Comprehensive Income Tax Course: Module 1
4. Randy turned 16 last year and had his first summer job. Even
though his parents are claiming
him as a dependent he wants to file a return in order to get his
refund. He receives his W-2
and decides he can do his own return using form 1040-EZ. Which of
the following information
is not found on a Form W-2?
a) The taxpayer’s Social Security number
b) The taxpayer’s wages, tips and other compensation
c) The taxpayer’s federal tax to be refunded
d) The taxpayer’s state wages
5. Clark has been a tax preparer for many years and has completed
countless tax returns. Which
of the following is an exception to the most commonly used filing
forms to report income and
deductions to the IRS?
a) 1040NR
b) 1040EZ
c) 1040A
d) 1040
6. Janet is unsure of her correct filing status. Which of the
following is listed incorrectly as a
filing status available on the federal tax return?
a) Single
b) Married filing Head of Household
c) Married Filing Jointly
d) Head of Household
7. Don had very low income last year and asks whether he even needs
to file. Which of the
following is an exception to the filing requirements table that
would require filing with lower
income?
a) Self-employment income in excess of $400
b) A dependent over age 19 who has earned income in the amount of
$3,950
c) Wages of less than $108.28 from a church or qualified controlled
organization that is
exempt from employer Social Security or Medicare taxes
d) A dependent with unearned income of $500
8. Henry turned 65 on January 1. Jane, Henry’s wife, turned 65 the
day before Henry. What is
their filing requirement for tax year 2014?
a) $20,300
b) $21,500
c) $22,700
d) $23,600
9. Jack understated a client’s tax liability this year. Jack will
face a penalty, as a paid preparer,
for intentional understatement of a taxpayer’s tax liability due to
an unreasonable position.
What is the penalty?
a) $500 per return
b) $50 per return up to $25,000 per year
c) $250 per return
d) Greater of $1,000 or 50% of the income derived per return
10. Mary's husband, Bob, died March 12, 2014. She married Richard
on December 15, 2014.
What would Bob’s filing status be?
a) Single
b) Married Filing Jointly
c) Married Filing Separately
d) Head of Household
11. Bob died March 12, 2013, leaving Mary with a two-year old son.
What would Mary's filing
status be for tax year 2014 if she does not remarry?
a) Married Filing Jointly
b) Married Filing Separately
c) Head of Household
d) Qualifying Widow(er) with Dependent Child
12. Bob died March 12, 2013. If in tax year 2016, Mary still does
not remarry what would be her
filing status? (Mary still has a dependent child living with
her.)
a) Single
b) Married Filing Jointly
c) Married Filing Separately
d) Head of Household
13. Jack, who is a paid preparer, understated a client’s tax
liability this year. What is the paid
preparer penalty for intentional disregard for IRS rules resulting
in understatement of
taxpayer’s tax liability?
a) $50 per return up to $25,000 per year
b) $5,000 per return up to $25,000 per year
c) $1,000 per return
d) Greater of $5,000 or 50%of the income derived per return
14. Mr. and Mrs. Collins are having marital problems and
temporarily separated in May 2014.
Their two young children are living with Mrs. Collins. They’re
uncertain what filing status they
should use. When would a taxpayer be considered unmarried and able
to file as Head of
Household?
a) He is married and living with his spouse as husband and
wife.
b) He is living with his spouse in a common law marriage that is
recognized in the state where
he now lives, or in the state where the common law marriage
began.
c) He is married and living apart from his spouse, but not legally
separated under a decree
of divorce or separate maintenance.
d) Spouse did not live in the home at all during the last six
months of the year, has a qualifying
child and is otherwise eligible to file as Head of Household.
15. Review the following scenarios. Which scenario is matched to
the incorrect form?
a) Married taxpayers with income of less than $17,000 filing Form
1040EZ
b) A Single person who itemizes his deductions on Schedule A and
files Form 1040
c) A married couple with interest and/or dividends less than $1,500
and child care credit.
