Chapters 1-6 Test (ITC 2023)
Freida is not married. Her son, Diego, lived with her all year. To claim the filing status of head of household, Freida must: a) Live in the U.S. more than half the year. b) Be married on the last day of the tax year. c) Pay over half of the cost of maintaining the household for herself and Diego. d) Pay a substantial portion of the cost of maintaining the household for herself and Diego.
c) Pay over half of the cost of maintaining the household for herself and Diego.
Ivan (47) is single. He is not blind. What is his 2022 standard deduction?
$12,950
Sergio and Malena were married for 10 years before Malena unexpectedly passed away in 2021. Sergio has a qualifying child dependent, Tomas (age 6), who lived with him all year. Sergio pays all the cost of maintaining the home for himself and Tomas. Sergio has not remarried. In 2021, Sergio filed his tax return as married filing jointly. Provided Sergio does not remarry by December 31 of the current tax year, what is Sergio's correct and most favorable filing status for 2022? a) Single. b) Married filing separately. c) Qualifying surviving spouse. d) Head of household. e) Mark for follow up
c) Qualifying surviving spouse.
For 2022, what is the gross income test for a taxpayer claiming a qualifying relative? The potential dependent's gross income must be less than: a) $1,150 b) $4,300 c) $4,400 d) $12,950
c) $4,400
When tax returns are filed electronically, what is one way a taxpayer can sign the return? a) Taxpayers may only use a handwritten signature to sign the return. b) The IRS will provide an Identity Protection Personal Identification Number (IP PIN) used to sign the return. c) There is no taxpayer signature requirement when a tax return is filed electronically. d) This can be accomplished by using a personal identification number (PIN).
d) This can be accomplished by using a personal identification number (PIN).
A taxpayer should include which of the following when figuring their federal gross income? a) Compensation received for personal injuries and physical illness. b) First $5,250 of educational assistance from an employer's qualified educational assistance program. c) Qualified scholarships and fellowships. d) Unemployment compensation.
d) Unemployment compensation.
Ada (18), is a dependent of her parents. She had interest income of $50 and wages of $5,800. What is Ada's 2022 federal standard deduction? a) $1,150 b) $5,850 c) $6,200 d) $12,950
a) $1,150 - incorrect
Tucker is an unmarried, 29-year-old taxpayer. He received the following income for the year: • Wages: $44,500. • Interest from a bank savings account: $50. • Unemployment compensation: $7,000. • Gift from his father: $3,000. How much of Tucker's income is considered earned income? a) $44,500 b) $44,550 c) $51,500 d) $54,550
a) $44,500
Which of the following statements is CORRECT regarding a spousal IRA? a) A spouse may be eligible to contribute to an IRA even if they have no income of their own. b) A spousal IRA is allowed for any filing status. c) The limitation on the amount that can be contributed to a spousal IRA is always the same as that of the working spouse. d) The taxpayer's income is not taken into consideration when establishing a spousal IRA.
a) A spouse may be eligible to contribute to an IRA even if they have no income of their own.
Which taxpayer has a potential qualifying child that meets the relationship test? a) Albert (27) and his brother, Conner (20), lived together all year. Conner is unmarried and a full-time student. Conner had no income, and did not provide more than half of his own support. b) Chase (32) lived with his mother, Willa (61), all year. Willa is unmarried; she earned $14,100, all from wages, and had no other income. c) Nadia (28) and Brandy (18) are cousins. Both are unmarried and lived in the same home all year. Brandy earned $4,100, all from wages, and she did not provide more than half of her own support. d) Tanner (29) and his girlfriend, Nora (29), lived in the same home all year. Nora's daughter (from a previous marriage), Serena (7), also lived in the home all year. Nora and Serena had no income and did not provide more than half of their own support.
a) Albert (27) and his brother, Conner (20), lived together all year. Conner is unmarried and a full-time student. Conner had no income, and did not provide more than half of his own support.
Stan would like to claim his grandson, Spencer, as his qualifying child so he can claim the Earned Income Credit (EIC). However, Spencer's mother, Alma, is also eligible to claim Spencer as her qualifying child for EIC purposes. As Stan's tax preparer, what information would you share with Stan? a) Alma holds a higher right and may claim EIC based on Spencer, because Alma is Spencer's parent. b) As long as Stan files before Alma, he may claim EIC based on Spencer, his qualifying child. c) Stan and Alma may agree to each claim one-half of the EIC based on Spencer, their qualifying child. d) Stan may claim EIC based on Spencer if his adjusted gross income is higher than Alma's.
a) Alma holds a higher right and may claim EIC based on Spencer, because Alma is Spencer's parent.
