taxes hrblock

All of the following benefits are available to taxpayers who contribute to defined contribution plans EXCEPT: Earnings on contributions are tax-deferred. Employee contributions are tax-deferred. The employee receives a predetermined, formula-based benefit at retirement. The taxpayer's employer may opt to match all or part of the employee's contributions.

"The taxpayer's employer may opt to match all or part of the employee's contributions"

A paid tax return preparer who fails to satisfy the due diligence requirements when preparing a return for a taxpayer claiming eligibility for the Earned Income Tax Credit, the Child Tax Credit and/or the Additional Child Tax Credit, the American Opportunity Tax Credit, or the head of household filing status in 2020 may incur a maximum penalty of: $2,120 per return. $1,590 per return. $530 per return. Zero, although penalties may be assessed against the taxpayer.

$2,120 per return

Which of the following is a type of nontaxable income that does not need to be reported on a federal tax return? Interest income from a U.S. Treasury security. Interest income from municipal bonds. Unemployment compensation. Workers' compensation.

.Interest income from municipal bonds.?

Char (61) took a $6,000 distribution from her Roth IRA. Twenty percent, or $1,200, is a distribution of earnings on her contributions. The remaining $4,800 is a distribution of her basis. Char established the account more than 20 years ago, when Roth IRAs first became available. How much of her distribution is taxable? $0 $1,200 $4,800 $6,000

0

Ramona will use the single filing status for 2020. She owns shares of stock, and during the year, she received dividends from this investment. She received a 2020 Form 1099-DIV from the company reporting a distribution of $1,500 in total ordinary dividends, shown in box 1, and qualified dividends of $1,500, shown in box 2. Ramona's only other income was from wages. Her taxable income for the year was $38,950. How much tax will she owe on the dividend income? $0 $150 $225 $300

0

Robert (31) may not be claimed as a dependent on anyone else's return. His filing status is single. During the year, he paid $3,800 in qualified student loan interest. His modified adjusted gross income prior to subtracting any deductions is $108,500. If he has no other adjustments to income, what is the maximum amount he may claim for the student loan interest deduction his 2020 tax return? $0 $1,667 $2,500 $3,800

0

Ramona will use the single filing status for 2020. She owns shares of stock, and during the year, she received dividends from this investment. She received a 2020 Form 1099-DIV from the company reporting a distribution of $1,500 in total ordinary dividends, shown in box 1, and qualified dividends of $1,500, shown in box 2. Ramona's only other income was from wages. Her taxable income for the year was $38,950. How much tax will she owe on the dividend income? $0 $150 $225 $300

0?

Xavier owns shares of a mutual fund. During the year, he received $2,750 in dividend distributions, $800 of which he received in cash. He elected to use the remaining $1,950 to purchase additional shares of the fund. The amount subject to tax is: $0 $800 $1,950 $2,750

0?

A taxpayer who deliberately overstates deductions in order to lower their tax liability may be assessed a negligence penalty of up to _________ of the amount of tax underpaid. 0.5%. 5%. 20%. 25%.

20

In 2019, Kathy and Jeff paid $2,500 of qualified domestic adoption expenses. The adoption did not become final until 2020, and they paid an additional $3,100 in qualified expenses that year. Their modified adjusted gross income was $165,000. What is the maximum amount they may be eligible to claim for the Adoption Credit on their 2020 return? $2,500 $3,100 $5,600 $14,080

14080?

Fabian (16), will be claimed as a dependent on his parents' tax return. His only income during the year consisted of $10,000, which was his net profit from a lawn mowing business. What is Fabian's self-employment tax? $0 $383 $1,413 $1,530

1413

Cecelia and Doug will file a joint return. During the year, they received dividends from a mutual fund investment, and they received a 2020 Form 1099-DIV reporting a distribution of $1,500 in total ordinary dividends, shown in box 1, and qualified dividends of $1,500, shown in box 2. Their only other income was from wages. Their taxable income for the year was $86,550. How much tax will they pay on their dividend income? $0 $150 $225 $300

150?

