Midterm review

The IRS prefers rounding cents to what?

Nearest dollar

Apply critical thinking skills to decide whether the tax preparers in the following scenarios have met the standards for due diligence. Check the box for Yes if you believe due diligence standards were met or No if they were not. Anissa started preparing tax returns this year. She frequently confuses the rules for head of household, EITC, and dependency. Instead of looking up the rules or asking for assistance, Anissa makes a best guess as to how they apply to each of her clients.

No

If The taxpayer's modified adjusted gross income (MAGI) is above $90,000 ($180,000 for MFJ), can they claim AOTC?

No

What is form 8867

Paid Prepares due diligence checklist

Other payments and refundable credits that need to be added will be on what form?

Schedule 5

What form is used for CTC?

Schedule 8812

allowable Roth IRA contributions must be reduced by what?

any amount contribution to a traditional IRA

How much tax-free educational assistance may an employer make available to employees and how is it reported? a.An employer may offer up to $5,150 in tax-free education assistance to employees, and it is reported on Form 1099-MISC, box 7. b.An employer may offer up to $5,250 in tax-free education assistance to employees, and it is often reported on Form W-2, box 14. c.An employer may offer up to $5,250 in tax-free education assistance to employees, and it is reported on Form 1098-T. d.An employer may offer up to $6,250 in tax-free education assistance to employees, and it is reported on Form W-2, box 1.

b

Social Security Wages _________ A. are always the same as W-2 box 1 B. are capped at $128,400 C. Do NOT include deferred compensation D. Include tips

b

Which of the following statements is incorrect regarding EITC? A. A taxpayer may qualify for EITC with or without a qualifying child. B. A taxpayer must be a U.S. citizen or resident alien for more than half of the year. C. The maximum amount of EITC for 2018 is $6,431. D. The taxpayer must not have investment income greater than $3,500.

b

Which of the following types of interest must be reported on a taxpayers return, but isn't taxable? A. Checking account B. municipal bond C. series H or HH D. treasury bill

b

For the situation below, write whether or not if the taxpayer qualifies for the AOTC, the lifetime learning credit, or both. Unless stated otherwise, all taxpayers are U.S. citizens with no felony drug convictions. The information presented is for 2018. Henry paid his $2,500 in qualified expenses with student loans. He is pursuing an undergraduate degree full-time. His parents are eligible to claim him as a dependent on their return, but chose not to do so. This is Henry's second year in college, and he has never claimed the AOTC.

both

Barbara is a law clerk for your county. Which of the following types of retirement plans would she contribute to through her employer? A. 401(k) B. 403(B) C. 457 D. IRA

c

What is the maximum deduction allowed for qualified student loan interest? a.$2,000 b.$2,500 c.$3,000 d.$5,000

c

Which of the following statements is correct about interest? A. All interest must be reported on schedule B B. Federal income tax is not withheld from interest payments when a taxpayer fails to provide their SSN to the payer C. The amount of a penalty on early withdrawal of savings may be more than total amount income received by taxpayer D. US savings bonds and other treasury obligation interest is taxable on the federal return and all state refunds

c

Which of the following is not an EITC due diligence requirement? A. Completion of an eligibility checklist B. Compution of the credit c. verification of employment d. record retention

d

Are roth IRAs deductable?

no

EITC is a _______ credit refundable or nonrefundable

refundable

What is the age requirement to be claimed as dependents?

under 17

What is the degree requirement to claim AOTC?

undergraduate degree

What is an example of taxable income?

wages

Cab AOTC be claimed for expenses paid with borrowed fund, for example student loans?

yes

For each scenario, indicate whether or not the taxpayers qualify to claim the Child and Dependent Care Credit for expenses in 2018 Alice Keeler is divorced. Her daughter, Janet (5), lived with her all year. Alice would have been able to claim the dependency exemption for Janet except that she signed a waiver allowing her ex-husband to do so. While she was working, Alice sent her daughter to the Kiddy Care Center.

yes

Taxpayers age 65 years or older and/or blind are entitled to the following increased standard deduction amounts for singles and HOH

$ 1,600

What is the max allowable contribution for an IRA fund?

$5,500

Indicate which type of deferred compensation plan the taxpayer most likely participated in Rhonda is a tax professional with H&R Block, she also works as a computer programmer with a local technology firm

401(k)

Which of the following is considered earned income? A. Interest from a bank account. B. Unemployment compensation. C. Income from farming. D. Gambling winnings

C

Which of the following taxpayer(s) may qualify to claim the lifetime learning credit? A. Morgan (23) is single and is attending Placer University, where she is completing her master's degree in accounting. Her parents will claim her as a dependent. B. Kevin, a married taxpayer who will file separately. He attended classes at Placer University, where he is working towards a masters degree in business administration. C. Jim and Sara, a married filing joint couple with modified adjusted gross income of $125,000. They paid tuition to Placer University for their daughter, Meg (22), as she obtains her master's degree in education. D. Marvin (35) is single and is attending Placer University, as he obtains his master's degree in psychology. His modified adjusted gross income is $70,000.

C

Which of the following taxpayer(s) may qualify to deduct student loan interest as an adjustment to income? A. Alanis (23), a single taxpayer. She paid $1,500 in interest on a loan she received from her grandmother when she was a full-time student at her state university. B. Roger (42), who is married filing separately. He paid $2,600 in student loan interest for his daughter, Meg, when she was completing her bachelor's degree in accounting. C. Leah (29), a single taxpayer with modified adjusted gross income of $68,000. She received a Form 1098-E, reporting $2,100 of interest on a loan used to pay tuition when she was working on her undergraduate degree at a state university. D. Jack and Kendra, a married filing joint couple with modified adjusted gross income of $169,000. They received a Form 1098-E, reporting $2,600 of interest on a loan which paid tuition at a local college for their daughter, Jane (28), when she was completing her bachelor's degree

C

A taxpayer may file form 8379 to receive the injured spouse allocation of a MFJ federal tax refund that may be offset by all of the following types of past due payments except___? A. Child and/or spouse support B. Federal Income Tax C. Student Loan D. Utility

D

A taxpayer's spouse died in 2018, and the taxpayer did not remarry. Assuming the taxpayer has a qualifying child, what is the taxpayer's most favorable and correct filing status for 2018? A. Single. B. Head of household. C. Married filing separately. D. Married filing jointly

D

What is the maximum amount of the American Opportunity Tax Credit a taxpayer could receive? a.$1,650 b.$1,800 c.$2,000 d.$2,500

D

Decide whether any of the situations below are a conflict of interest, and what the tax preparer should do to resolve the conflict. On April 9, a tax preparer delays return preparation for all existing clients and devotes the entire week to new clients' returns.

It is a conflict of interest

Mario (5) was claimed by his mom, Janice and father Frank. Mario lived with them both 3 months out of the year. Then lived with his mother for 5 more months separate and Frank 4 months. Who can claim Mario?

Janice

For filing status MFS that lived with spouse at some time during the year; What's the full contribution phase out for ROTH IRA?