Which of the following taxpayers qualifies for the Child Tax Credit? a) Amir has a daughter, Kala, who was 16 years old at the end of 2022. Kala is a U.S. citizen and qualifies as a qualifying child dependent on Amir's 2022 tax return. Both Amir and Kala have social security numbers valid for employment in the U.S. b) Bruce divorced in 2020. He has a daughter, Shyla, who was 6 years old at the end of 2022. Shyla lived with her mother all year. Shyla is a U.S. citizen and will be claimed as a qualifying child dependent on her mother's 2022 tax return. Both Bruce and Shyla have social security numbers valid for employment in the U.S. Bruce would like to claim the Child Tax Credit. c) Diana's daughter, Hayley, was 7 years old at the end of 2022. She met the requirements to be Diana's qualifying child dependent. Hayley is a U.S. resident alien of the United States and has an individual taxpayer identification number (ITIN). d) Victor has a son, Kye, who was 17 years old at the end of 2022. Kye is a citizen of the United States and qualifies as a qualifying child dependent on Victor's 2022 tax return.
a) Amir has a daughter, Kala, who was 16 years old at the end of 2022. Kala is a U.S. citizen and qualifies as a qualifying child dependent on Amir's 2022 tax return. Both Amir and Kala have social security numbers valid for employment in the U.S.
What are the first three tests (or requirements) a taxpayer must meet to claim a qualifying child or qualifying relative as a dependent? a) Dependent taxpayer, joint return test, and citizen or resident test. b) Dependent taxpayer, joint return test, gross income test. c) Not a qualifying child test, gross income test, and support test. d) Relationship test, age test, and residency test.
a) Dependent taxpayer, joint return test, and citizen or resident test.
Ella, Emma, Erin, and Emily are all siblings. Between them they provide 100% of the support for their father. Each of them contributes the following amounts: ● Ella: 46%, $14,720. ● Emma: 39%, $12,480. ● Erin: 8%, $2,560. ● Emily: 7%, $2,240. Who may claim the dependent exemption for their father on their return? a) Either Ella or Emma may claim the dependent exemption. The one who does not claim their father must sign Form 2120, Multiple Support Declaration, or a statement waiving their right to claim their father. b) Ella and Emma may split the dependent exemption. c) Only Ella may claim the dependent exemption, as she paid the most toward their father's support. d) They must decide between the four of them who will claim the dependent exemption. The others must sign a statement agreeing not to take an exemption for their father.
a) Either Ella or Emma may claim the dependent exemption. The one who does not claim their father must sign Form 2120, Multiple Support Declaration, or a statement waiving their right to claim their father.
After preparing the tax return and collecting all required signatures, the tax return has to be filed with the IRS. How are the majority of tax returns submitted to the IRS? a) Electronically. b) By fax. c) By mail. d) Through wire transfer.
a) Electronically.
Kennedy is a qualifying child to three taxpayers: • Her grandfather, whose AGI is $6,789. • Her father, whose AGI is $26,123. • Her uncle, whose AGI is $64,456. Which taxpayer is entitled to claim Kennedy, if all three wish to do so? a) Father. b) Grandfather. c) Uncle. d) No one is entitled to claim Kennedy.
a) Father.
Braxton is single and has no qualifying child. His adjusted gross income is $13,800. In order to claim the Earned Income Credit, he must meet which of the following requirements? a) He cannot be the dependent of another taxpayer. b) He must be age 18 or older. c) He must earn his income as an employee. He cannot be self-employed. d) He may have either an ITIN or a social security number.
a) He cannot be the dependent of another taxpayer.
Sadi received interest from several different sources. Which of the following types of interest is nontaxable on a federal return? a) Interest income from municipal bonds. b) Interest income earned from a certificate of deposit. c) Interest income earned from a checking account. d) Interest income received from a personal loan.
a) Interest income from municipal bonds.
Which of the following taxpayers may potentially qualify for the Retirement Savings Contributions Credit (Saver's Credit)? (Assume that all are over the age of 18, not claimed as a dependent on another's return, and not a student.) a) John and Angie are married and file a joint return. Their modified adjusted gross income is $52,762. Angie contributed to a Roth IRA. b) LaMonte will use the single filing status. His modified adjusted gross income is $47,000. His employer made contributions on his behalf to a simplified employee pension (SEP) IRA. c) Maureen will use the head of household filing status. Her modified adjusted gross income is $55,000. She contributed to a traditional IRA. d) Vicky and Edmond are a married couple filing a joint return. Their modified adjusted gross income is $72,000. Vicky made voluntary contributions to her company's 401(k) plan.
a) John and Angie are married and file a joint return. Their modified adjusted gross income is $52,762. Angie contributed to a Roth IRA.
Kiri and Divina are registered domestic partners. Neither had dependents they could claim for 2022. What is Kiri's and Divina's correct and most favorable 2022 filing status on the federal return? a) Single. b) Married filing jointly. c) Married filing separately. d) Qualifying surviving spouse.
a) Single.