In 2020, Ana (27), lived with her daughter, Brynn (4), her brother, Sam (19), and her fiance, Mack (30) for the entire year. Ana's adjusted gross income is $32,700, Sam's gross income is $5,000, Mack's gross income is $4,500, and Brynn has no income. None of the individuals in the household were students during the year. Neither Sam, nor Mack, nor Brynn provided over 50% of their own support. Ana qualifies for and files as head of household in 2020. How many qualifying dependents can Ana claim on her return? Four. Three. Two. One.

1?

The maximum amount a taxpayer may claim for the lifetime learning credit is: $2,000 per return. $2,000 per eligible student, including the taxpayer, their spouse, and any dependents listed on the return. $2,500 per return. $2,500 per eligible student, including the taxpayer, their spouse, and any dependents listed on the return.

2000 per return

Greg and Casie are married and will file a joint return. For 2020, their modified adjusted gross income is $80,000. Their dependent daughter, Katelyn (21), is in her third year at State University. Greg and Casie are not students, and they have no other dependents. They paid $6,300 for Katelyn's tuition during the year. What is the maximum American Opportunity Tax Credit (AOTC) they may be eligible to receive? $0 $2,000 $2,500 $5,300

2500

Marcus (20) attends State University and is a qualifying student for the purpose of the American Opportunity Tax Credit (AOTC). His parents will claim him as a dependent on their jointly-filed 2020 return. Their adjusted gross income is $125,000, and they paid $14,000 for Marcus' tuition during the year. What is the maximum AOTC Marcus' parents may be eligible to receive? $0 $2,000 $2,500 $4,000

2500

Gerri (29) may not be claimed as a dependent on anyone else's return. Her filing status is single. During the year, she paid $2,500 in qualified student loan interest. Her modified adjusted gross income prior to subtracting any deductions is $75,000. If she has no other adjustments to income, what is the maximum amount she may claim for the student loan interest deduction on her 2020 tax return? $0 $1,667 $2,000 $2,500 Mark for follow up

2500?

What is the 2020 gross income filing requirement for a married couple, filing jointly, where neither is blind, but one is age 65, and the other is age 60? They lived together all year. $24,800 $25,700 $26,100 $27,400

26100

Louise is a 29-year-old taxpayer who will use the head of household filing status. Her 2020 modified adjusted gross income is $48,000. During the year, she made a $1,500 contribution to her employer's 401(k) plan. She has never taken a distribution from any retirement plan. The maximum amount Louise may receive for the retirement savings contributions credit (Saver's Credit) is: $0 $150 $300 $1,500

300

William (71), a retired single taxpayer, received a monthly pension of $2,500 ($30,000 annually). He did not contribute any after-tax dollars to the plan while he was working; his employer paid all the costs. William received a 2020 Form 1099-R reporting a gross distribution of $30,000 in box 1, but box 2 of the form is blank. How much of William's pension distribution is taxable? $0 $15,000 $25,500 $30,000

30000

Sasha (34) will use the head of household filing status. She has one dependent child, Harper (5). During the year, Sasha spent $7,000 for Harper's childcare. Sasha's income during the year totaled $59,000, all from wages. She did not receive any dependent care benefits from her employer. What amount may Sasha use to calculate the Child and Dependent Care Credit? $0 $3,000 $6,000 $7,000

3000?

Choose the response that accurately completes the following sentence. A single dependent who is not blind and is under age 65 has a 2020 filing requirement if their gross income is more than the greater of $1,100 or their earned income (up to $12,050) plus: $50 $200 $250 $350

350

If a taxpayer claiming the American Opportunity Tax Credit (AOTC) has their tax liability reduced to zero, what is the maximum amount they may receive as a refundable credit? 20% of the credit, up to $500. 40% of the credit, up to $1,000. 100% of the first $1,000 of qualified education expenses. 100% of the first $4,000 of qualified education expenses.

