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Federal Tax Law Course

In this tax subject, we will review some tax rules that affect every person who may have to file a federal income tax return. We will cover topics such as who must file, what filing status and how many exemptions to use. In addition, this subject is about the standard deduction and taxpayers who do not itemize their deductions.

Tax School Home Page

Student Instructions: Follow the following 5 steps:

Step	Instructions - You must do all of the following (steps 1 - 3)	Links:
	(We must receive from you both an assignment and a quiz for each Tax Subject)
1	Print the checklist:
2	Read the reading material and answer the questions on this page.	Reading Material
3	Submit the answers to the Review Questions online (the questions on this page). Scroll down for all questions on this page. When you are ready to submit click on the Review Questions link. Make sure you either write your answers or print the page before you click on the Review Questions link.	Review-Questions

Important: If you fail a topic you can keep trying until you pass. Every time you try the questions will be different.

Most forms are in Adobe Acrobat PDF format.

You will need Adobe Reader to view and print these forms. If you do not already have Adobe Reader installed on your computer, you may download the software for free.

Review Questions

Question

1 of 50

You must keep your records

· A. For as long as they may be needed for the administration of any provision of the Internal Revenue Code.

· B. Until the period of limitations for that return runs out.

· C. For the period of time in which you can amend your tax return to claim a credit or refund or the IRS can assess additional tax.

· D. All of the above.

2 of 50

You must use Form 1040A or 1040 if,

· A. You receive interest as a nominee.

· B. You receive a 2014 Form 1099-INT for U.S. savings bond interest that includes amounts you reported before 2014.

· C. You owned or had authority over one or more foreign financial accounts with a combined value over $10,000 at any time during 2014.

· D. Any of the above.

3 of 50

To file your tax return electronically, you must sign the tax return electronically using a personal identification number (PIN).

· True

· False

4 of 50

On October 22, 1986, President Reagan signed into law the Tax Reform Act of 1986. The act called for an increase in individual taxation over a five-year period.

· True

· False

5 of 50

Two tax bills signed in 2005 and 2006 extended through 2010 the favorable rates on capital gains and dividends that had been enacted in 2003, raised the exemption levels for the Alternative Minimum Tax, and enacted new tax incentives designed to

· A. Persuade individuals to save more for retirement.

· B. Pursue their college education.

· C. Invest in stocks and bonds.

· D. Extend to individuals a cornucopia of tax breaks.

6 of 50

When you receive interest income as a nominee, it means that

· A. You are responsible to report this income in your tax return.

· B. The IRS has name you the owner of such income.

· C. The income is in your name, but it actually belongs to someone else.

· D. You can choose whomever you want as the owner of this income.

7 of 50

On or before the ___________ of each year the President is required by law to submit to the Congress a budget proposal for the fiscal year that begins the following October.

· A. First Monday in January.

· B. First Monday in February.

· C. First Monday in March.

· D. First Monday in April.

8 of 50

In 1997, President Clinton signed a tax revenue act which

· A. Cut taxes by $152 billion.

· B. Included a cut in capital-gains tax for individuals.

· C. Included a $500 per child tax credit and tax incentives for education.

· D. All of the above.

9 of 50

If you changed your name because of marriage, divorce, etc., be sure to report the change to the Social Security Administration (SSA) before you file your return. This

· A. Prevents delays in processing your tax return.

· B. Prevents delays in issuing tax refunds.

· C. Safeguards your social security benefits.

· D. All of the above.

10 of 50

You direct deposit request will be rejected and a check will be sent instead if

· A. Any numbers or letters on lines 11b through 11d are crossed out or whited out.

· B. Your financial institution will not allow a joint refund to be deposited to an individual account.

· C. You request a deposit of your refund to an account that is not in your name.

· D. Any of the above.

11 of 50

The original hard copy books and records may be destroyed provided that an electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements.

· True

· False

12 of 50

The Act of 1862 established the office of Commissioner of Internal Revenue. The Commissioner was given the power to

· A. Assess taxes.

· B. To enforce the tax laws through seizure of property and income and through prosecution.

· C. Levy and collect taxes.

· D. All of the above.

13 of 50

Your employer must provide or send Form W-2 to you no later than January 31, 2012. If you do not get a Form W-2, you

· A. File your tax return without it.

· B. Call the IRS and ask them for a copy for a $57 fee.

· C. Still have to report your earnings of your tax return.

· D. Ask your employer for one and if he refuses, file a complaint with the IRS.

14 of 50

The presidential election campaign Fund reduces candidate's dependence on large contributions from individuals and group and places candidates on an equal financial footing in the general election. If you check a box for $3 to go to this fund, your tax refund will be lowered by $3.