Seth and Marisol were divorced on December 1, 2022. Neither had dependents they could claim for 2022. What is Seth's correct and most favorable 2022 filing status? a) Single. b) Married filing jointly. c) Married filing separately. d) Head of household.
a) Single.
Robin received a Form 1099-R with a distribution code 7. How should Robin's distribution be treated for tax purposes? a) The distribution is a normal distribution and is not subject to an additional tax. b) The distribution is eligible for the 10-year option method. c) The distribution is subject to a 10% additional tax. d) The distribution should be treated as a rollover.
a) The distribution is a normal distribution and is not subject to an additional tax.
Bart, a 38-year-old single taxpayer, contributed $2,000 to a traditional IRA. His modified adjusted gross income is $30,000, all from wages. Bart has never taken a distribution from any retirement account. He is potentially eligible for a Retirement Savings Contributions Credit (Saver's Credit) of up to what amount? a) $0 b) $200 c) $400 d) $2,000
b) $200
Jax files single and claims his son, Zander (20). His adjusted gross income (AGI) is $184,000. What is the maximum amount Jax may potentially be able to claim for the credit for other dependents? a) $0 b) $500 c) $2,000 d) $3,000
b) $500
Alice, a 49-year-old single taxpayer, earned $98,000 in wages. She is not covered by an employer-sponsored retirement plan. What is her maximum allowable contribution to a traditional IRA for 2022? a) $0 b) $6,000 c) $7,000 d) $20,500
b) $6,000
All of the following statements regarding a taxpayer's identification number are true, EXCEPT? a) A dependent on a tax return, can have a social security number, individual taxpayer identification number, or an adoption taxpayer identification number. b) A social security number, individual taxpayer identification number, or an adoption taxpayer identification number is not required for a taxpayer to claim a qualifying relative. c) A social security number, individual taxpayer identification number, or an adoption taxpayer identification number must be received before the due date of the return, including extensions, or the taxpayer may not claim the dependent on that year's tax return. d) A taxpayer may not amend a return to add a dependent whose identification number was received after the due date of the return.
b) A social security number, individual taxpayer identification number, or an adoption taxpayer identification number is not required for a taxpayer to claim a qualifying relative.
Vanida received workers' compensation due to an injury on the job. When Vanida files her tax return, her workers' compensation income will be: a) Fully taxable. b) Nontaxable. c) Partially taxable. d) Taxable at the discretion of the employer.
b) Nontaxable.
All of the following statements regarding the 2022 Additional Child Tax Credit are correct, EXCEPT? a) The Additional Child Tax Credit is a refundable credit. b) The Additional Child Tax Credit is a nonrefundable credit. c) Taxpayers must have an earned income of at least $2,500 to qualify. d) The maximum Additional Child Tax Credit is $1,500.
b) The Additional Child Tax Credit is a nonrefundable credit.
At what age does a child no longer qualify a taxpayer for the Child Tax Credit? a) The year the child reaches age 16. b) The year the child reaches age 17. c) The year the child reaches age 18. d) There is no age limitation on the Child Tax Credit.
b) The year the child reaches age 17.
Which of the following taxpayers qualifies for the Earned Income Credit? (All are U.S. citizens, lived in the United States for more than six months, and have valid social security numbers that allow them to work. They did not have any foreign income and will not file Form 2555, Foreign Earned Income.) a) Alley (28) is filing as a single taxpayer with no dependents. Alley's earned income and adjusted gross income in 2022 was $24,900, all from wages. She had no other income. b) Anwar (27) is filing as a single taxpayer with no dependents. Anwar's earned income and adjusted gross income in 2022 was $13,333, all from wages. He had no other income. c) Doug (38) and Serena (39) are married, filing a joint return. Doug's income from wages was $19,781. Serena's income from wages was $31,564. They had no other income in 2022. Doug and Serena had their first child, Caleb, in December 2022. d) Ronald (29) and Suzie (39) are married, filing a joint return. Ronald's income from wages was $20,778. Suzie's income from wages was $42,555. They had no other income in 2022. Ronald and Suzie have three qualifying children (ages 3, 6, and 9).
b) Anwar (27) is filing as a single taxpayer with no dependents. Anwar's earned income and adjusted gross income in 2022 was $13,333, all from wages. He had no other income.
What is the due date to file a 2022 Form 1040, U.S. Individual Income Tax Return, or request an extension? a) January 31, 2023 b) April 18, 2023 c) June 15, 2023 d) October 16, 2023
b) April 18, 2023
Which taxpayer may file as head of household? (If the scenario states the dependent is a qualifying child or qualifying relative, it means they have passed all the dependency requirements.) a) Adam is single. Adam and Lee are cousins. They lived together in Adam's home all year. Adam paid all of the cost of maintaining the home for the year. Lee is a qualifying relative dependent of Adam. b) Cortez is single. His son Mario (age 20) lived with him all year. Mario is a full-time student, and did not provide more than half of his own support. Mario is a qualifying child dependent of Cortez. Cortez paid all the cost of maintaining the home for the year. c) Ebony is single. Her friend, Dalia, is her qualifying relative dependent. Ebony and Dalia lived together all year. Ebony paid all of the cost of maintaining the home for the year. d) Rico is single. His girlfriend Marie lived with him all year. Marie's daughter (from a previous marriage), Sofia (age 8), also lived in the home all year. Rico paid all of the cost of maintaining the home for the year.
b) Cortez is single. His son Mario (age 20) lived with him all year. Mario is a full-time student, and did not provide more than half of his own support. Mario is a qualifying child dependent of Cortez. Cortez paid all the cost of maintaining the home for the year.