40%

Rita, a single mother, has three children, Luis (7), Perry (10), and Alexis (17). Rita's adjusted gross income is $64,000, and her 2020 tax liability is $5,204. All three children are Rita's qualifying child dependents. What is the total of Rita's Child Tax Credit and Credit for Other Dependents?

4500?

Failure to meet the due diligence requirements when determining eligibility for the Child Tax Credit, Earned Income Tax Credit, American Opportunity Tax Credit, and head of household filing status could result in a penalty for a return filed in 2021 for Tax Year 2020 of: $50, per return, assessed towards the taxpayer. $500, per return, assessed towards the tax preparer. $520, per return, assessed towards the taxpayer. $530, for each item on each return, assessed towards the tax preparer.

500?

Alexander, who is 43 years old and single, earned $10,750 in wages in 2020. The maximum amount he can contribute to a traditional IRA for 2020 is: $0 $6,000 $7,000 $10,750

6000

Christopher and Victoria have four dependent children, ages 17, 16, 14, and 10. What is the maximum amount Christopher and Victoria may be eligible to receive for the Child Tax Credit and the Credit for Other Dependents? $4,000 $6,000 $6,500 $8,000

6?

A sole proprietor may be eligible for: A deduction of up to 20% of gross income from all sources. A deduction of up to 20% of qualified business income. A more favorable tax rate of 0%, 15%, or 20% on net profit from business. A flat corporate tax rate of 21% on net profit from business.

A deduction of up to 20% of gross income from all sources

Which of the following is depreciable property? An automobile used only for personal driving. A dump truck used in a business. A small tool used in a business. The tool will wear out in about three months. A vacant piece of land held for investment.

A dump truck used in a business.

Which of the following is depreciable property? Equipment placed in service and disposed of in the same year. A lawnmower used to mow the taxpayer's yard. A truck used by the taxpayer for both personal and business purposes. An unimproved piece of land used as a parking lot.

A truck used by the taxpayer for both personal and business purposes.

Michelle was married with two dependent children when her husband died in 2020. She has not remarried. Michelle's correct filing status for 2020 is: Head of household. Married filing jointly. Qualifying widow. Single.

Married filing jointly

Rich and Lucy were married for 52 years. Rich died on May 9, 2020. Lucy has no dependents, and she did not remarry. The correct and most favorable filing status for Lucy's 2020 return is: Married filing jointly. Married filing separately. Single. Qualifying widow.

Married filing jointly.

What is a paid tax preparer's correct response to a taxpayer who omitted items on an income tax return that was submitted in a previous year? Advise the taxpayer promptly of the fact of such omission and: Advise them of the consequences of not amending the previous year's return. Make an adjustment for the previous year's omission on the current-year return. Refer them to an office supervisor. Refuse to prepare the current-year return until the previous year return is amended.

Advise them of the consequences of not amending the previous year's return

Which of the following is taxable income? Alimony received in accordance with a divorce decree signed prior to December 31, 2018. No changes have been made to the agreement. Child support payments received in accordance with a divorce decree signed prior to December 31, 2018. No changes have been made to the agreement. A noncash property settlement paid by a former spouse. Payments made to maintain the taxpayer's primary residence, made by a former spouse who still owns the property.

Alimony received in accordance with a divorce decree signed prior to December 31, 2018. No changes have been made to the agreement.

Taxpayers who receive more than $1,500 in interest income during the year must file: Form 1099-DIV. Form 1099-INT. The Qualified Dividends and Capital Gain Tax Worksheet. Schedule B.

B?

Under the CARES Act, a sole proprietor may be eligible for all of the following EXCEPT: Paycheck Protection Program (PPP loan). PPP loan forgiveness. Economic Impact Payment. Pandemic Unemployment Assistance.

Economic Impact Payment.

Interest income from U.S. Treasury obligations, such as Treasury bills, notes, and bonds, is: Federally taxable and must be reported on Form 1040. Nontaxable and does not have to be reported on Form 1040. Not federally taxable but should be reported on Form 1040. Not federally taxable and is only reportable on Form 1040 when the amount received exceeds $1,500.

Federally taxable and must be reported on Form 1040.

