Household taxpayer, with a qualifying child, who lived apart from his spouse for the last 9 months of 2021 Married Filing Separately taxpayer, with a qualifying child, who lived apart from her spouse for the last two days of 2021 All of the above Page 5 of 15 A taxpayer gives his daughter $100,000 in 2021, to buy her first home. Which of the following is a consequence of that gift? The giver's estate tax exclusion will be reduced by $85,000 The recipient will have to pay income tax on $85,000 The recipient must file Form 709, Gift Tax Return The giver must pay income tax on $85,000 on his 2021 tax return Your clients are a Married Filing Jointly couple. Neither spouse is an active participant in any other retirement plan than their Roth IRAs. Can both of them contribute $6,000 to a Roth IRA for tax year 2021? Yes, as long as MAGI is below $198,000 Yes, as long as MAGI is below $207,999 Yes No Page 10 of 15 Your clients are a Married Filing Jointly couple. Neither spouse is an active participant in any other retirement plan than their Traditional IRAs. Can both of them contribute $6,000 to a Traditional IRA for tax year 2021? Yes, as long as MAGI is below $105.001 Yes, as long as MAGI is below $124.999 Yes No Which of the following is a true statement about the SEP IRA contribution for tax year 2021? Maximum is $58,000 for all taxpayers Maximum is 25% of compensation Maximum is $58,000 or 25% of compensation, whichever is less Maximum is 25% of taxable income