$0

For filing status MFS, that lived with their spouse at some time during the year, whats the full deduction phase out for IRA?

$0

For filing status MFS that lived with spouse at some time during the year; What's the contribution reduced phase out for ROTH IRA?

$1 - $9,999

For filing status MFS, that lived with their spouse at some time during the year, whats the deduction reduced phase out for IRA?

$1 - $9,999

Jack and Jill are married and will file a joint return. They have AOTC of $2,500 and a modified gross income of $165,000. What will be their computed tentative credit?

$1,875

For filing status MFS that lived with spouse at some time during the year; What's the no contribution phase out for ROTH IRA?

$10,000 or more

For filing status MFS, that lived with their spouse at some time during the year, whats the no deduction phase out for IRA?

$10,000 or more

For filing status of MFJ or QW; whats the deduction reduced for phase out IRA?

$101,000 - $120,999

For filing status of MFJ or QW; whats the full deduction for the phase out IRA?

$101,000 or less

For filing status S, HH, MFS; What's the contribution reduced phase out for ROTH IRA?

$120,000 - $134,999

In 2018, taxpayers who adopt a child may qualify for a nonrefundable credit for adoption expenses of up to $______ per eligible child

$13,810

Taxpayers age 65 years or older and/or blind are entitled to the following increased standard deduction amounts for MFJ & QW

$1300

What is the MGI limit for single, MFJ, when considering the life time learning credit

$134,000

For filing status S, HH, MFS; What's the no contribution phase out for ROTH IRA?

$135,000 or more

whats the max annual allowable contribution

$18,500

For filing status MFJ or QW; What's the contribution reduced phase out for ROTH IRA?

$189,000 - $198,999

For filing status MFJ or QW; What's the no contribution phase out for ROTH IRA?

$199,000 or more

What is the credit limit for lifetime learning credit?

$2,000 per tax return.

For 2018, the Affordable Care Act ; $695 per individual family member ($347.50 per child under age 18) without coverage, up to $_____ per tax household.

$2,085

The AOTC is available for up to $______ / eligible student.

$2,500

what is the max credit limit for the AOTC

$2,500 per eligible student.

Determine the maximum allowable 2018 traditional IRA contribution for each situation. None of the taxpayers in this exercise are active participants in employer-maintained retirement plans, so all contributions are fully deductible. Roger Williams (54) is single and earned $2,850 in wages. Because he has a large amount of investment income, he would like to contribute and deduct the largest allowable IRA amount to help reduce his tax liability. He has not yet made a contribution, but will do so before the due date of his return.

$2,850

The amount of the Adoption Credit begins to phase out when taxpayers' modified adjusted gross income exceeds $_______,

$208,140

Whats the max annual allowable contributions for ages 50 and up?

$24,500

How much money is allowed as an additional "catch-up" for ages 50+

$6,000

The earned income credit can be worth as much as ______ for 2018, depending upon the taxpayer's filing status, income, and number of qualifying children claimed.

$6,431

What is the max allowable contribution for an IRA fund for someone over 50

$6,500

For filing status of s, hh, MFS; whats the full deduction for the phase out IRA?

$63,000 or less

For filing status of s, hh, MFS; whats the reduced deduction for the phase out IRA?

$63,001 - $72,999

What is the MGI limit for single, HH, or QW, when considering the life time learning credit

$67,000

For 2018, the Affordable Care Act ; $______ per individual family member ($347.50 per child under age 18) without coverage, up to $2,085 per tax household.

$695

For filing status of s, hh, MFS; whats the no deduction for the phase out IRA?

$73,000 or more

Heather received 3 forms w2. The first one shows $2,368.43, the second shows $5,299.37, and the third shows $1,022.46. What is the total wages?

$8,690

Mary moore earned $95,000 as vice president of a local bank. Mary also earned $750 of interest from a CD from the same bank she works. What is mary's total income?

$95,750

The maximum amount of expenses allowed per tax return for thr lifetime learning credit is $_______

10,000

What form is interest totaling $1,500 or less entered on?

1040 line 2b

If a person received unemployment compensation during 2018 that state will issue what form?

1099-G

Determine the maximum allowable 2018 traditional IRA contribution for each situation. None of the taxpayers in this exercise are active participants in employer-maintained retirement plans, so all contributions are fully deductible. Tom (27) and Toni (23) Nichols will file a joint return. Tom earned $40,000 in wages. Toni is a college student and had no compensation. They would like to contribute and deduct the largest allowable IRA amounts.

11000

Determine the maximum allowable 2018 traditional IRA contribution for each situation. None of the taxpayers in this exercise are active participants in employer-maintained retirement plans, so all contributions are fully deductible. Ray (54) and Regina (48) Moore will file a joint return. Ray earned $38,000 in wages. He would like to contribute and deduct the largest allowable IRA amount. Regina earned $31,000 in wages. She also would like to contribute and deduct the largest allowable amount.

12000

For filing status of MFJ or QW; whats the no deduction for phase out IRA?

121,000 or more

What number is the following tie breaker rule? If the parents don't file MFJ but both claim the child, the IRS will treat the child as the QC of the parent with whom the child lived with the greater number of nights during the year

2

The amount of the lifetime learning credit is _____% of the total qualified expenses for all eligible students on the tax return

20

What form is used for the multiple support agreement?

2120

What number is the following tie breaker rule: If neither parent can claim the child as QC, the child is treated as the QC of the person with the highest AGI for the year

3

How many number of years of post secondary education is AOTC available?

4

What number is the following tie breaker rule: If the parent can claim the child but no parent does claim the child, the child is treated as the QC of the person who had the highest AGI of either parent

4

Indicate which type of deferred compensation plan the taxpayer most likely participated in June is a fundraiser for the local united way office

403(B)

Indicate which type of deferred compensation plan the taxpayer most likely participated in Katie works part time as an art instructor at junior high school

403(B)

Indicate which type of deferred compensation plan the taxpayer most likely participated in Jordan is a public school teacher

403(b)

Indicate which type of deferred compensation plan the taxpayer most likely participated in Antonio is a city councilman on your city council

457

Determine the maximum allowable 2018 traditional IRA contribution for each situation. None of the taxpayers in this exercise are active participants in employer-maintained retirement plans, so all contributions are fully deductible. Bobbi Bright (33), a single taxpayer, earned $8,700 in wages. She has already contributed $1,700 to her IRA.

5500

When a taxpayer reached what age they can withdraw funds from their IRA without penalty ?

59.5

For workers born before 1938, full retirement age is age?

65

The retirement age is gradually being increased to age _____ for workers born after 1937

67

To establish and contribute to a traditional IRA, a taxpayer must have taxable compensation and must not have reached what age?

70.5

The custodial parent may release the right to claim the dependency exemption for a qualifying child to allow the noncustodial parent to claim the exemption, this is accomplished by using what form?

8332

What form is used for request for innocent spouse relief?

8857

AOTC id claimed on what form

8863

American Opportunity Credit is calculated on what form?