Jeff (39) is a U.S. citizen. He was married at the beginning of 2020. His wife lived in the household until August. Their divorce was finalized on September 30, and Jeff has not remarried. Jeff provided 100% of the support for his son, who lived with him all year and is his qualifying child. Jeff's most advantageous filing status is: Head of household. Married filing jointly. Married filing separately. Single.

HOH?

Simone's (57) husband, Charles, died in 2017, and she has not remarried. Simone's mother, Lucy, lives in a nursing home. Lucy's only income for 2020 consisted of $17,650 in social security benefits. Simone pays the entire cost of the nursing home and more than 50% of Lucy's support. Simone does not have any children, and no one else lives with her. What is Simone's correct and most favorable filing status? Single. Qualifying Widow. Married filing jointly. Head of household.

HOH?

A taxpayer may be eligible to deduct which of the following as an allowable business expense in Part II of Schedule C, Profit or Loss from Business? Half the cost of their group term life insurance. Half the cost of meals purchased while traveling for business. An amount contributed to their individual retirement plan. The cost of health insurance premiums for themselves and their families.

Half the cost of meals purchased while traveling for business.

Deductible medical expenses include payments made for all of the following EXCEPT: Cosmetic surgery to correct a deformity arising from an accident. Cost of a smoking cessation program. Health club dues. Eyeglasses.

Health club dues

Complete the following sentence. Taxpayers that take a coronavirus-related distribution from a qualified retirement plan will: Not be allowed to repay all or part of the coronavirus-related distribution to an eligible retirement plan, unless it is repaid in the current year that the distribution is received. Pay tax on the full distribution on their 2020 tax return. In general, will include the distributions in the taxpayer's income ratably over a three-year period, beginning with the year of distribution. Be subject to the 10% additional tax. Mark for follow up

In general, will include the distributions in the taxpayers ratebly over a three year period, beginning with the year of distribution.

section 1 Which of the following is an example of unearned income? Tips. Wages from a part-time job. Compensation received by a self-employed, freelance photographer for services provided. Interest earned on a savings account.

Interest earned on a savings account.

Brianna timely filed her 2019 tax return on March 1, 2020. She had a balance due, which she paid on April 15, 2020. She later determined that she had failed to claim an education credit for which she was eligible. The credit would have reduced her tax liability that year. The latest Brianna can file an amended return to correct the originally filed 2019 return and claim the credit is: March 1, 2022. April 15, 2022. March 1, 2023. April 17, 2023.

March 1, 2023.

In June 2020, Alicia filed for divorce from her husband, John. Although they lived apart for the last six months of the year, their divorce is not yet finalized; they are still legally married. Alicia does not wish to file a joint 2020 return, and she has no qualifying child or qualifying relative. What filing status should Alicia use? Head of household. Married filing separately. Single. Unmarried for tax purposes.

Married filing separately.

All of the following are self-employed taxpayers EXCEPT: Markus, an independent consultant who performs services for a manufacturing firm in exchange for a fee. Janice, the owner and operator of a bed and breakfast. She provides daily cleaning and laundry services in addition to the furnished rooms in exchange for rent. Nick, a driver for a rideshare service. He received a Form 1099-K reporting payments from credit and debit card transactions. Mya, a home health nurse who works for a health care agency that determines when and how her work should be performed.

Mya, a home health nurse who works for a health care agency that determines when and how her work should be performed.

When depreciating property, the entire cost of the asset is deducted: The first year it is acquired. Over a period of years, rather than all at once. The second year after it was acquired. When it is no longer used in business.

Over a period of years, rather than all at once.

All of these are due diligence requirements for paid tax preparers who prepare returns claiming the American Opportunity Tax Credit (AOTC) EXCEPT: Complete Form 8863, Education Credits, and attach it to the return. Complete and submit Form 8867, Paid Preparer's Due Diligence Checklist. Request and maintain a copy of the student's academic transcripts. Request that the taxpayer provide substantiation for the credit, such as a Form 1098-T and/or receipts for the qualifying expenses.

