Accounting 2 Final Exam

The maximum taxable amount of Hank's benefits is 85%

t

The relationship test must be met for a qualifying relative.

t

Taxpayers can deduct part of their self-employment tax as an adjustment to income.

true

to qualify for the child and dependent care credit, a taxpayer must have taxable income

true

Gloria's husband, Dante, has neither a green card nor a visa, and he does not have a tax home in another country. He was physically present in the United States for 150 days in each of the years 2009, 2010, and 2011. Is Dante a resident alien under the substantial presence test for 2011?

yes

the amount withheld from pay for federal income tax

withholding tax

The amount of tax due and paid with this year's tax return qualifies as an estimated payment

False

Brenda discovered an error on her 2007 tax return, which had been filed on time. Correction of this error would result in a refund. She mails an amended return on May 6, 2011. Is it too late for Brenda to claim a refund?

Yes

Christopher is 22 and earned $32,000 during the year. He is single and contributed $3,000 to his 401(k) plan at work. Christopher is eligible for the qualified retirement savings contributions credit.

false

For EIC, a child can be claimed as a qualifying child on more than one tax return.

false

The Social Security Benefits Worksheet is used to calculate the taxable portion of Hank's benefits.

t

When Colten was laid off, he received state unemployment compensation totaling $4,000 before finding a new job. He will report $4,000 as unemployment income.

t

a company sometimes called a supplier, that supplies a retail business with products to be resold to the public

vendor

Self-review is an acceptable means of quality review, but only if a second qualified person cannot be present.

True

Some taxpayers may wish to increase withholding and make estimated tax payments to avoid having a balance due next year.

True

Taxpayers with more than one employer might have had more than the required amount of social security tax withheld from their wages for the year. If this occurred, taxpayers can claim the excess withholding as a credit in the Payments section of Form 1040.

True

The nonbusiness energy property credit applies only to a taxpayer's principal residence not rentals

True

There are fees charged by the IRS on installment agreement requests that are approved.

True

A driver's license can be used to verify a taxpayer's social security number and correct name spelling.

f

B A Form W-4 is used to report wage and tax information to employees

f

Form 1099-INT may be used to report tax-exempt interest income.

f

Hank's neighbor is correct; all of Hank's social security benefits are taxable.

f

Total salary before any deductions are subtracted (hours * rate)

gross pay

The difference between sales revenue and cost of goods sold

gross profit

The amount charged but the bank for the use of borrowed money

interest

A tenant under a lease or real property

lessee

A landlord who leases real property to a tenant

lessor

the difference between the retail price and the cost price

markup

Ryan and Julie were married on December 29 of the tax year. They should file as:

married filing joint

Becky and Frank were divorced on December 29 of the tax year. They have no children or other dependents and have not remarried. Their filing status should be:

single

Tom's wife died on October 20, 2009. Tom has no dependents and has not remarried. Tom should file as

single

Individuals who are not required to file a tax return should file a return if they can claim the earned income credit.

t

Anita has a 13-year-old adopted son, Ryan. He is a U.S. citizen and lived with Anita for the entire tax year. Anita provided all of her son's support. Ryan is a qualifying child for the child tax credit.

true

Benjamin, age 26, lives alone, is single, and earns $10,250. His adjusted gross income is $10,950. Benjamin can claim the EIC.

true

Taxpayers can purchase savings bonds for their beneficiaries with part of their refund.

true

Using direct deposit is one way to reduce the chance that a refund will be lost or stolen

true

the cost of sending a child to day camp is a qualified expense for the child and dependent care credit

true

the price a retailer pays to a vendor for merchandise (cost of goods sold)

wholesale price

Taxpayers who claim the EIC based on one or more qualifying children are required to attach the Schedule EIC to their return.

true

To qualify for the nonrefundable child tax credit, a taxpayer must have tax liability (owe taxes)

true

traditional IRAs and other qualified plans allow individuals to defer paying taxes on money they contribute, and the earnings, until the funds are distributed. However, a taxpayer who takes a distribution before age 59 1/2 may be subject to not only the income tax but also an additional tax.

true

Maintaining eye contact with a taxpayer is a nonverbal cue that you are actively listening

t

Cindy's husband died on August 19 of the tax year. Cindy has no dependents and has not remarried. She should file as:

Married filing joint

Income earned from the sale of goods and services

revenue

Factors that determine the amount of a taxpayer's standard deduction are the taxpayer's gross income and filing status.