Which of the following potential dependents fails the support test to be claimed as a qualifying child? a) Blake (18) is unmarried and worked full-time. She saved all of her income. She lived with her parents all year and they provided all of her support. b) Devan (18) is unmarried and worked full-time. He had significant income and paid more than half of his own support. He lived with his mother all year. c) Nova (16) lived with her brother Sam (26) all year. She had no income. Sam provided all of her support. d) Xavier (23) is unmarried and attended school nine months of the year. He lived on campus for those nine months and with his parents during school breaks. He worked part-time and earned $7,400. He did not provide more than half of his own support.
b) Devan (18) is unmarried and worked full-time. He had significant income and paid more than half of his own support. He lived with his mother all year.
What are the three factors needed to determine the filing requirement for a nondependent? a) Dependent taxpayer test, joint return test, and citizen test. b) Filing status, age, and income. c) Marital status, filing status, and income. d) Unearned income, earned income, and gross income
b) Filing status, age, and income.
Taxpayers who receive interest income of $10 or more will receive which form from the payer? a) Form 1099-DIV. b) Form 1099-INT. c) Form W-2. d) Form 1099-NEC.
b) Form 1099-INT.
Tami and her daughter, Jade (5), lived all year with Tami's mother, Yasmin. Yasmin paid the entire cost of keeping up the home. Tami's adjusted gross income (AGI) was $12,000, and Yasmin's AGI was $30,000. Jade meets the requirements of a qualifying child dependent for both Tami and Yasmin. Yasmin would like to claim her granddaughter, Jade. As Yasmin's tax preparer, what information would you share with Yasmin? a) As long as Yasmin files before Tami, she may claim Jade since Jade meets the requirements of a qualifying child for Yasmin. b) If Tami and Yasmin each filed their tax returns claiming Jade as their qualifying child, Tami would receive the dependency benefits, since the first tiebreaker rule states the parent has a higher claim than a non-parent. c) Only Yasmin may claim Jade since her adjusted gross income is the highest. d) Yasmin and Tami may agree to each claim Jade, since she meets the requirements of a qualifying child for both Tami and Yasmin.
b) If Tami and Yasmin each filed their tax returns claiming Jade as their qualifying child, Tami would receive the dependency benefits, since the first tiebreaker rule states the parent has a higher claim than a non-parent.
Which of the following is an example of unearned income? a) Compensation received by a self-employed, freelance writer for services provided. b) Interest earned on a savings account. c) Tips. d) Wages from a part-time job.
b) Interest earned on a savings account.
Kaden and Cherie were divorced in 2019. The divorce decree granted them joint custody of their son, Bryce. Bryce, now age 15, lived with Cherie until June 20. On June 21, Bryce went to stay with Kaden and lived there the remainder of the year. Bryce did not provide more than half of his own support. Bryce stayed with Cherie 171 nights and with Kaden 194 nights during the year. Which statement is correct? a) Cherie is entitled to claim Bryce as a qualifying child dependent. b) Kaden is entitled to claim Bryce as a qualifying child dependent. c) Kaden and Cherie must split all dependency benefits for Bryce. d) Neither Kaden nor Cherie are entitled to claim Bryce as a qualifying child dependent.
b) Kaden is entitled to claim Bryce as a qualifying child dependent.
Jeremy and Veronica were married. Jeremy died on May 1, 2022. On November 1, 2022, Veronica married David. Veronica and David will file a joint return. What is Jeremy's correct and most favorable 2022 filing status? a) Single. b) Married filing jointly. c) Married filing separately. d) Head of household.
b) Married filing jointly.
Ruben and Josie were married on October 15, 2022. They wish to file only one return. What is Ruben's and Josie's correct and most favorable 2022 filing status? a) Single. b) Married filing jointly. c) Married filing separately. d) Head of household.
b) Married filing jointly.
The IRS requires paid tax preparers to keep a completed copy of returns or claim for refund; or retain some type of record, or list, which includes the taxpayer's name, identification number, and tax year. How long must these records be retained and available for inspection? a) Two years following the close of the tax return period in which the claim for refund was requested. b) Three years following the close of the tax return period in which the claim for refund was requested. c) Seven years following the close of the tax return period in which the claim for refund was requested. d) There is no limit to how long these records are kept.
b) Three years following the close of the tax return period in which the claim for refund was requested.