8863

After suffering a debilitating injury, Ahmad (47) retired on disability after teaching high-school math for several years. He had not yet reached the minimum retirement age for the district where he taught. If Ahmad's employer paid the premiums on his disability insurance policy using pre-tax dollars, how does he report the disability benefits reported to him on Form 1099-R? A. As taxable wage income reported on Form 1040, line 1. B. As nontaxable wage income reported on Form 1040, line 1. C. As taxable pension income reported on Form 1040, line 4. D. As nontaxable pension income reported on Form 1040, line 4

A

Chris (67) and Leon (68) are married, and they will file a joint return. Their only income during the year consisted of $32,000 in social security benefits and a $10,000 pension distribution. How much of their social security benefits are taxable? A. Zero. B. Up to 50%. C. Up to 85%. D. Up to 100%

A

Frivolous is: A. Obviously improper or unlawful. B. A position that has less than 50% likelihood of being sustained on its merits. C. A fraudulent return that cannot be tolerated. D. Claiming a luxury hotel bill as a business expense

A

How much is the Child Tax Credit worth? A. Up to $2,000 per qualifying child. B. $2,500 per qualifying child. C. $3,000 per qualifying child. D. $5,000 per qualifying child

A

James (35), a single taxpayer, lives with his sister, Denise (24), and Neveah, his three-year-old niece. Denise works part-time and earned $3,600 for 2018. Denise will not claim Neveah as a dependent; she will file her return just for the purpose of claiming a refund for tax withheld. James earned $48,000 during the year, and he pays more than half the cost of maintaining the home. What is James's correct and most favorable filing status? A. Head of household. B. Single. C. Married filing separately. D. Married filing jointly

A

Taxpayers who have any financial interest in, or signature authority over, a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country may have to report this information by filing: A. FinCEN Form 114 B. Form 1116. C. Form 6251. D. Form 8275

A

The head of household filing status requires that a taxpayer maintain a household for: A. A qualifying child, qualifying relative, or a parent claimed as a dependent on the taxpayer's return. B. At least one other person. C. A beloved family pet. D. Maintaining a household for another person is not a requirement of the head of household filing status

A

The tax on income that comes entirely from wages under $100,000 is determined according to the: A. Tax Tables. B. Tax Computation Worksheet. C. Qualified Dividends and Capital Gain Tax Worksheet. D. Schedule D Tax Worksheet

A

Under what circumstances might a taxpayer, who does not meet the federal filing requirement, want to file a federal return anyway? A. They are entitled to one or more refundable credits. B. They are entitled to one or more nonrefundable credits. C. To claim itemized deductions. D. If there was any state tax withheld

A

What happens if an individual is the qualifying child of more than one taxpayer? A. The IRS tiebreaker rules apply. B. Neither taxpayer is allowed to claim the child as a dependent. C. Each taxpayer is eligible to claim one half (50%) of the Child Tax Credit. D. It is acceptable for both taxpayers to claim the child as a dependent on their return

A

When a taxpayer receives Form 1099-R with no amount entered in box 2a and code 7 entered in box 7, the entire distribution: a.Could be taxable. b.Is never taxable. c.Is an early distribution and taxable. d.Has been rolled into a traditional IRA or into another qualified plan.

A

Which form is used by employers to report wages earned by their employees? A. Form W-2. B. Form W-4. C. Form 1098-T. D. Form 1099-R

A

Which of the following exemptions cannot be claimed directly on the federal tax return? A. Death of a close family member. B. Gross income below the return filing threshold. C. Membership in a health care sharing ministry, federally recognized Indian tribe, certain religious sects, nonresident aliens, or undocumented immigrants. D. Short coverage gap.

A

Which of the following expenses qualifies for an education credit in 2018? a.Tuition payments. The taxpayer didn't receive scholarships, grants, or other nontaxable benefits. b.Fees for an optional student activity. c.Cost of student medical fees. d.Tuition payments. The taxpayer received a nontaxable grant, which covered the entire tuition expense.

A

Which of the following is not counted as support? A. Life insurance premiums. B. Lodging. C. Clothing. D. Entertainment

A

Which of the following is reported on Schedule 1 (Form 1040), line 21, Other Income? A. Gambling winnings. B. Taxable scholarship. C. Disability pension income. D. Welfare benefits.

A

Which of the following is specifically excluded from gross income? A. Interest on municipal bonds. B. Alimony and separate maintenance payments. C. Pensions. D. Compensation for services, including fees, commissions, and certain fringe benefits

A

A taxpayer claiming a child who is permanently and totally disabled must understand that the definition of the permanent and totally disabled requires which of the following 2 factors: A. child cannot engage in any substantial gainful activities B. Child must seek medical care on a regular scheduled basis C. The doctor determined the condition has lasted or will last for at least one year or can lead to death D. The child must not be able to attend school

A / C

A taxpreparer who prepares a tax return for someone one or more qualifying children who are different from last years should take which of the following 2 actions: A. Advise the taxpayer of the qualifying child rules B. Not enter the child on the return unless the child was born that tax year C. Request documentation from the biological parents that they will not be claiming the child D. Document the taxpayers explanation that makes them eligible to claim the child

A / D

To claim a credit for qualified expenses, what are the requirements a taxpayer must meet?

A dependent who is a qualifying child and has not reached their 13th birthday when the care was provided.

You should ask the taxpayer more questions whenever the information you have received appears to be (check all that apply): A. Incorrect. B. Insensitive. C. Incomplete. D. Inconsistent

A/C/D

How many years is the lifetime learning credit available?

Available for all years of postsecondary education and for courses to acquire or improve job skills.

All of the following are generally considered qualified expenses for the student loan interest deduction EXCEPT: A. Graduate school tuition. B. Transportation expenses incurred for a nondependent grandchild attending college in another state. C. Room and board at a dormitory owned and operated by the educational institution. D. Books and supplies

B

Anthony (29) and Vanessa (31) have lived together for the last couple of years. They are not married and do not present themselves as married. Vanessa's daughter, Sasha (9), lived with them all year. Sasha is not Anthony's daughter. Sasha's father, Ted, is not in her life, but Ted sends Vanessa $100 in child support each month. Anthony's wages were $36,291, Vanessa's wages were $23,576, and Sasha has no income. Using 2018 tax law, who should claim Sasha as a dependent? A. Anthony. B. Vanessa. C. Ted. D. Sasha should file her own return.