False

Since volunteer tax assistance sites use tax software to create and e-file tax returns, a paper copy of the return is not necessary.

False

Stephen's wife files a separate return and itemizes her deductions. True or False? Stephen can choose to take the standard deduction or itemize his deductions.

False

Taxpayers who have a balance due may elect to pay in full within 60 or 120 days with no interest and penalty.

False

The quality review can be done either before or after the taxpayer signs the return.

False

Tip income of less than $20 per month is exempt from federal income tax

False

Wendel's father obtained a loan for his son's qualified educational expenses. Wendel, who is his father's dependent, has agreed to pay the interest on the loan. True or False? In this case, either person can claim the deduction, as long as they do not both claim the deduction.

False

You can provide a guaranteed date that the taxpayer can expect a tax refund, based on the date the return is filed.

False

federal income tax withheld is reported to taxpayers on form W-4

False

Tip income is not subject to federal income tax.

f

The difference between sales revenue and expenses when when expenses are greater than sales revenue

net loss

The amount of money left after all deductions have been taken out of gross pay

net pay

The difference between sales revenue and expenses when sales revenue is greater than expenses

net profit

William Burke's wife is a Greek citizen. Her sister, Athena, who is also a Greek citizen, lived in the Burkes' home in Greece for the entire tax year. William provided more than 50 percent of Athena's total support. Can William claim his sister-in-law as a dependent?

no

The usual maintenance expenses of a business other than the cost of buying merchandise for resale

operating expenses

Anne's husband died one year ago. Anne has not remarried during the current tax year, but she has a 18-year-old dependent son. Anne's filing status should be:

qualifying widower

the final selling price paid for goods or services by the consumer

retail price

Besides Publication 4012, Volunteer Resource Guide, Publication 17 should be used as a reference for help on all tax-related topics.

t

Bob is 27 years old. No one can claim him as a dependent. His gross income was $9,550 during the tax year. Based only on this information, Bob is required to file a tax return.

t

Form 13614-C must be used by all certified volunteer tax preparers participating in the VITA/TCE programs when preparing a tax return.

t

Gambling winnings minus gambling losses is the correct way to report gambling income on Form 1040, line 21.

t

If Hank had not sold his stock and had no other source of income other than social security, his benefits may not be taxable

t

In most cases, unemployment compensation is taxable.

t

Jenny married Rick in April of the tax year. Neither can be claimed as a dependent on another's tax return. Both worked and earned gross income for the tax year. Can they claim both of their personal exemptions on their joint tax return?

t

The age test applies to a qualifying child

t

a person be claimed as a dependent on more than one income tax return

f

the taxpayer's spouse can be claimed as dependency exemption

f

A taxpayer who is on temporary disability and under age 65 might qualify for the credit for the elderly or the disabled.

false

All taxpayers who contribute to traditional IRAs are automatically entitled to a full or partial deduction on their tax return

false

Nadia divorced in 2007. Her settlement agreement states that she must pay her ex-husband $14,000 a year. She is also required to pay his ongoing medical expenses for a condition he acquired during their marriage. During the tax year, the medical expenses were $8,400. True or False? The amount she can deduct as an adjustment to income includes only her medical expenses, not the payments to her ex-husband.

false

Taxpayers can take the additional child tax credit in place of the child tax credit.

false

Taxpayers who file as Married Filing Separately may qualify for the EIC.

false

The child and dependent care tax credit applies only to taxpayers with dependents under the age of 13

false

A taxpayer who claims a dependent can use any form except Form 1040EZ.

t

A plan for selling a product

Marketing strategy

The price of goods in a suppliers catalog before any discounts are deducted

list price

All interest income is taxable

f

A joint return requires the signature of both spouses, even if only one spouse has income.

True

Social security tax

Fica tax

Form W-2G is used by taxpayers to report gambling winnings.

t

Each dependency exemption decreases income subject to tax.

t

The amount a company paid for merchandise that was sold

Cost of goods sold

Form 1040-ES is used to compute the amount of estimated tax to be paid over the year.

True

Form 13614-C, Section C must be used to conduct a quality review.

True

An employee can deduct the amount of jury duty pay turned over to the employer as an adjustment to income when the employer continues to pay the employee and the jury duty pay is given to the employer.

f

the amount of money borrowed

principal

John e-filed his 2009 Form 1040 on March 29, 2010. The next year, while preparing his 2010 return, John discovered an error in his 2009 return, which resulted in a higher refund. John mailed an amended 2009 return on April 19, 2011. Is this too late to qualify for the refund?

No