In 2022, Rich (28) lived with his daughter, Ava (4), his brother, Joe (18), and his fiancée, Linda (30) for the entire year. Rich's adjusted gross income is $36,555, Joe's gross income is $4,100, Linda's gross income is $5,900, and Ava has no income. None of the individuals in the household were disabled or students during the year. Neither Joe, nor Linda, nor Ava provided over half of their own support. Rich qualifies for and files as head of household in 2022. How many qualifying dependents can Rich claim on his return? a) One. b) Two. c) Three. d) Four.
b) Two.
If a taxpayer has investment income that exceeds a certain threshold, they are not eligible to claim the Earned Income Credit. For 2022, what is that threshold? a) $3,650 b) $10,000 c) $10,300 d) $11,000
c) $10,300
Dallas, a 44-year-old taxpayer, earned $80,000 in wages. What is the maximum contribution he can make to his 401(k) plan in 2022? a) $6,000 b) $7,000 c) $20,500 d) $27,000
c) $20,500
Manuel, age 54, received the following Form 1099-R. What amount, if any, will Manuel need to pay as an additional tax on early distributions? Answer choices are below the image. a) $0 b) $100 c) $200 d) $400
c) $200
Maleko (55) and Luni (50) will file married filing jointly. Neither is blind. What is their 2022 standard deduction? a) $19,400 b) $25,100 c) $25,900 d) $27,300
c) $25,900
What is the 2022 gross income filing requirement for a married couple filing jointly? One spouse is age 65, the other is age 62. Neither is blind, and they lived together all year. a) $25,900 b) $26,450 c) $27,300 d) $28,700
c) $27,300
Jeff (55) and Tara (49) are filing jointly for 2022. Jeff earned $40,000, and Tara earned $2,500. Jeff may contribute up to $7,000 to his IRA for 2022. If Jeff contributes $5,000 to his IRA, how much can they contribute to Tara's IRA for 2022? a) $2,000 b) $2,500 c) $6,000 d) $7,000
c) $6,000
Leonard, a 51-year-old single taxpayer, earned $65,000 in wages. He is covered by an employer-sponsored retirement plan. What is his maximum allowable contribution to a traditional IRA for 2022? a) $0 b) $6,000 c) $7,000 d) $27,000
c) $7,000
Mario is a fireman at your local fire department. He contributes to his employer's retirement savings plan through regular payroll deductions. His contributions are tax-deferred, and so are his earnings in the plan. Mario most likely participates in which of the following types of employer-sponsored retirement plans? a) 401(k) plan. b) 403(b) plan. c) 457 plan. d) IRA.
c) 457 plan.
Rachelle (68) and Camille (66) are married and file a joint return. Their gross income (including one-half of their social security) for 2022 was $48,650. Up to what amount of their social security benefits may be taxable? a) 0% b) 50% c) 85% d) 100%
c) 85%
If a taxpayer's Earned Income Credit (EIC) was disallowed, what additional step must the taxpayer take the next time they claim the EIC? Amend the previous year's tax return. a) Complete Form 8812 (Form 1040). b) File a grievance with the IRS. c) File Form 8862. d) Mark for follow up
c) File Form 8862.
Ling (53) is unmarried and pays 75% of the cost of maintaining a home for her father, Tao (79), who had no taxable income and did not live with Ling. Tao is Ling's qualifying relative dependent, and she will claim him on her tax return in 2022. What is Ling's correct and most favorable filing status for 2022? a) Single. b) Married filing separately. c) Head of household. d) Qualifying surviving spouse.
c) Head of household.
Which of the following statements regarding the "tiebreaker" rules for claiming benefits, including the Earned Income Credit (EIC), is TRUE? a) If the parents choose to file separately, they can split the benefits however they decide. b) The parent who files first during the filing season takes precedence over the other parent. c) If the parents are not filing jointly, the parent with whom the child lived for the longer period of time during the year takes precedence. d) Between two non-parents, the person with whom the child stayed the most nights takes precedence.
c) If the parents are not filing jointly, the parent with whom the child lived for the longer period of time during the year takes precedence.
Which of these individuals would be subject to the "kiddie tax"? a) Dana, age 12, earned $800 in dividends, with no other income. b) Gia, age 15, worked as a lifeguard all summer and earned $2,800 with no other income. c) Kyle, age 14, earned $1,000 in interest and had a $1,800 royalty from a family oil well. He had no other income. d) Paul, age 19, is taking a year off before starting college. He received $4,200 in dividends with no other income.
c) Kyle, age 14, earned $1,000 in interest and had a $1,800 royalty from a family oil well. He had no other income.