B

Assuming all other requirements are met, how long may an eligible surviving spouse file as a qualifying widow(er)? A. One year. B. Two years. C. Three years. D. Five years

B

Choose the response that best completes the following sentence. Under the special rules for children of divorced or separated parents, the noncustodial parent may be entitled to: A. Claim a higher standard deduction. B. Claim the Child Tax Credit. C. Claim the Earned Income Tax Credit. D. File as head of household

B

Education credits are complex, and the rules are different for each credit. Which of the following accurately describes some of the differences between the American Opportunity Tax Credit (AOTC) and the lifetime learning credit? A. The lifetime learning credit is not a refundable credit, while up to $2,500 of the AOTC may be refundable. B. The credit for AOTC may be as much as $2,500 per eligible student, while the maximum amount of the lifetime learning credit is $2,000 per tax return. C. Up to 40% of the AOTC may be refundable. The amount of the lifetime learning credit is 20% of qualified educational expenses, and there is no cap on the amount of expenses. D. The credit for AOTC may be as much as 100% of the first $4,000 of expenses per eligible student, while the amount of the lifetime learning credit is only 20% of the first $10,000 of qualified expenses

B

For 2018, how much is the standard deduction for a single taxpayer who is not blind and is under age 65? A. $0 B. $12,000 C. $18,000 D. $24,000

B

For 2018, what is the gross income filing requirement for a single taxpayer age 65 or older? A. $12,000 B. $13,600 C. $24,000 D. $26,600

B

In 2018, Erin (38) contributed $2,000 to a traditional IRA. She is single, and her modified adjusted gross income (MAGI) is $31,000, all from wages. Erin has never taken a distribution from any retirement account. She is potentially eligible for a retirement savings contributions credit (Saver's Credit) of up to ____________. A. $0 B. $200 C. $400 D. $500

B

In 2018, John, a single parent, sent his dependent daughter, Marlene, to Big Kids' Play Yard while he worked during the day. Marlene turned 13 on August 1, 2018. John paid Big Kids' Play Yard $2,310 ($35 per week day) from June 1 through August 31, 2018. He did not incur any other child care expenses during the year. How should John report this amount on Form 2441, Child and Dependent Care Expenses? A. John should report $2,310 on line 1 and $2,310 on line 2. B. John should report $2,310 on line 1 and $1,505 on line 2. C. John should report $1,505 on line 1 and $1,505 on line 2. D. John will not be able to claim the child care expenses because his daughter turned 13 during the year

B

In the event of a conflict of interest, tax preparers subject to Circular 230 may still represent the clients under certain circumstances. All of the following apply, EXCEPT: A. The tax preparer reasonably believes they can provide competent and diligent representation to each affected client. B. District General Manager approval. C. The representation is not prohibited by law. D. Each affected client gives informed consent, confirmed in writing, in which they waive the conflict

B

Schedule B is required when interest income exceeds which of the following thresholds? A. $1,000 B. $1,500 C. Schedule B is always required. D. Schedule B is never required

B

Some adjustments to income do not have a specific line on the tax return and are instead included on Schedule 1 (Form 1040), line 36, as a "write-in" adjustment. All of the following are considered "write-in" adjustments EXCEPT: A. Jury duty payment turned over to an employer. B. A penalty for early withdrawal from a savings account. C. Expenses related to rental income from personal property. D. Attorney fees paid to settle an unlawful discrimination claim

B

Tax preparers who need to document head of household due diligence questions for a taxpayer whose income appears to be insufficient to support the household should: A. Advise the taxpayer that the IRS will be contacting them for more information. B. Assure the taxpayer that the information will be kept confidential and will only be shared with the IRS in the event of an audit. C. Inform the taxpayer that they are unable to prepare their return. D. Advise the client you are unable to prepare their return.

B

Victoria and Xavier Quinn are married and will file a joint return with taxable income of $73,678. Using the tax tables, whats their amount of tax A.$5,580 B. $8,460 C. $10,757 D. $12,148

B

What are the five tests for a qualifying child? A. Relationship, citizenship, age, support, and joint return. B. Relationship, residency, age, support, and joint return. C. Marital status, residency, age, support, and joint return. D. Relationship, residency, age, support, and type of income

B

What is the standard deduction amount for a 68-year-old single taxpayer who is also blind? A. $18,000 B. $15,200 C. $13,600 D. $12,000

B

Where should unemployment compensation be reported on Form 1040? A. Form 1040, line 1. B. Schedule 1, line 19. C. Schedule 1, line 21. D. Unemployment compensation is nontaxable and not required to be reported on an income tax return

B

Which of the following is nontaxable on a federal income tax return? A. Interest income from a savings account. B. Interest income from municipal bonds. C. Interest from corporate bonds. D. Interest from personal loans

B

Which of the following shows these numbers rounded correctly: $31.43, $143.57, $369.22, $1,547.88? A. $32. $142. $368. $1,547. B. $31. $144. $369. $1,548. C. $31. $142. $369. $1,547. D. $32. $144. $368. $1,547.

B

Which of the following statements about distributions from qualified retirement plans is TRUE? A. A blank amount in box 2a of Form 1099-R usually means that none of the distribution is taxable. B. A distribution code 4 in box 7 of Form 1099-R generally means the taxpayer is not subject to the additional tax on early distributions. C. A distribution code 1 in box 7 of Form 1099-R indicates a direct rollover to a qualified retirement plan or IRA. D. The Tax Code imposes an additional 10% early withdrawal penalty on all distributions made before the taxpayer has reached age 59 1/2

B

Which of the following three factors determine the filing requirement for nondependents? A. Marital status, age, and residency. B. Marital status, age, and gross income. C. Marital status, age, and taxable income. D. Marital status, age, and total deductions

B

All of the following are forms of qualified health care coverage EXCEPT: A. Marketplace insurance. B. Employer- sponsored health insurance. C. Stand-alone disability coverage. D. Coverage provided by the Children's Health Insurance Program (CHIP)

C

Curtis (71) and Shirley (64) are married with a gross income of $23,370. Curtis and Shirley are required to file a return because their gross income excesses their filing requirement of ___? A. $18,000 B. $24,000 C. $25,300 D. $26,600

C

Disability retirement benefits qualify as earned income: A. Always. B. Never. C. Until the taxpayer reaches minimum retirement age. D. After the taxpayer reaches minimum retirement age.

C

Doris and Aubrey were married. Doris died on February 1, 2018. On December 1, 2018 Aubrey was remarried to Fredia. Aubrey and Fredia may file a joint return, or they may file MFS, whichever they choose. Doris's filing status for 2018 is? A. Single B. MFJ C. MFS D.QW

C

For 2018 tax returns, what is the standard deduction for taxpayers using the head of household filing status? A. $0 B. $12,000 C. $18,000 D. $24,000

C

In specific circumstances, tax preparers subject to Circular 230 may disclose confidential tax return information. The two most common exceptions are the: A. Limited disclosure and related party. B. Circular 230 and related party. C. Related party and written consent. D. Written consent and limited disclosure

C

Margaret works for a privately held corporation. She contributes to her employer's retirement savings plan through regular payroll deductions. Her contributions are tax-deferred, and so are her earnings in the plan. Her employer matches part of her contributions. Margaret most likely participates in which of the following types of employer-sponsored retirement plans? A. Pension plan. B. Annuity. C. 401(k) plan. D. 403(b) plan.