Request and maintain a copy of the student's academic transcripts.

Which of the following taxpayers will be allowed to take a deduction (adjustment to income) even if they do not itemize on their 2020 tax return? Each taxpayer is single and has no other deductions to claim on Schedule A. Joseph made his real estate property tax payment of $2,050 on December 9, 2020. Alice contributed $450 to her local Cancer Society on November 2, 2020, which is a qualified charity. Mary paid $5,980 in dental work on April 13, 2020. She charged it on her credit card. Samuel contributed $50 to a GoFundMe that will benefit a child in his daughter's classroom by paying medical bills. He did this on May 12, 2020.

Samuel contributed $50 to a GoFundMe that will benefit a child in his daughter's classroom by paying medical bills. He did this on May 12, 2020.

Pamelia (21) is a full-time undergraduate student pursuing an accounting degree at her state university. During the year, she received a $6,500, unrestricted scholarship, reported to her on Form 1098-T rather than Form W-2. She spent $5,500 of the scholarship funds on her current-year tuition, and she applied the rest to room and board. Pamelia also had income from a part-time job, and she is required to file a 2020 tax return. How does she report the scholarship on her Form 1040? None of Pamelia's scholarship is included in her taxable income or reported on her return. She should enter "SCH" and $1,000 on the dotted line next to line 1 of Form 1040. She should enter "SCH" and $1,000 on the dotted line next to line 4 of Schedule 1 (Form 1040). She should enter "SCH" and $6,500 on the dotted line next to line 8 of Schedule 1 (Form 1040).

She should enter "SCH" and $6,500 on the dotted line next to line 8 of Schedule 1 (Form 1040).?

All of the following are types of retirement plans self-employed taxpayers may establish for themselves and their employees EXCEPT: Qualified defined contribution plans, such as 401(k) plans. SIMPLE IRAs. Simplified employee pensions (SEPs). Spousal IRAs.

Spousal IRAs.

Juan received a state income tax refund in 2020 for state taxes he overpaid in 2019. He was able to reduce his 2019 federal tax liability by itemizing and claiming a deduction for state and local income taxes paid that year. When Juan files his 2020 return, he may need to report all or part of the state tax refund he received in 2020 as: A negative deduction. A recaptured credit. A refundable credit. Taxable additional income.

Taxable Income".

Talese would like to claim her granddaughter, Natalia, as her qualifying child so she can claim the Earned Income Tax Credit (EITC). However, Natalia's mother, Taye, is also eligible to claim Natalia as her qualifying child for EITC purposes. As Talese's tax preparer, what information would you share with Talese? As long as Talese files before Taye, she may claim EITC based on Natalia, her qualifying child. Taye holds a higher right and may claim EITC based on Natalia because Taye is Natalia's parent. Talese may claim EITC based on Natalia if her adjusted gross income was higher than Taye's. Talese and Taye may agree to each claim one half of the EITC based on Natalia, their qualifying child.

Taye holds a higher right and may claim EITC based on Natalia because Taye is Natalia's parent.

Carol is a single mother with two qualifying dependent children. The amount of her Child Tax Credit was limited by her tax liability. Carol may qualify for: The Additional Child Tax Credit. An additional itemized deduction. An additional adjustment to income. An additional nonrefundable credit.

The Additional Child Tax Credit.

Which tax benefit for education is partially refundable? American Opportunity Tax Credit. Distribution from a Qualified Tuition Program. Lifetime learning credit. Student loan interest deduction.

The American Opportunity Tax Credit (AOTC)?

A taxpayer whose only capital gain income consists of dividend distributions from a mutual fund investment should compute their tax liability using: Form 8949, Sales and Other Dispositions of Capital Assets. The Qualified Dividends and Capital Gain Tax Worksheet. Schedule D, Capital Gains and Losses. The 2020 Tax Tables for Form 1040.

The Qualified Dividends and Capital Gain Tax Worksheet.