The taxpayer has taxable income of $67,850 and files form
1040A.
d) A married filing separate taxpayer with a taxable income of
$102,000 filing Form 1040EZ
16. Mr. Simpson died on September 26th. Who is responsible for
filing his final return?
a) His mother
b) His attorney
c) His personal representative
d) His ex-wife
17. Allen is the executor of his mother’s estate. What additional
form should be filed with his
mother’s personal return to claim a refund?
a) No additional form is needed because Allen is the personal
representative.
b) Form 1310
c) No one is eligible to claim a refund for a decedent.
d) Form 1041
18. Mr. and Mrs. Kelly separated in October. Mrs. Kelly had no
income during the year. She
resides in the couple’s house and Mr. Kelly continues to pay all
expenses for the household.
Mrs. Kelly has decided that she does not want to file a joint
return with Mr. Kelly. The couple
has no dependent children. Which of the following statements is
true in regard to their
situation?
a) Mr. Kelly can file a joint return without Mrs. Kelly’s
consent.
b) Mr. Kelly must file a Married Filing Separate return. He may
claim Mrs. Kelly’s exemption
without her consent.
c) Mr. Kelly must file a Married Filing Separately return. He may
claim Mrs. Kelly as a
dependent only if she consents.
d) Mr. Kelly must file as Single, and he may not claim Mrs. Kelly
as an exemption.
19. The Browns filed as Married Filing Jointly and claim four
dependents. Which of the following
would a Married Filing Jointly taxpayer not be able to claim as a
dependency exemption?
a) A qualifying child
b) A qualifying foster child
c) A parent
d) A spouse
20. If any of the Browns’ four dependents is a qualifying relative
there are requirements which
must be satisfied. Which of the following is an invalid requirement
that must be satisfied to
claim an exemption for a qualifying relative?
a) Member of household or relationship test
b) Support test
c) Gross income test
d) Age test
21. Clark, the veteran preparer, knows there are several types of
Taxpayer Identification Numbers
(TIN). Which of the following is an invalid Taxpayer Identification
Number that can be used
on Form 1040A?
a) Social Security Number (SSN)
b) Employer Identification Number (EIN)
c) Individual Taxpayer Identification Number (ITIN)
d) Adoption Taxpayer Identification Number (ATIN)
22. Calvin Olsen and his siblings provided support for their mother
all year. Based on the following
information, who is eligible to claim their mother’s exemption
using the multiple support
agreement?
Calvin provided $4,000 for support
Calvin’s brother Jerome provided $1,250 for support
Calvin’s sister Alice provided $1,250 for support
Calvin’s sister Betsy provided $3,000 for support
Calvin’s sister Nancy provided $3,500 for support
a) Calvin, Betsy, or Nancy
b) Calvin only
c) Calvin or Nancy
d) Calvin and his siblings should decide who claims the
exemption
23. The Smiths are separated and must determine who may claim their
son Todd as a dependent.
Which of the following conditions does not need to be true in order
for a divorced or separated
parent to satisfy the dependency residency test for a child?
a) The parents are divorced or legally separated under a decree of
divorce or separate
maintenance agreement or, separated under a written separation
agreement, or lived
apart at all times during the last 6 months of the calendar
year.
b) The parents provided more than half of the child’s total support
for the calendar year.
c) One or both parents had custody of the child for more than half
of the calendar year.
d) The child chooses which parent to live with.