C

Nathan Bayer is a single taxpayer. His 2018 taxable income was $57,474. What is Nathan's 2018 federal income tax? A. $5,749 B. $6,898 C. $8,584 D. $12,644

C

Noncustodial parents who want to claim a dependency exemption, and obtained a divorce decree or separation agreement that went into effect after 2008, must file which of the following forms to claim the exemption? A. Form 8379. B. Form 2120. C. Form 8332. D. A copy of the court-ordered agreement

C

Roberta (37) is married, but she lived apart from her husband, Leo, for the last three months of 2018. Roberta and Leo are not divorced or legally separated. They agree that they do not want to file a joint return. They share custody of their two children, who spend an equal amount of time with both parents. What is Roberta's most favorable and correct filing status? A. Single. B. Married filing jointly. C. Married filing separately. D. Head of household

C

Tax preparers must exercise due diligence when preparing returns for taxpayers claiming the American Opportunity Tax Credit (AOTC). Which of the following is NOT one of the requirements? A,. Complete Form 8867. B. Knowledge. C. Complete Form 8863. D. Retain records

C

Tax-exempt interest is: A. Taxable and reportable. B. Not required to be reported. C. Nontaxable, but reportable. D. Nontaxable and not reportable

C

The IRS requires tax preparers subject to Circular 230 who obtain written conflict of interest waivers from clients to retain the waivers for at least: A. 12 months. B. 24 months. C. 36 months. D. 48 months

C

The purpose of Form 8962 is to calculate the taxpayer's: A. Premium Tax Credit and reconcile it with any advance payment of the Premium Tax Credit. B. Insurance premiums for minimum essential coverage from both private insurers and the Marketplace. C. Penalty for failing to obtain qualifying coverage. D. Health coverage exemption

C

The standard deduction on an income tax return is determined by: A. Citizenship. B. Residency. C. Filing status. D. Gross income

C

To be eligible to deduct educator expenses, a taxpayer must meet the definition of qualified educator described in the regulations. This includes: A. Teachers, instructors, and teacher's aides who worked in their role for at least 750 hours during the school year. B. Counselors and principals who worked at least 750 hours during the school year. C. Teachers, instructors, and teacher's aides who worked in their role for at least 900 hours during the school year. D. Counselors, principals, and administrative assistants who worked at least 900 hours during the school year

C

To ensure an accurate return, tax preparers must do all of the following EXCEPT: A. Ask questions when clarification is necessary. B. Know the applicable tax laws. C. Audit the return. D. Apply due diligence standards

C

To file as head of household, a taxpayer must meet all of the following requirements EXCEPT: A. Be unmarried, or "considered unmarried" on the last day of the tax year. B. Pay more than half the cost of maintaining the household for the year. C. Have gross income of at least $18,000. D. Have maintained a household for either a qualifying child or a qualifying relative

C

Unearned income is all of the following except: A. Interest. B. Dividends. C. Wages. D. Alimony

C

What are the four tests for a qualifying relative? A. Relationship or member of the household, gross income, support, and residency. B. Relationship or member of the household, gross income, citizenship, and not a qualifying child. C. Relationship or member of the household, gross income, support, and not a qualifying child. D. Relationship or member of the household, gross income, support, and be a qualifying child

C

What does Circular 230 require that you do if you discover that a taxpayer has previously not complied with the revenue laws of the United States? A. Call the IRS immediately. B. Notify local police. C. Advise the taxpayer of the facts, and the consequences for noncompliance. D. Nothing; you are only responsible for the return you are currently preparing

C

What form is used to report long-term disability benefits to the taxpayer? A.Form W-2. B. Form 1099-G. C. Form 1099-R. D. Form 1098-E.

C

What is the maximum amount of the lifetime learning credit? a.$1,100 per return. b.$1,650 per return. c.$2,000 per return. d.$2,500 per return.

C

What should you do if a taxpayer brings in a Form W-2 that has an obviously altered SSN? A.Notify local authorities. B. Call the IRS. C. Question the client carefully and document the responses. D. Refuse to prepare the return

C

Which form is filed to protect one spouse when the other spouse has understated income or overstated a deduction or credit? A. Form 4852. B. Form 8332. C. Form 8857. D. Form 8379

C

Which form is filed to protect one spouse's share of a refund when the other spouse has past-due debts that could be offset by the refund? A. Form 8332. B. Form 2120. C. Form 8379. D. Form 8857

C

Which of the following is NOT a requirement that must be met for a taxpayer to qualify for the head of household filing status? A. The taxpayer must be unmarried (or qualified as unmarried) for tax purposes. B. The taxpayer must pay over half the cost of maintaining a home for the year. C. The taxpayer must be legally separated or divorced. D. The taxpayer's home must have been the main home of the taxpayer and their qualifying child or qualifying relative for more than half the year

C

Which of the following is NOT an example of disreputable conduct? A. Using abusive language, making false accusations and statements knowing them to be false, circulating or publishing malicious or libelous matter, or engaging in any contemptuous conduct in connection with practice before the IRS. B. Giving a false opinion knowingly, recklessly, or through gross incompetence, or following a pattern of providing incompetent opinions in questions arising under the federal tax laws. C. Preparing the current-year return for a taxpayer when the tax preparer realizes the taxpayer omitted items on a prior-year return. D. Being convicted of any criminal offense under the revenue laws or of any offense involving dishonesty or breach of trust

C

Which of the following is earned income? A.dividends B. Graduation Gift C. Self employment income D. SS/Disability

C

Which of the following nondependent taxpayers is NOT eligible to claim the student loan interest deduction? A. A taxpayer filing as single. B. Two taxpayers filing married filing jointly. C. A taxpayer filing married filing separately. D. A taxpayer filing head of household.

C

Which of the following taxpayers is NOT able to claim the Child and Dependent Care Credit? a.Alice Keeler is divorced. Her daughter, Janet (5), lived with her all year. Alice would have been able to claim the dependency exemption for Janet except that she signed a waiver allowing her ex-husband to do so. While she was working, Alice paid for her daughter to attend the Kiddy Care Center. b.Christine Williams' husband, Henry, was disabled and unable to care for himself for the entire year. Christine hired a nurse to care for him in their home while she was at work. Christine and Henry Williams will file a joint return. c.Sidney and Stella Anderson have a dependent daughter, Andrea (8). Sidney works full-time, and Stella is extensively involved in charity work. They paid the Daily Child Care Center to take care of Andrea while Stella worked for various charitable organizations. d.Jim and Mary McGraw have two dependent children, Tom (10) and Dana (4). Jim worked all year. Mary looked for a job in July and worked from August through December. They paid a babysitter to care for the children from July through December. The McGraws will file a joint return.