Ladonna and Gabe are divorced and have one child. Ladonna is the custodial parent. For 2022, Ladonna signed Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, and gave the child's exemption to Gabe. Assuming all other requirements are met, which benefits may Ladonna claim for this dependent? a) Ladonna may claim the Earned Income Credit, any Child and Dependent Care Credit, the Child Tax Credit, and any Additional Child Tax Credit. b) Ladonna may use the head of household filing status, claim the dependency, and any Child and Dependent Care Credit. c) Ladonna may use the head of household filing status, claim the Earned Income Credit, and any Child and Dependent Care Credit. d) Ladonna may use the head of household filing status, claim the Earned Income Credit, any Child and Dependent Care Credit, the Child Tax Credit, and any Additional Child Tax Credit.
c) Ladonna may use the head of household filing status, claim the Earned Income Credit, and any Child and Dependent Care Credit.
Michael and Amina are married and lived in a community property state the entire year. Michael earned $40,000 in wages, and Amina earned $60,000. If Michael and Amina file separate returns, how much income will be reported on their returns? a) Michael: $20,000; Amina: $30,000. b) Michael: $40,000; Amina: $60,000. c) Michael: $50,000; Amina: $50,000. d) Michael: $100,000; Amina: $0
c) Michael: $50,000; Amina: $50,000.
Miguel (45) lived with his qualifying child, Roberto (22), all of 2022. In November 2022, Roberto married Valentina (21), and they both lived with Miguel for the remainder of the year. Roberto, a full-time student, did not work in 2022, and Valentina earned $3,400, all from wages, and had no other income. Roberto and Valentina did not provide more than half of their own support. Which of the following statements is correct? a) Miguel may claim both Roberto and Valentina as his dependents. b) Miguel may claim Valentina only if Roberto and Valentina do not file a joint return. c) Miguel may claim Roberto even if Roberto and Valentina file a joint return to get a refund of the taxes withheld from Valentina's wages. d) Miguel may not claim Roberto once he is married.
c) Miguel may claim Roberto even if Roberto and Valentina file a joint return to get a refund of the taxes withheld from Valentina's wages.
Which taxpayer has a potential qualifying relative that meets the relationship or member of the household test? a) Justus lived with Owen as a member of his household for ten months in 2022. Justus is not a relative. b) Kamila is Samara's cousin. She lived with Samara for eight months in 2022. c) Murphy's father, Kelvin, lived with him since 2020. Kelvin died on March 1, 2022. d) Nolan's girlfriend lived with him as a member of his household for seven months in 2022.
c) Murphy's father, Kelvin, lived with him since 2020. Kelvin died on March 1, 2022.
Rachel is a restaurant hostess with tip income. Which of the following statements would help her to report her tip income accurately? a) Any tips Rachel receives are excluded from gross income and are not subject to federal income tax. b) If Rachel does not report her tips to her employer, they are not taxable. c) Rachel should use Form 4070-A, Employee's Daily Record of Tips, to keep a daily record of her tip income. d) Tips under $20 a month are not taxable.
c) Rachel should use Form 4070-A, Employee's Daily Record of Tips, to keep a daily record of her tip income.
Which of the following statements is TRUE about both Roth and traditional IRAs? a) Contributions made to traditional and Roth IRAs are always tax-deductible. b) Distributions from a traditional or Roth IRA are always taxed when the money is withdrawn. c) Taxpayers may contribute to traditional and Roth IRAs for the same tax year. d) Taxpayers may contribute up to $20,500 to their traditional and Roth IRA each year.
c) Taxpayers may contribute to traditional and Roth IRAs for the same tax year.
Terry and Sal divorced in 2019. During 2022, their son Nick lived with his mother, Terry, Terry's mother (Andrea), and Terry's best friend (Vanna) from January 1 to November 1. During that time, Nick visited Sal every other weekend for a total of 40 nights. On November 2, Nick went to live with Sal for the rest of the year. After that time, Nick visited Terry, Andrea, and Vanna every other weekend for a total of 16 nights. Terry's adjusted gross income (AGI) was $33,100, Andrea's AGI was $21,500, Vanna's AGI was $32,600, and Sal's AGI was $29,900. Who has the superior claim to Nick's dependency? a) Andrea. b) Sal. c) Terry. d) Vanna.
c) Terry.
Which of the following statements is correct regarding the 2022 Child Tax Credit? a) The Child Tax Credit is a $2,000 credit available for taxpayers with one or more qualifying children who have not yet reached the age of 18. b) The Child Tax Credit is a refundable credit. c) The Child Tax Credit is worth up to $2,000 for each qualifying child dependent that meets the requirements, who is under the age of 17. d) The taxpayer must have a qualifying relative per the dependency rules to claim the Child Tax Credit.
c) The Child Tax Credit is worth up to $2,000 for each qualifying child dependent that meets the requirements, who is under the age of 17.