The simplified method may be used to calculate the taxable portion of a distribution from a qualified retirement account when: The funds are rolled over into a Roth IRA. The funds are rolled over into a traditional IRA. The taxpayer previously made after-tax contributions to a traditional IRA. The taxpayer previously made after-tax contributions to a qualified pension, profit-sharing, stock bonus plan, or employee annuity plan.

The Taxpayer previously made after-tax contribution to a qualified pension, profit-sharing, stock bonus plan, or employee annuity.

Vivian (28) is the beneficiary of her deceased grandmother's traditional IRA. She received a Form 1099-R reporting the $10,000 gross distribution. The form had a distribution code "4" in box 7, indicating that the distribution is due to death. What is the tax consequence of this distribution? The entire amount is tax-free and penalty-free. The only tax to which Vivian is subject is the 10% additional tax on early distributions. The gross distribution is taxable income, but Vivian may claim an exemption from the 10% additional tax on early distributions. The gross distribution is taxable income, and in addition, Vivian is subject to a 10% additional tax on early distributions.

The gross distribution is taxable income, but Vivian may claim an exemption from the 10% additional tax on early distributions.

Which of these is a requirement for a taxpayer without a qualifying child to claim the Earned Income Tax Credit (EITC)? Their investment income cannot exceed $1,500 for the year. They must be at least 25 years old, but younger than age 65, on December 31, 2020. They must be a U.S. citizen or resident alien, or have resided in Mexico or Canada for more than half the year. They must have a valid social security number or individual taxpayer identification number (ITIN).

They must be at least 25 years old, but younger than age 65, on December 31, 2020.

Why would a taxpayer need to file Form 1040X, Amended U.S. Individual Income Tax Return? To correct errors and omissions on the original return that result in a change to the original tax liability, refund, or balance due. To report original information before the end of the tax year when a return has not been filed previously. To report information from a corrected income document before the original return has been filed. To report original information when the due date for the return has passed, and the return has not been previously filed.

To correct errors and omissions on the original return that result in a change to the original tax liability, refund, or balance due.

start of new test Which of the following is included in an individual taxpayer's federal gross income? Disaster relief payments. Unemployment compensation. Interest on state and local municipal bonds. A federal income tax refund.

Unemployment compensation.

Which statement about amended returns is TRUE? An amended return can be e-filed if it is submitted before the due date of the original return. An amended return should be supported with any additional or corrected forms that show a change to the taxpayer's withholding. The explanation portion of Form 1040X should always cite a court case, revenue procedure, regulation, or revenue ruling. More than one Form 1040X may be required if a change to one part of the original return affects other sections of the return.

When an amended return is to be filed it should be supported with any additional or corrected forms that depict a change to withholding of taxpayer.

All of these are tests that determine whether an individual is a qualifying child EXCEPT: Age. Gross income. Relationship. Support.

age

Choose the response that best defines gross income. All worldwide income realized in any form, from whatever source derived, unless specifically excluded by law. Financial gain derived from labor or capital, less any deductions or adjustments. Income less allowable reductions. Specific income items identified and classified as taxable income.

all worldwide income realized in any form, from whatever source derived, unless specifically excluded by law.

Choose the response that completes the following sentence. A cash distribution from a qualified retirement account in which the taxpayer ONLY made pre-tax contributions: Is always fully taxable. Is never taxable. Is only taxable at the state and local level. May be partially taxable.

always fully

In which of the following situations might it be appropriate for a married taxpayer filing a joint return to file an injured spouse claim? The taxpayer is unable to pay the tax liability because their spouse has suffered some type of injury. There is an understatement of tax due because the taxpayer's spouse omitted income on the original return. The joint overpayment was applied to a prior tax liability of the taxpayer and their spouse. The joint overpayment was applied to their spouse's past-due child support.

child support

All of the following are factors that usually determine whether a nondependent taxpayer is required to file a return EXCEPT: Age. Citizenship. Filing status. Gross income.