C

A taxpayer eligible to claim the lifetime learning credit may receive up to $2,000 for this credit. All of the following are considered qualified expenses for this credit EXCEPT: A. Tuition and fees paid to acquire a degree from an accredited university. B. Tuition and fees paid to a local community college for a class that will improve the taxpayer's job skills. C. Books that must be purchased from the educational institution as a condition for enrollment. D. Room and board

D

All of the following are types of retirement plans self-employed taxpayers may establish for themselves and their employees EXCEPT: A. A 401(k) plan. B. Simplified employee pensions (SEPs). C. SIMPLE IRAs. D. Spousal IRAs

D

Choose the response that best describes a credit that is not claimed very often because the income limits are very low, and taxpayers who are eligible generally receive only a small amount. A. Adoption Credit. B. Child and Dependent Care Credit. C. The Foreign Tax Credit. D. Credit for the Elderly or Disabled

D

For a taxpayer to be considered an eligible educator for the educator expenses adjustment, how many hours does the taxpayer need to work during the school year as a teacher, teacher's aide, counselor, or administrator in an elementary or secondary school? A.400 hours. B. 600 hours. C. 850 hours. D. 900 hours.

D

For tax purposes, when is a person's marital status determined? A. On the first day of the tax year. B. On the taxpayer's birthday. C. On the day the person files their tax return. D. On the last day of the tax year

D

Nakita was born in 1957. Based on her year of birth, when would Nakita reach full retirement age for social security benefits? a.65 years. b.65 years and 6 months. c.66 years. d.66 years and 6 months.

D

Some types of income do not need to be reported anywhere on a federal tax return. This includes all of the following EXCEPT: A. Most medical insurance proceeds. B. Workers' compensation paid to an employee who was injured on the job. C. Welfare benefits. D. Unemployment compensation

D

Taxpayers who receive Form 1099-DIV, showing that they received qualified dividends, must complete which of the following forms to compute their tax? A. Schedule J. B. Schedule B. C. Schedule D Tax Worksheet. D. Qualified Dividends and Capital Gain Tax Worksheet.

D

The Child and Dependent Care Credit: a.Phases out completely when the taxpayer's AGI reaches $25,000. b.Phases out completely when the taxpayer's AGI reaches $37,500. c.Phases out completely when the taxpayer's AGI reaches $43,000. d.Never completely phases out.

D

What would make a scholarship or fellowship fully or partially taxable to the student? A. The student is a non-degree candidate. B. The scholarship or fellowship exceeds the student's current-year qualified educational expenses. C. As a condition of the scholarship or fellowship, the student is required to teach a course at the university. D. All of the above.

D

Which form is required when a custodial parent releases their right to claim their child as a dependent to the noncustodial parent? A. Form 8453. B. Form 8283. C. Form 8867. D. Form 8332.

D

Which of the Following type of income is nontaxable? A. workers' compensation B. rebates c. disaster relief payments d. all of the above

D

Which of the following is NOT a percentage of social security benefits subject to federal tax? Up to __________. a.0% b.50% c.85% d.100%

D

Which of the following is incorrect regarding the requirements to be considered unmarried for tax purposes? A. The taxpayer must file a separate return from their spouse. B. The taxpayer must have provided more than half the cost of maintaining their home for the tax year. C. The home must have been the main home of the taxpayer and their qualifying dependent for more than half of the tax year. D. The taxpayer's spouse must have not lived in the home at any time during the tax year

D

Which of the following is not one of the four requirements to claim a dependent? A. The dependent must be a qualifying child or qualifying relative. B. The dependent must be a U.S. citizen or a resident of the United States, Canada, or Mexico. C. If the dependent is married, they cannot be claimed as a dependent if they file a joint return with their spouse (unless they are only filing to claim a refund of withholding). D. The taxpayer must provide 100% of the dependent's support for the whole year.

D

Which taxpayer is required to file a tax return for 2018? A. Reba, age 65. She is a qualifying widow. Her gross income was $24,500. B. Simon, age 26. He is single, and his gross income was $11,500, all from wages. C. Raine, age 27. Her filing status is head of household. Her gross income was $17,500, all from wages. D. Felipe, age 23. His gross income was $5,750. His filing status is married filing separately.

D

Determine which of the following taxpayers may claim the AOTC. If the taxpayer is ineligible, explain why. You may refer to your textbook to help you complete this exercise. Kenneth Griffin paid qualified expenses for his son, John, who he claims as a dependent. John is a freshman at State University. Is Kenneth eligible to claim the AOTC?

Eligible

Determine which of the following taxpayers may claim the AOTC. If the taxpayer is ineligible, explain why. You may refer to your textbook to help you complete this exercise. Sharon Liston supports her son, Robert (20), an unmarried college student. He earned $6,700 in wages from a part-time job and paid qualified expenses in 2018. Sharon plans to claim Robert as a dependent. Her taxable income is $30,000. Is Sharon eligible to claim the AOTC?

Eligible

When a taxpayer takes or receives money from a retirement account, it is called a distribution, this is reported to the recipient taxpayer on what form

Form 1099-R

What for is used to notify the taxpayer of total social security benefits received during the year

Form SSA-1099

Determine which of the following taxpayers may claim the AOTC. If the taxpayer is ineligible, explain why. You may refer to your textbook to help you complete this exercise. Lisa Dougherty is claimed as a dependent by her mother, Florence. Lisa paid most of her own college expenses. Is Lisa eligible to claim the AOTC?

Ineligible

Read the following scenario and determine who is part of the tax household. Jennifer (15) and Jeremy (9) are Emily's children from her previous marriage. They both lived with Richard and Emily until May, when Jennifer moved out to go live with her father. Jeremy continued to live with Richard and Emily for the remainder of the year.

Jeremy

Can a student be claimed as a dependent and also claim AOTC?

No

Julie Ann (72) was claimed by both her son, Mark, and her other son, Samuel. Mark and Samuel each provided 40% of Julie Ann's support. The remaining 20% was paid by Julie Ann's niece, Kathy. Who can claim Julie Ann's dependency exemption?

No One

Linda (17) was claimed by her grandmother, Nadine. Linda lived with her mother, Rose, and grandmother for all of 2011. Nadine's AGI was $22,450. Rose's AGI was $34,650. Rose did not claim any dependents in 2011. Who can claim Linda's dependency exemption?

No one

Determine whether or not the taxpayer qualifies for EITC. If they do not qualify, explain the reason for their disqualification. If they do qualify, determine the amount of the credit Juan (52) is filing as a single taxpayer with no dependents. Juan's earned income and AGI in 2018 was $15,281, all from wages. He had no other income. Juan is a U.S. citizen.

No. Juan's income was greater than $15,269.

Determine whether or not the taxpayer qualifies for EITC. If they do not qualify, explain the reason for their disqualification. If they do qualify, determine the amount of the credit Lorelei (29) and Sean (28) are married taxpayers, filing a joint return. Lorelei's income from wages was $18,871. Sean's income from wages was $10,465. They had $88 of interest income from their checking account. They had no other income in 2018. Lorelei and Sean are expecting their first child in June of 2019. Both are U.S. citizens.

No. Lorelei and Sean have a combined income greater than $20,949.

Determine whether or not the taxpayer qualifies for EITC. If they do not qualify, explain the reason for their disqualification. If they do qualify, determine the amount of the credit Rosalee (19) is filing as a single taxpayer with no dependents. Rosalee's earned income and AGI in 2018 was $8,974, all from wages. She had no other income. She is a U.S. citizen.