24. Henry and Ethel Morris have an AGI of $219,800. The couple is
filing MFJ and they claimed
four exemptions. What is their exemption deduction for 2014?
a) $15,800
b) $15,600
c) $16,800
d) $14,800
25. Bill’s wife just had twins and he wants his federal withholding
changed on his paycheck. What
form should be used to determine federal withholding
exemptions?
a) 1040
b) 1040V
c) W-2
d) W-4
26. Bill, the new father of twins, asks his tax preparer to change
his federal withholding. His tax
preparer tells him he cannot do this. Who is responsible for
determining the taxpayer’s
withholding allowance?
a) The taxpayer
b) The employer
c) The IRS
d) The Social Security Administration
27. Bill’s tax preparer explains to Bill how to go about changing
his federal withholding. Where or
with whom should Form W-4 be filed?
a) The taxpayer’s employer
b) The Internal Revenue Service
c) The Social Security Administration
d) The Department of Labor
28. Bill’s tax preparer also explains to Bill whether or not he
should review his W-4 information.
How often should the Form W-4 be evaluated?
a) It is not necessary to evaluate the W-4 after it is initially
completed for new employment.
b) Annually, or as often as the taxpayer’s situation changes
c) Only in the case of birth of a dependent
d) Only when the taxpayer’s marital status changes
29. Harry is single with a full-time job as well as a part-time job
for extra money. What should a
single taxpayer with two jobs do about withholding and
exemptions?
a) Claim the same number of withholdings at both places of
employment
b) Complete a separate set of Form W-4 worksheets for each place of
employment
c) Complete only one set of Form W-4 worksheets for all places of
employment and divide
the exemptions between the two jobs
d) Decide how many exemption allowances he wants to claim for each
place of employment
30. Last year Bob was refunded all federal withholding because he
had no tax liability. He has
determined he should be exempt from withholding because he isn’t
expecting to have tax
liability again this year. What should a taxpayer do if he
determines that he is exempt from
withholding?
a) Write “Exempt” on line 7 of Form W-4
b) Write “Exempt” at the top of Form W-4
c) Write “Exempt” at the top of Form 1040EZ, 1040A, or 1040
d) Write “Exempt” on the withholding line of Form 1040EZ, 1040A, or
1040
31. In order for Bob to continue to claim to be exempt, when is it
necessary for him to complete a
new Form W-4?
a) Only if his situation changes
b) No later than February 15 each year
c) No later than December 1 each year
d) No later than January 1 each year
32. Tim will receive his first pension distribution this year. He’s
concerned whether or not this
distribution is taxable. Which of the following type of pension and
annuity distributions would
be exempt from having taxes withheld?
a) Traditional individual retirement arrangement (IRA)
b) A life insurance company under an endowment, annuity, or life
insurance contract
c) A pension, annuity, or profit-sharing plan, a stock bonus
plan
d) A Roth IRA distribution
33. On August 14, Olaf was involved in an electrical accident which
left him with partial vision in
only one eye. Olaf's ophthalmologist has prescribed a contact lens
to correct the vision in one
eye. However, due to pain Olaf can only wear the contact lens for a
few hours each day.
Olaf's vision is not expected to improve beyond the present
condition. Is Olaf entitled to the
higher standard deduction for blindness?
a) No, Olaf must be totally blind in both eyes to be eligible for
the higher standard deduction.
b) No, Olaf is not entitled to the higher standard deduction
because his vision is correctable
with a contact lens.
c) Yes, Olaf is entitled to the higher standard deduction because
he can only wear the
contact lens briefly.
d) Yes, Olaf is entitled to the higher standard deduction but only
beginning in the year
following the accident.
34. Lester is retired with only investment income and prefers not
to make estimated tax payments.
Which of the following is listed incorrectly as a qualification a
taxpayer must meet to avoid
making estimated tax payments in the current year?
a) He was required to file a prior year tax return.
b) He had no tax liability for the prior year.
c) He was a U.S. citizen or resident for the whole year.
d) His prior year tax year covered a 12 month-period.
35. Lester’s tax preparer convinces Lester he should make the
estimated payments and explains
to Lester when the payments are due. Estimated taxes are due on all
of the dates listed below
with the exception of:
a) April 15
b) June 15
c) September 15
d) December 15
36. Ray’s preparer tells him he may owe an underpayment penalty on
this year’s taxes. Which of
the statements below would prevent a taxpayer from owing an
underpayment penalty?
a) He fails to withhold enough income tax.
b) He fails to make required estimated tax payments.
c) He fails to make estimated tax payments on time.
d) He did not have a tax liability in the previous tax year.