If a taxpayer's Earned Income Credit is disallowed due to reckless or intentional disregard of the rules, there is a waiting period after the disallowance. How long is the waiting period? a) Sixty to ninety days. b) Six months to one year. c) Two to ten years. d) Fifteen to twenty years.
c) Two to ten years.
Ricky and his wife, Sarah, are filing their tax return. Which of the following statements regarding signing the return is NOT correct? a) A joint return must be signed by both the taxpayer and the spouse. b) Every taxpayer must sign their own return. c) When a tax return is filed electronically, there are no signature requirements for the taxpayer. d) When a taxpayer signs their tax return, they declare, under penalties of perjury, that they have examined the return and accompanying schedules and statements, and to the best of their knowledge and belief, they are true, correct, and complete.
c) When a tax return is filed electronically, there are no signature requirements for the taxpayer.
Beatrice had interest income reported on Form 1099-INT, Interest Income. Which of the following scenarios would require Beatrice to file Schedule B, Interest and Ordinary Dividends, along with Form 1040? Beatrice received: a) $10 of regular interest. b) $1,250 of regular interest. c) $1,600 of tax-exempt interest. d) $1,700 of regular interest.
d) $1,700 of regular interest.
Omari (47) is single. He had wages of $45,950. In 2022, he opened an interest-bearing savings account and received Form 1099-INT, Interest Income, showing he had earned $16 of interest income for the year. What amount of interest must be reported on his Form 1040? a) $0 b) $8 c) $10 d) $16
d) $16
Min Lee received the following items of income during the year: • $35,000 of wages. • $150 of dividends from a savings account at her credit union. • $200 of interest from a U.S. Savings Bond. • $250 of interest from a Treasury bill. What amount will be reported on Min's Form 1040, line 2b? a) $350 b) $400 c) $450 d) $600
d) $600
Mark (67) and Josephine (69) are married and are both U.S. citizens. They will file a joint return. Which federal tax form do they have the option to use to file their personal income tax return? a) Form 1040-ES. b) Form 1040-NR. c) Form 1040-PR. d) Form 1040-SR
d) Form 1040-SR
Mrs. Yang is married and does not wish to file a joint return. She provided more than half of the cost of maintaining the home for the tax year, where she and her son lived. Her son is age 11 and her qualifying child dependent. Mr. Yang left on February 14, and Mrs. Yang has not seen her husband since. What is Mrs. Yang's correct and most favorable filing status for 2022? a) Single. b) Married filing jointly. c) Married filing separately. d) Head of household.
d) Head of household.
Vincent lives with his daughter, June. Vincent received $5,500 in social security benefits. He used $2,400 for rent, $1,000 for food, $1,500 for recreation, $500 for the doctor, and $100 for eyeglasses. What amount of support must June pay to claim Vincent as a qualifying relative? a) Less than $5,500. b) More than $2,400. c) More than $2,750. d) More than $5,500.
d) More than $5,500.
Paloma (63) shared a home all year with her son, Antonio (41), and Antonio's son, Danny (23). They were all U.S. citizens, lived in the U.S. all year, and all had social security numbers valid for employment. Paloma and Antonio worked full-time. Danny was a part-time student during the year; he took one class at the local community college. Danny also worked part-time and had wages of $6,800. No one else lived in the home. Paloma had earned income and an adjusted gross income of $23,459. She had no foreign income or investment income. Antonio had earned income and an adjusted gross income of $32,500. He had no foreign income or investment income. Who, if anyone, is eligible to claim and receive the Earned Income Credit? a) Both Paloma and Antonio. b) Either Paloma or Antonio but not both. c) Paloma only. d) No one.
d) No one.
A taxpayer should include which of the following when figuring their federal gross income? a) Gifts and inheritances. b) Life insurance payments, if paid by reason of the death of the insured. c) Meals and lodging provided for the convenience of the employer d) Prizes and awards.
d) Prizes and awards.
Malachi has a savings account at his local credit union. He earned $50 on deposits made to this account. How is this income reported on his tax return? The income will be reported as: a) Nominee interest. b) Ordinary dividends. c) Qualified dividends. d) Regular interest.
d) Regular interest.
Which taxpayer has a potential qualifying child that meets the age test? (Unless stated, none of these individuals are permanently or totally disabled.) a) Aiyden and Zuri are married and have a son, Caleb (25). Caleb is unmarried and a full-time student. Caleb earned $11,000, all from wages, and he did not provide more than half of his own support. Caleb lives on campus while school is in session. During the summer, Caleb lives with Aiyden and Zuri. b) Lexi (42) has a daughter, Josie (19). Josie is unmarried and lived with Lexi all year. Josie decided to take a year-long break from school before starting college. She worked part-time and earned $10,500, all from wages. She did not provide more than half of her own support. c) Omana (21) and her brother, Benji (23), lived together all year. Benji is unmarried and a full-time student. Benji had no income and did not provide more than half of his own support. d) Rohan (23) and his sister, Annie (25), lived together all year. Rohan and Annie are both unmarried. Annie is permanently and totally disabled. Annie had no income and did not provide more than half of her own support.
d) Rohan (23) and his sister, Annie (25), lived together all year. Rohan and Annie are both unmarried. Annie is permanently and totally disabled. Annie had no income and did not provide more than half of her own support.