No. Rosalee is not between the ages of 25 and 65.

Is the lifetime learning credit refundable or nonrefundable?

Nonrefundable

A pension is calculated using a formula based on what?

Number of years worked, age, history of earnings with the employer

Read the following scenario and determine who is part of the tax household. Richard and Emily are newly married and file jointly. This is a second marriage for both. They each have two children from their previous marriages. Emily's mother lives with the couple and helps out with childcare.

Richard and Emily

What is the course load requirement to claim AOTC?

Student must be enrolled at least half-time for at least one academic period

Determine whether or not the taxpayer qualifies for EITC. If they do not qualify, explain the reason for their disqualification. If they do qualify, determine the amount of the credit Marty (24) is a single taxpayer, filing head of household, with one dependent, Mindy (2). Mindy is Marty's daughter, and she lived with him for all of 2018. No one else lived with Marty. Marty's earned income and AGI was $23,457, all from wages. He had no other income. Both Marty and Mindy are U.S. citizens. Marty is not a full-time student.

Yes

Determine whether or not the taxpayer qualifies for EITC. If they do not qualify, explain the reason for their disqualification. If they do qualify, determine the amount of the credit Ronald (28) is filing as a single taxpayer with no dependents. Ronald's earned income and AGI in 2018 was $10,281, all from wages. He had no other income. He is a U.S. citizen.

Yes

Decide whether any of the situations below are a conflict of interest, and what the tax preparer should do to resolve the conflict. For the past eight years, Ralph has prepared joint income tax returns for Dan and Marlo, who divorced in January 2017, after a bitter and nasty court battle. They now have joint custody of their four-year-old son, Marcus. After the divorce, Ralph kept Dan and Marlo as separate clients. In 2019, Dan came to Ralph's office for preparation of his 2018 tax return. Dan told Ralph that Marcus lived with him in 2018 for more than six months and Dan paid about 55% of Marcus' support. Based on this information, Ralph prepared Dan's return using the head of household filing status and claiming Marcus as a qualifying child for purposes of dependency, Child Tax Credit, and EITC. Three weeks after preparing Dan's return, Ralph prepared Marlo's return. During his interview with Marlo, she advised Ralph that, for 2018, Marcus lived with her for seven months and she paid about 55% of his support.

Yes, there is a conflict of interest

Determine whether or not the taxpayer qualifies for EITC. If they do not qualify, explain the reason for their disqualification. If they do qualify, determine the amount of the credit Ernest (45) and Teresa (41) are married taxpayers, filing a joint return. Ernest's income from wages was $23,457. Teresa's income from wages was $18,293. They had $144 of interest income from a money market account. Their AGI was $41,894. They had no other income in 2018. Ernest and Teresa have two dependent sons, Michael (17) and Connor (15). They all lived together in 2018, and no one else lived with them. Ernest, Teresa, Michael, and Connor are all U.S. citizens.

Yes. Their combined earned income of $41,750 and AGI of $41,894 would allow them to receive $2,025 in EITC.

Determine whether or not the taxpayer qualifies for EITC. If they do not qualify, explain the reason for their disqualification. If they do qualify, determine the amount of the credit Junichi (34) and Mariko (32) are married taxpayers, filing a joint return. Junichi's gross income from wages was $34,281. Mariko had no income in 2018. They had no other income in 2018. Junichi and Mariko have one dependent daughter, Sakiko (4). They all lived together in 2018, and no one else lived with them. Junichi, Mariko, and Sakiko are all U.S. citizens.

Yes. They would receive $1,875 in EITC.

Which of the following statements about retirement account distributions is true? a.The taxable portion of a pension or annuity with a starting date of June 4, 2018, is calculated using the simplified method. b.Taxpayers taking a distribution from a qualified retirement plan or IRA before reaching age 70½ are subject to an early distribution penalty of 20%. c.Retirement account distributions are always fully taxable. d.Distributions are usually reported to the taxpayer on Form W-2

a

For the situation below, write whether or not if the taxpayer qualifies for the AOTC, the lifetime learning credit, or both. Unless stated otherwise, all taxpayers are U.S. citizens with no felony drug convictions. The information presented is for 2018. Frank and Maggie, who file jointly, paid $1,500 in tuition for their dependent son. The tuition was for their son's first year at an eligible educational institution where he has been a full-time student since September 2018, pursuing an undergraduate degree. The AOTC has never been claimed for their son.

both

For the situation below, write whether or not if the taxpayer qualifies for the AOTC, the lifetime learning credit, or both. Unless stated otherwise, all taxpayers are U.S. citizens with no felony drug convictions. The information presented is for 2018. June is a half-time student at an eligible educational institution where she paid $5,000 in tuition. She had enough credit hours to become a sophomore in the spring of 2018. She claimed the AOTC credit on her 2017 tax return. Her filing status is single, and she is not eligible to be claimed as anyone's dependent.

both

Which of the following statements is NOT true about the American Opportunity Tax Credit? a.The AOTC is a credit of up to $2,500 per eligible student, and up to 40% of the credit ($1,000) may be refundable. b.The AOTC is available to taxpayers who paid qualified education expenses for higher education for an eligible student whom they claimed as a dependent. C.Taxpayers may claim the AOTC if they file MFS, or have modified adjusted gross income (MAGI) above $90,000 ($180,000 for MFJ). d.The AOTC is only available for the first four years of postsecondary education.

c

Which of the following taxpayers does NOT qualify to deduct qualified educator expenses? a.Melanie is an elementary school substitute teacher in her local school district. She worked 960 hours in 2018. She spent $100 on books for her various classrooms, and $90 on computer software for her math classes. She was not reimbursed for these expenses. b.Martin is vice-principal at his local high school. He worked full-time during 2018. He spent $245 on supplies that were used in classrooms at the school. He was not reimbursed for his expenses. c.Gaylene is a high school substitute teacher in her local school district. She worked 1,040 hours in 2018. She spent $590 home schooling her fifth-grade daughter, Jodie. She spent $230 on supplies used in her various classrooms. She was reimbursed for the supplies. d.Lori is an elementary school teacher. She worked full-time during 2018. She spent $300 on supplies for her classroom. She was not reimbursed for these supplies.

c

Which of the following taxpayers may claim the Child and Dependent Care Credit? A. Amanda is a nurse, who works the night shift. She paid her neighbor's daughter, Tiffany (19), to spend the night with her 14-year-old daughter, Zoey, on the weekends while she worked. B. Daniel and Aimee paid Tiny Tots to watch their son, Landon (3), while Daniel works full-time and Aimee volunteers at the local children's hospital. C. Marlene paid for her husband, Seth, who is disabled, to attend an adult daycare center that complies with all relevant state and local laws, three days a week while she works. D. Both Tim and Karla work full-time and they paid their son, Stephen (17), to watch their other son, Kyle (9), after school until they get home from work.