37. Ray chooses to let the IRS determine his underpayment penalty.
What will the IRS do if the
IRS calculates the underpayment penalty for a taxpayer?
a) Wait to collect the penalty until the taxpayer files his next
tax return
b) Deduct the penalty amount from current estimated tax
payments
c) Deduct the penalty from current withholdings
d) Send the taxpayer a bill
38. Greg has a balance due on his current return. He will not owe a
penalty if his total tax less
withholding is less than which of the following amounts?
a) $1,500
b) $1,000
c) Last year’s liability
d) $2,000
39. Greg’s preparer tells him he may be required to pay estimated
taxes. Which of the following
conditions would cause Greg to be required to pay estimated
taxes?
a) He expects to owe more than $1,000.
b) He expects to owe Federal income taxes.
c) He expects to owe at least $1,000.
d) Only if he is receives a Form 1099.
40. Wayne’s employer provides meals and lodging on business trips.
Which of the following is
listed incorrectly as a condition that must be met for the taxpayer
to avoid reporting the value
of meals and lodging as income?
a) The meals are: Furnished on the business premises of the
employer for the
convenience of the employer
b) Lodging is: Furnished on the business premises of the employer
for the convenience of
the employer
c) A condition of employment (the taxpayer must accept it in order
to be able to properly
perform his duties)
d) The cost of the meals must not exceed the federal per diem
rate.
41. Riley received benefits from an accident or health insurance
plan through his employer. Under
what circumstances are these benefits not taxable to Riley the
employee?
a) If the employer paid the plan premiums
b) If the amount of the premiums were included in the employee’s
income
c) If the amount of the premiums were not included in the
employee’s income
d) Only if the employer decides the benefits are not taxable
42. Connie’s employer provided her with a company vehicle that she
is allowed to drive home.
Connie is allowed to use the vehicle for personal use. What portion
of the vehicle usage is
taxable to Connie?
a) Connie’s business and personal use of the vehicle are
taxable.
b) None of the vehicle usage is taxable to Connie.
c) Only the personal use portion that is not commuting to and from
work is taxable.
d) Connie’s personal use of the vehicle is taxable.
43. Teresa’s employer sold her a new car at a discount. To prevent
Teresa from paying taxes on
the discount she received, which of the following statements must
be true?
a) The discount Teresa received must be the same discount offered
to customers in the
ordinary course of business in which Teresa works.
b) The employer must decide prior to the sale if he is going to
report the discount as a taxable
fringe benefit.
c) Teresa must pay cash for the car.
d) Teresa’s employer must offer the same discount plus 20% to all
customers.
44. Becky is a flight attendant for a company that owns both an
airline and a hotel chain. Her
employer allows her to take personal flights, only if there is an
unoccupied seat. He also
allows her to stay in any one of their hotels, only if there is an
unoccupied room, at no cost.
What value will Becky report as income?
a) Becky will not be required to report any value as income.
b) Becky will report the value of the flight as income.
c) Becky will report both the value of the flight and the hotel
stay as income.
d) Becky will report only the value of the hotel stay as
income.
45. Sam’s employer provides transportation benefits. Which of the
following is unacceptable as
a qualified transportation benefit?
a) A transit pass
b) Reimbursement for tolls
c) Qualified parking
d) Transportation in a commuter highway vehicle between the
taxpayer’s home and work
place
46. Sam’s employer also provides his employees with small benefits
that it would be unreasonable
to account for. These benefits are called de minimis benefits.