citizenship

Which taxpayer is potentially eligible to receive the Child Tax Credit? In each scenario, the child mentioned is the taxpayer's only dependent or potential dependent, and the taxpayer provided more than half the child's support. Rachel has a daughter, Margo, who was 7 years old at the end of 2020. Margo lived in Mexico for all of 2020 and is not a U.S. citizen, U.S. national, or U.S. resident alien. Lucia has a niece, Alejandra, who was 9 years old at the end of 2020. Alejandra is not a citizen of the United States. Alejandra does have an Individual Taxpayer Identification Number (ITIN), and she lived in Mexico for all of 2020. Ian has a nephew, Dylan, who is a resident alien. Dylan was 16 years old at the end of 2020. Dylan lived with Ian all year. Dylan obtained a social security number valid for employment before the due date of the return. Isaac has a son, Ryan, who was 17 years old at the end of 2020. Ryan is a citizen of the United States and qualifies as a dependent on Isaac's 2020 tax return.

ian?

A state income tax refund is federally taxable only to the extent: Of the amount reported on Form 1099-G, Certain Government Payments. Of the sum of all itemized deductions. That the deduction reduced taxable income in the earlier year. State income tax refunds are never taxable.

that the deduction reduced taxable income in the earlier year.

Which taxpayer(s) will be required to file a 2020 federal income tax return? None of the individuals are blind. Glenn (67) has gross income of $13,700. He is single and has no dependents. Sophia (34) has gross income of $18,150. She will file as head of household with one dependent. Lucas (37) and Ann (35) are married and have gross income of $24,280. They lived together all year and wish to file a joint return. Jose (66) and Marcia (63) have gross income of $26,950. They wish to file a joint return.

jose

Choose the response that accurately completes the following sentence. Claiming the Child and Dependent Care Credit is NOT allowed for taxpayers who: Are actively searching for employment. Lived with their spouse for the entire year, but will file a separate return. Are self-employed. Use the services of an independent caregiver, such as a nanny or babysitter.

lived with their spouse?

All of these scenarios describe a person who may be the qualifying child of a taxpayer claiming the Earned Income Tax Credit (EITC) EXCEPT: Amethyst (16), a full-time high school student. The taxpayer is her 22-year-old sister. Daniela (23), a full-time student. The taxpayer is her 68-year-old grandmother. Maeve (24), a full-time student. The taxpayer is her 22-year-old sister. Reese (33), who is totally and permanently disabled. The taxpayer is her 29-year-old brother.

maeve?

All of the following statements are true for Tax Year 2020, in regard to contributing to a traditional or a Roth IRA, EXCEPT: There is no age limit on making regular contributions. Ages 70½ or older cannot make regular contributions to a traditional IRA. Ages 70½ or older can make regular contributions to a Roth IRA. Taxpayers that file a joint return may be able to contribute to an IRA if their spouse had taxable compensation, even if they did not.

no age limit

Interest from a municipal bond investment is: Federally taxable and must be reported on Form 1040. Nontaxable and does not have to be reported. Not federally taxable but must be reported on Form 1040. Not federally taxable and only reportable on Form 1040 when the amount received exceeds $1,500.

not must report 1040?

Keith (54) has not yet reached the minimum retirement age. However, he suffers from a debilitating illness and retired on disability in 2020. While he was working, his employer paid for his disability policy with pre-tax dollars. How are Keith's disability pension benefits reported on his tax return? Keith's disability pension benefits are neither taxable nor reportable. As wages on line 1 of Form 1040. As pension income on line 4d of Form 1040. As other income on line 8 of Schedule 1 (Form 1040).

other income schedule 1?

section 2 Which taxpayer(s) will be required to file a 2020 federal income tax return? None of the individuals are blind. Patrick (58) has gross income of $18,900. He will file as head of household. Beatrice (68) has gross income of $19,150. She will file as head of household. Mark (71) and Darius (62) are married and have gross income of $25,500. They lived together all year and will file a joint return. Michael (72) and Dee (68) are married and have gross income of $26,950. They lived together all year and will file a joint return.

patrick

Read the following scenario, and then choose the response that accurately completes the last sentence. Jackson (32) and Sally (27) married in March 2020. Chloe (8), Sally's child from a previous marriage, came to live with them on July 5, 2020. Prior to moving in with Jackson and Sally, Chloe was supported by and lived with her father. Neither Sally nor Chloe's father have ever signed Form 8332, Release/Revocation of Release of Claim to Exemption by Custodial Parent. Jackson and Sally are: Eligible to claim Chloe as a qualifying child. Eligible to claim Chloe as a qualifying relative. Eligible to claim a personal exemption for Chloe. Not eligible to claim Chloe as a dependent for the purpose of any tax benefit.

qualifying relative?