c

Which of the following statements about qualified retirement plans for self employment taxpayers is true? A. A simplified employee pension is for self-employed taxpayers who only want to contribute to their own retirement B. Self employed taxpayer who setup qualified plans for themselves are not required to cover their employes C. All retirement plans covering self employed taxpayers and their employees must be set up by the end of the tax year D. Defined contribution plans, such as 401(k) plans, are available to self employed taxpayers

d

Which of the following statements is incorrect regarding a paid tax return preparer's due diligence for ACTC? a. Must complete Form 8867. b. Copies of worksheets and documents used to determine eligibility and compute the credit(s) must be kept in the client file. c. May be penalized $520 for each failure, per credit, per return if due diligence is not exercised. d. Must meet three of the four due diligence requirements to allow the taxpayer to claim the Child Tax Credit.

d

Which of the following statements is true about IRAs? A. Contributions to an IRA are not tax-deductible B. Taxpayers are not limited on the amount they may contribute to their IRA each year C. A taxpayer of any age may contribute to any type of IRA D. A taxpayer may contribute to traditional and ROTH IRAs for the same tax year

d

Which of the following statements is true about dividends: A. Ordinary dividends totaling more than $1,000 must be reported B. Ordinary Dividend are least common C. Payers of $25 or more in dividends to any person during the year are required to report the amount paid to the IRS and furnish recipient with form 1099-div D. Qualified Dividends are those received on shares of stock in domestic corporations and certain foreign corporations that meet holding requirements

d

Which of the following taxpayers may claim the lifetime learning credit? a.Nancy attended two classes a semester at the local community college working on a second undergraduate degree. She paid $2,346 for tuition and $975 for books that she was not required to purchase at the school. Nancy and her husband Gary file MFS because he has past-due child support. b.Vincent is a doctor pursuing a law degree in the evenings and on weekends. He paid $12,924 in tuition and $3,568 for books that he purchased from the school as a class requirement. Vincent is single, and his MAGI is $72,347. c.Michael (23) is in his fifth year of college, pursuing his music degree. He earned $3,981 as a part-time barista and volunteers at his church when he is not attending classes. He files a return to request a refund of his federal withholding. He lived with his parents all year. Michael's parents will claim him as a dependent on their tax return. d.Elizabeth (23) paid $8,735 to attend college as a full-time candidate seeking a master's in social work. She purchased her books for $435 through the school as a requirement for enrollment.

d

For filing status S, HH, MFS; What's the full contribution phase out for ROTH IRA?

less than $120,000

For filing status MFJ or QW; What's the full contribution phase out for ROTH IRA?

less than $189,000

For the situation below, write whether or not if the taxpayer qualifies for the AOTC, the lifetime learning credit, or both. Unless stated otherwise, all taxpayers are U.S. citizens with no felony drug convictions. The information presented is for 2018. Leo and Sue, who file jointly, have qualified education expenses for their daughter, Lisa, who they claim as a dependent on their return. Their daughter attends college less than half-time.

lifetime learning credit

For the situation below, write whether or not if the taxpayer qualifies for the AOTC, the lifetime learning credit, or both. Unless stated otherwise, all taxpayers are U.S. citizens with no felony drug convictions. The information presented is for 2018. Megan's tuition at trade school is $3,600. She received a Pell Grant of $2,400 and a nontaxable tuition scholarship of $1,200. Megan graduated from high school last spring. She is a dependent on her parents' tax return.

neither

For the situation below, write whether or not if the taxpayer qualifies for the AOTC, the lifetime learning credit, or both. Unless stated otherwise, all taxpayers are U.S. citizens with no felony drug convictions. The information presented is for 2018. Phil paid $3,000 in qualified expenses for his dependent daughter's tuition for her freshman year of college at an eligible educational institution. He claims his daughter as his dependent on his return. He does not qualify to be considered unmarried for tax purposes, and his filing status is MFS.

neither

Apply critical thinking skills to decide whether the tax preparers in the following scenarios have met the standards for due diligence. Check the box for Yes if you believe due diligence standards were met or No if they were not. Jeffrey did not know taxpayers could deduct contributions to an Individual Retirement Account (IRA) as an adjustment to income. Accordingly, he did not ask clients if they had made any contributions and did not claim a deduction for clients whose records showed such contributions

no

Apply critical thinking skills to decide whether the tax preparers in the following scenarios have met the standards for due diligence. Check the box for Yes if you believe due diligence standards were met or No if they were not. When Alan prepares a tax return for a client, he reviews information on the prior year's return. He then asks, "Is everything the same as last year?" He does not ask any other questions, except in response to information provided by his client.

no

For each scenario, indicate whether or not the taxpayers qualify to claim the Child and Dependent Care Credit for expenses in 2018 Sidney and Stella Anderson have a dependent daughter, Andrea (8). Sidney works full-time, and Stella is extensively involved in charity work. They paid the Daily Child Care Center to take care of Andrea while Stella worked for various charitable organizations. Stella did not receive any compensation for her work. The Andersons will file a joint return.

no

Is the fair rental value of a home owned by the taxpayer included in tallying the cost of maintaining a home?

no

Decide whether any of the situations below are a conflict of interest, and what the tax preparer should do to resolve the conflict. Paul is an enrolled agent. He plans to open his own private tax practice next tax season. He gives his new business card and information sheet to each client for whom he prepares an income tax return at the accounting office where he currently works.

no conflict

Decide whether any of the situations below are a conflict of interest, and what the tax preparer should do to resolve the conflict. Helene and Tom are divorced. Helene plans to request innocent spouse relief for Tax Years 2016 and 2017, asserting that Tom is solely responsible for the additional taxes. They have different tax preparers within the same office.

no conflict of interest

Non-participating spouse: if their MAGI is $199,000 or higher do they get a deduction?

no deduction is allowed

is the lifetime learning credit refundable or nonrefundable?

nonrefundable

Read the following scenario and determine who is part of the tax household. Rachel (24) and Paul (20) are Richard's children from his previous marriage. They both live with their mother, but often visit Richard and Emily on the weekends. Rachel is a college graduate and works as a preschool teacher. She is saving most of her money for graduate school. Richard gives her spending money, and her mother provides most of her daily needs. Rachel does not provide more than 50% of her own support. In 2018, she earned $23,285 from her job at the preschool.

rachel

A non-participating spouse is allowed a full deduction for traditional IRA contribution if the couple's MAGI is what?

reduced

is the american opportunity credit refundable or nonrefundable?

refundable up to 40%

What number is the following tie breaker rule: Only if the taxpayers is the child's parent, the child is treated as the qualifying child of the parent

rule number 1

Cafeteria Plans are also known as

section 125 plans

Why do qualified plans recieve more favorable tax treatment?

they meet IRC section 401 (a) and ERISA of 1974

For each scenario, indicate whether or not the taxpayers qualify to claim the Child and Dependent Care Credit for expenses in 2018 Christine Williams' husband, Henry, was disabled and unable to care for himself for the entire year. Christine hired a nurse to care for him in their home while she was at work. They will file a joint return.

yes