Which of the following taxpayers may file as a Qualifying surviving spouse for 2022? a) Austin and Carla were married for five years before Carla's passing in 2022. Austin has not remarried. Austin paid all of the cost of maintaining a home for himself and his son, Joshua (age 10). Joshua lived with Austin for all of 2022 and is his qualifying child dependent. b) Dale and Maggie were married for three years before Dale's passing in 2020. Maggie has not remarried. Maggie paid all of the costs of maintaining a home for herself and her dependent son, Lionel (age 18). Lionel moved out of her home permanently in November of 2022. He did not pay more than half of his own support for the year. Maggie filed a joint return for 2020. c) Neil and Debbie were married for five years when Debbie died unexpectedly in 2020. Neil remarried in 2022. Neil paid over half of the cost of maintaining a home for himself, his wife, and his dependent son, Liam (age 6). Liam lived with Neil for all of 2022 and is his qualifying child dependent. Neil filed a joint return for 2020. d) Ryan and Becky were married for ten years before Ryan's death in 2021. Becky has not remarried. Becky paid over half of the cost of
d) Ryan and Becky were married for ten years before Ryan's death in 2021. Becky has not remarried. Becky paid over half of the cost of maintaining a home for herself and her dependent daughter, Ella (age 3). Ella lived with Becky for all of 2022 and is her qualifying child dependent. Becky filed a joint return for 2021.
Which of the following is an example of earned income? a) Capital gains. b) Rents. c) Royalties. d) Sick pay.
d) Sick pay.
Which taxpayer has a potential qualifying child that meets the residency test? a) Cedro (52) is single. His grandson, Zack (15), came to live with him in September of 2022. Zack did not provide more than half of his own support. b) Donald (26) is single. His brother, John (17), lived with him for five months of 2022. John is unmarried and did not provide more than half of his own support. c) Melody (28) is single. Her cousin, Autumn (22), moved in with her in August of 2022. Autumn did not provide more than half of her own support. d) Tanisha and Michelle are married and have a daughter, Kya (13). They all lived together the entire year. Kya did not provide more than half of her own support.
d) Tanisha and Michelle are married and have a daughter, Kya (13). They all lived together the entire year. Kya did not provide more than half of her own support.
As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020, legislation provided for expanded distribution options and favorable tax treatment to COVID-19-related distributions from retirement plans or IRAs during 2020. All of the following statements regarding these distributions are true, EXCEPT: a) Eligible individuals included those diagnosed with COVID-19 or individuals whose spouse or dependent was diagnosed with the illness. b) Eligible taxpayers could take penalty-free COVID-19-related distributions of up to $100,000 from retirement plans or IRAs during 2020. c) Taxpayers who took COVID-19-related distributions from a retirement plan (including IRAs) in 2020 could have elected to include taxable amounts in their income ratably over a three-year period. d) Taxpayers who took COVID-19-related distributions from a retirement plan (including IRAs) in 2020 were subject to a 10% penalty for early distribution.
d) Taxpayers who took COVID-19-related distributions from a retirement plan (including IRAs) in 2020 were subject to a 10% penalty for early distribution.
What is the tax treatment of Canadian social security benefits in the United States? Canadian social security benefits are: a) Not taxable in the United States. b) Taxed as a pension using the general rule. c) Taxed as a pension using the simplified method. d) The benefits are treated as paid under the social security legislation of the United States and reported as if they were United States social security benefits for a United States resident.
d) The benefits are treated as paid under the social security legislation of the United States and reported as if they were United States social security benefits for a United States resident.
To avoid the risk of penalties, tax preparers must abide by rules regarding preparer tax identification numbers (PTINs). Which of the following statements is TRUE regarding PTINs? a) A PTIN is required semi-annually for anyone who prepares or assists in preparing federal tax returns for compensation. b) If a tax preparer does not have a PTIN, they can still prepare tax returns for compensation. c) The IRS may provide a PTIN to taxpayers who are victims of identity theft. d) The preparer must enter their PTIN on the tax return in the space provided.
d) The preparer must enter their PTIN on the tax return in the space provided.
Harry (71), a single taxpayer, began receiving a pension of $3,500 per month for life on May 1, 2009. He has after-tax contributions in the plan. His 2022 Form 1099-R is shown below. Box 2a is blank. Which of the following statements is CORRECT? a) $42,000 is taxable. b) Harry is subject to a 10% additional tax. c) None of Harry's distribution is taxable. d) The taxable distribution is figured using the Simplified Method Worksheet.
d) The taxable distribution is figured using the Simplified Method Worksheet.