Which of the following tax benefits may reduce a taxpayer's tax liability below zero? Adjustment. Deduction. Nonrefundable credit. Refundable credit.

refundable

Review the following choices, then choose the only response that does NOT describe a due diligence requirement for an individual who is paid to prepare returns for taxpayers claiming the head of household filing status and/or one or more of the following credits: The Earned Income Tax Credit, the American Opportunity Tax Credit, the Child Tax Credit/Additional Child Tax Credit, and the Other Dependent Credit. Complete all worksheets used to compute the credit and maintain copies of these worksheets. Require the taxpayer to provide documentation proving relationship to a qualifying child prior to claiming the related credit. Maintain a copy of documents provided by the taxpayer used to determine eligibility for the credit. Record the date the information was obtained and the name of the person who provided the information. Make additional inquiries to determine if the taxpayer is eligible for the credit whenever information provided appears to be incorrect, inconsistent, or incomplete. Then, document both the questions asked and the responses provided.

require

For the purpose of the American Opportunity Tax Credit (AOTC), qualified tuition and related expenses generally include all of the following EXCEPT: Books required for the student's course of study. Fees associated with the student's degree program. Room and board at a residence hall operated by the educational institution. Student activity fee required as a condition for enrollment.

room and board

Marcus and Patrick were divorced on October 16, 2020. Neither has any dependents. Neither has remarried. The correct filing status they should each use is: Head of household. Married filing jointly. Married filing separately. Single.

single

Which of the following expense items should be included when determining whether a taxpayer who wishes to file as head of household paid more than half the cost of keeping up their home? Education. Medical expenses. Real estate taxes. Rental value of the home owned by the taxpayer.

taxes?

What is the age requirement to contribute to a Roth IRA? There is no age requirement if the taxpayer meets the compensation requirements. Taxpayers must be at least age 18 and less than age 59½. Taxpayers must be at least age 18 and less than age 70½. Taxpayers must be at least age 18, but there is no maximum age.

there is no age requirement

Which taxpayer may NOT claim a charitable contribution deduction for the expenses described? Tom, an attorney who donates his time to assist a local veteran's organization. The estimated value of his total time performing legal services is $250. Jeannie, who volunteers at a local hospital. She is required to wear a uniform that she purchases herself. Miguel, who serves on the board for a local arts council. Each month, he drives 15 miles each way to attend a board meeting. Michael, a Boy Scout leader who sometimes spends his own money to purchase supplies for the troop.

tom

All of the following income items are federally taxable EXCEPT: A $16,000 distribution from a public pension plan. Income in the amount of $12,000 from an illegal activity. A wedding gift from a non-relative in the amount of $10,000. Interest on a certificate of deposit in the amount of $550.

wedding gift

Abigail and Todd were married 18 years ago. They had one child, Madeline (12). Todd passed away in 2019, and Abigail has not remarried. section 3 Abigail and Madeline lived together all year long; no one else lived with them. Abigail paid all the expenses of maintaining their home. What is Abigail's most beneficial filing status for 2020? Head of household. Married filing jointly. Qualifying widow. Single.

widow?

Choose the response that accurately completes the following sentence. A taxpayer claiming the Premium Tax Credit: May be claimed as a dependent on another person's return, as long as they are under age 27. May have employer-sponsored health care coverage. Must have household income for their family size that is less than 150% of the federal poverty level. Will receive a refund if the amount of the credit is larger than the tax they owe.

will receive a refund?