Which of the following would
not be a de minimis benefit?
a) Company picnics
b) Cab fare home when working overtime
c) A bonus
d) Discounts at the company cafeteria
47. The Smiths are separated and unsure how to report community
income. Which of the following
is listed incorrectly as a condition under which a taxpayer is not
responsible for tax relating
to an item of community income?
a) He does not file a joint return for the tax year.
b) He does not include an item of community income in gross income
on his separate return.
c) He established that he did not know of, and had no reason to
know of, that community
income.
d) He treats the item as if only he is entitled to the
income.
48. Troy needed to have the transmission in his car rebuilt. Gene,
Troy’s best friend, offered to
rebuild the transmission in exchange for an old pickup truck
belonging to Troy. Troy agreed
and gave the truck to Gene. The value of the service Gene provided
is $950. The value of
the pickup is $750. How much bartering income must Troy report on
his tax return?
a) $ 950
b) $ 750
c) $ 0
d) $1,700
49. Sam started a new job and was told his employer offers a
cafeteria plan. Sam is unsure what
a cafeteria plan is. Which of the following defines a cafeteria
plan?
a) A plan allowing an employer to have an onsite facility for
employee meals
b) A corporate citizen plan to furnish meals to low income
residents
c) An arrangement whereby an employer offers a choice of nontaxable
fringe benefits from
which to select
d) A plan awarding the employee with a variety of stock
options
50. Last year John received a refund or reimbursement of items he
previously had used as
deductions on his tax return. Which of the following is not a
recovery of an item previously
deducted?
a) A refund of a medical expense deducted in a prior year
b) Reimbursement of an employee business expense deducted in a
prior year
c) Mortgage interest refund
d) Self-employment tax
51. John is unsure how to report recoveries on his tax return. How
should a recovery of an item
previously deducted be reported?
a) A credit
b) A deduction
c) Income
d) An exemption
52. Thomas received the following payments during the year and does
not know if these items
should be reported on his tax return. Identify the taxable item for
Thomas.
a) Cash rebates
b) Recoveries of items that did not produce tax benefits in
previous years
c) Accidental health insurance proceeds (Employee paid
premiums)
d) Vacation pay
53. Chad works as a server at a local restaurant. He is one of the
more popular servers and
receives substantial tips from the customers. What are the tips
Chad receives considered to
be?
a) Income that is not subject to taxation
b) Income that is not subject to reporting to the employer
c) Income that is subject to federal income taxation
d) Income only if the tips are received in cash
54. Sue and her husband divorced last year and Sue received
alimony. She is uncertain if she
has to report the alimony on her tax return and if she does where
it should be reported. Where
must the recipient of alimony report the income?
a) Form 1040, line 11
b) Form 1040, line 31a
c) Form 1040, line 21
d) Is not required to report alimony received
55. What form must Sue’s payment from her husband be in order to be
considered alimony?
a) Transfer of services or property
b) Execution of a debt instrument by the payer
c) Cash payments (checks or money orders)
d) The use of property
56. The divorce decree also awarded child support to Sue. Which of
the following would Sue’s
child support payments be?
a) Alimony
b) Taxable
c) Nontaxable
d) Voluntary
57. Tony has new clients who have farm income and needs to prepare
a return for them. Farm
income is reported on which of the following forms?
a) Schedule C
b) Schedule F
c) Schedule C, and then Form 1040
d) Schedule F, and then Form 1040
58. Walt invests heavily in mutual funds. Which of the following is
a type of mutual fund?
a) Money market fund
b) Money market certificates
c) Original Issue Discount
d) Insurance dividends
59. Geoffrey received ordinary dividends from the following
sources:
Acme Corp. $ 59
CDR, Inc. $ 172
VTEC $1,642
BETA, Inc. $ 128
Geoffrey is single with no dependents. His taxable income for the
tax year is $102,383. What
form(s) must Geoffrey use to complete his return? (Use the least
complicated form.)
a) Form 1040EZ
b) Form 1040A
c) Form 1040A, Schedule B
d) Form 1040, Schedule B
60. Marilyn received ordinary dividends from the following
sources:
TTS, Inc. $ 968
PFS, Corp. $1,869
She received a nontaxable distribution from:
ABC, Inc. $ 847
Marilyn is single with no dependents. Her taxable income (derived
from interest income and
W-2 income) for the tax year is $31,004. What form(s) must Marilyn
use to complete her
return? (Use the least complicated form.)
a) Form 1040EZ
b) Form 1040
c) Form 1040A, Schedule B
d) Form 1040, Schedule B
61. Wendy received the following dividend income:
Capital, Inc. (ordinary dividends) $ 68
ERC (ordinary dividends) $757
Maapco (ordinary) $814
Maapco (reinvested) $858
Federal Credit Union $910
What is the amount to be reported on line 6, Schedule B?
a) $1,639
b) $2,497
c) $ 858 (not required to use Schedule B)
d) $1,768
62. Mark and Alice had the following income:
Dividends from the credit union $ 974
Interest from National Bank $ 875
Conco ordinary dividends $ 658
Duval Fund (ordinary dividends) $ 169
Municipal bond interest $ 205
Series EE bond interest (education expenses) $ 547
Media Corp (liquidating dividends) $ 245
Interest received on a personal loan $1,458
What amount should be on Schedule B, Part I, line 2?
a) $3,854
b) $2,333
c) $3,307
d) $3,512
63. Mark and Alice had the following income:
Dividends from the credit union $ 974
Interest from National Bank $ 875
Conco ordinary dividends $ 658
Duval Fund (ordinary dividends) $ 169
Municipal bond interest $ 205
Series EE bond interest (education expenses) $ 547
Media Corp (liquidating dividends) $ 245
Interest received on a personal loan $1,458
What is the amount of income to be reported on line 6, Part II,
Schedule B?
a) $1,072
b) $2,046
c) $ 827
d) $1,801
64. Mark and Alice had the following income:
Dividends from the credit union $ 974
Interest from National Bank $ 875
Conco ordinary dividends $ 658
Duval Fund (ordinary dividends) $ 169
Municipal bond interest $ 205
Series EE bond interest (education expenses) $ 547
Media Corp (liquidating dividends) $ 245
Interest received on a personal loan $1,458
What is the amount of income to be reported on line 4, Part I,
Schedule B?
a) $4,059
b) $2,333
c) $3,307
d) $3,854
65. Tony is a new tax preparer. The office manager at the location
where he works cautions Tony
about common interview mistakes. Which of the following is a common
mistake tax preparers
make when interviewing clients or potential clients?
a) Using Head of Household status for taxpayers who do not
qualify
b) Asking questions to determine if spouses have lived together
during the last six months
of the year
c) Using Qualifying Widow(er) status for a taxpayer who is a
widow(er) and also has a
qualifying child
d) Preparing a tax return with a 1099R with a determinable taxable
amount
66. In 2014 Josephine found an error in her 2012 return. She
amended her return and found that
the IRS owed her an additional refund. She received her refund with
interest on September
30, 2014. In what tax year should Josephine report the interest
income?
a) 2013
b) 2012
c) 2014
d) Not taxable
67. Don is a single parent. His son is 19 (not a student) and his
daughter is 17 (still a student).
Don claimed EIC on his tax return for both children. He later
received a letter from the Internal
Revenue Service which disallowed EIC for his son. The letter also
stated that Don’s claim
was an error due to reckless or intentional disregard of the EIC
rules. For how many years
will Don be denied EIC?
a) 10 years
b) 5 years
c) 2 years
d) 1 year
68. Last year Rick fraudulently claimed his cousin’s children as
dependents on his return in order
to receive earned income credit. The IRS discovered this when
Rick’s cousin also claimed
the children. Rick’s cousin was able to prove he had the right to
claim his children and the
EIC was denied on Rick’s return. How long will EIC be prohibited if
a taxpayer is denied EIC
due to fraud?
a) 10 years
b) 5 years
c) 2 years
d) 1 year
69. Walt was the preparer who neglected to complete Form 8867 or
otherwise record information
needed for the return Rick fraudulently claimed the children for
EIC purposes. After the IRS
was able to prove Rick had committed fraud it was shown that Walt
failed to exercise due
diligence. What penalty will a tax preparer face if it is
determined that he has failed to exercise
due diligence?
a) $100 per year
b) $500 per return
c) $500 per year
d) $100 per return
70. Jack received a notice from the IRS about his 2012 tax return.
He called the IRS and the
agent asked him to verify the adjusted gross income (AGI) on the
return. On which form and
line is AGI found?
a) Line 21 of Form 1040
b) Line 6 of Form 1040EZ
c) Line 37 of Form 1040
d) Line 15 of Form 1040A
71. In which of the following scenarios does the taxpayer fail to
meet the residency test for EIC
purposes?
a) A taxpayer whose child lived with him for 5 months and 29
days
b) A taxpayer whose eligible foster child lived with him all
year
c) A taxpayer whose child lived with him all year. He and his
spouse separated on May 29
d) A taxpayer who is 64 years old and lives alone
72. Trudy lives alone with her two children (ages 16 and 12) and
her filing status is Head of
Household. Trudy’s earned income and AGI was $31,000. Is Trudy
eligible for EIC?
a) Yes
b) No, the taxpayer’s earned income is not within the range to
receive EIC
c) No, the taxpayer’s children do not meet the age test to be a
qualifying child
d) No, the taxpayer is not eligible due to her filing status
73. Jill prepares returns for many clients who are able to claim
earned income credit. To be certain
she is practicing due diligence pertaining to the earned income
credit, which of the following
forms must Jill prepare for these clients?
a) Form 1040
b) Form W-5
c) Form 8862
d) Form 8867
74. Lionel has heard many of his friends talk about getting a
larger refund because they receive
earned income credit. Lionel is uncertain what makes a taxpayer
eligible for EIC. Which of
the following is listed incorrectly as a condition of eligibility
for purposes of earned income
credit?
a) The taxpayer must have earned income
b) The taxpayer must meet residency requirements
c) The taxpayer must meet the age requirement if he does not have a
qualifying child
d) The taxpayer must have at least one qualifying child
75. Danika is a single mother with three children, ages 3, 7, and
9. Danika’s tax return shows an
AGI of $32,765 which includes earned income of $32,700 and interest
income of $65. She
meets the requirements for filing status Head of Household and
supports her family without
any additional help from other sources. Which of the following
statements is true?
a) Danika’s EIC will be based on her earned income alone without
considering her AGI
b) Danika’s EIC will be the smaller of the two EIC amounts based on
her AGI or her earned
income
c) Danika’s EIC will be based on her AGI without considering the
earned income amount
d) Danika is not eligible to receive EIC
76. Cassidy and Megan are married and have received income from the
following sources.
Interest from Austin FCU $369 Dividends from Cartlett, Inc.
$197
Interest from Crestar Bank $195 Interest from an account in Ireland
$114
Dividends from ACME, Inc. $2,695 Interest from an account in
Scotland $219
Dividends from Byerly’s, Inc. $259
Which parts of Schedule B, if any, must be completed by Cassidy and
Megan?
a) Part II only.
b) Parts I and II.
c) Parts I, II and III.
d) Schedule B does not need to be completed.
77. Gerald had the following types of income.
Wages $175,000
Interest from Fidelity Bank $649 Aggregate total $21,633
Dividends from Good Brothers $1,749 Aggregate total $249,895
Interest from a bank in India $299 Aggregate total $8,300
What forms must Gerald file with his return?
a) Form 1040EZ
b) Form 1040A, Schedule 1
c) Form 1040 and Schedule B
d) Form 1040, Schedule B and FinCEN Report 114
Comprehensive Income Tax Course: Module 1 4. Randy turned 16 last year and had his first...
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