· True

· False

15 of 50

On August 10, 1993, President Clinton signed the Revenue Reconciliation Act of 1993 into law. The act's main purpose was to

· A. Decrease taxation on corporations.

· B. Increase taxation of small business.

· C. Reduce taxes of individuals.

· D. Reduce the federal deficit.

16 of 50

If your spouse is a nonresident alien, he or she

· A. Cannot file a U.S. tax return.

· B. Must have either a SSN or an ITIN.

· C. Must become a resident alien before she or he can file a return.

· D. Be living with you in the United States and file with you jointly.

17 of 50

Use this filing status if your spouse died in 2014 and you did not remarry in 2014 or you were married at end of 2014 to another spouse.

· A. Single.

· B. Qualifying Widow(er).

· C. Married Filing Jointly.

· D. Head of Household.

18 of 50

The nation's first sales taxes were on gold, silverware, jewelry and watches due to

· A. The War of 1817.

· B. The high cost of the War of 1812.

· C. Tariffs on imported goods.

· D. Sufficient funds to run the government.

19 of 50

The tax return information is needed to carry out the tax laws of the United States and to figure and collect the right amount of tax.

· True

· False

20 of 50

In 2014, you were age 24, single, and living at home with your parents. You worked and were not a student. You earned $7,500. Your parents cannot claim you as a dependent. When you file your tax return, you

A. Can claim the Earned Income Credit because although you are not 25 yet, not one can claim you as a dependent.

B. Can claim the Earned Income Credit because you earned less than $19,100 and it does not matter that you are not at least age 25.

C. Live with your parents so you don't qualify for the Earned income Credit because your parents will already have claimed a credit.

D. Cannot claim the Earned Income Credit because you are not at least age 25.

21 of 50

You cannot use Form 1040EZ if

A. Your filing status is single or married filing jointly.

B. Your taxable income is less than $100,000.

C. You are not a debtor in a Chapter 11 bankruptcy case filed after October 16, 2005.

D. None of the above.

22 of 50

If your spouse is a nonresident alien, you cannot use Form 1040EZ if he or she

A. Cannot file a U.S. tax return.

B. Has either an SSN or an ITIN.

C. Becomes a resident alien before he or she can file a tax return.

D. Is living with you in the United States and files with you jointly.

23 of 50

You can file a tax return using Form 1040EZ if

A. You owe tax from the recapture of an education credit.

B. You claim a credit for excess social security and tier 1 RRTA tax withheld.

C. You claim a credit for the retirement Savings Contributions Credit (Saver's Credit).

D. None of the above.

24 of 50

An ITIN entitles you to social security benefits and allows you to work legally under U.S. law.

True

False

25 of 50

Your filing status is single if on December 31, 2014

A. You never were married.

B. You were legally separated, according to your state law, under a decree of divorce or separate maintenance.

C. You were widowed before January 1, 2015, and did not remarry in 2014.

D. Any of the above

26 of 50

Even if you do not have to file a tax return, you should file one to get a refund of any federal income tax withheld or you are eligible for the EIC.

True

False

27 of 50

If you take the EIC even though you are not eligible and it is determined that your error is due to reckless or intentional disregard of the EIC rules, you will

A. Be allowed to claim the credit as long as you are eligible this year.

B. Not be allowed to take the credit for 10 years even if you are otherwise eligible this year.

C. Not allowed to take the credit for 2 years even if you are otherwise eligible to do so.

D. Be eligible to claim the credit as long as you file Form 8862.

28 of 50

You must file Form 8862 if your EIC for a year after 1996 was reduced or disallowed for any reason other than a math or clerical error. Do not file Form 8862

A. For 2 years after the most recent tax year for which there was a final determination that your EIC claim was due to reckless or intentional disregard of the EIC rules.

B. If the only reason your EIC was reduced or disallowed in the earlier year was because it was determined that a child listed on your Schedule EIC was not your qualifying child.

C. For 10 years after the most recent tax year for which there was a final determination that your EIC claim was due to fraud.

D. None of the above.

29 of 50

A. Can claim the Earned Income Credit because although you are not 25 yet, not one can claim you as a dependent.

B. Can claim the Earned Income Credit because you earned less than $19,100 and it does not matter that you are not at least age 25.

C. Live with your parents so you don't qualify for the Earned income Credit because your parents will already have claimed a credit.

D. Cannot claim the Earned Income Credit because you are not at least age 25.

30 of 50

Any refund you receive as a result of taking the EIC will not be used to determine if you are eligible for temporary assistance for needy families, Medicaid and SSI, or supplemental Nutrition Assistance Program and low income housing. The refund you receive because of EIC can count as an asset if

A. You receive more than the limits set by the organization.

B. Payments from a welfare state fund are permanent.

C. You spend on items that are not for your family such as going to bars.

D. None of the above.

31 of 50

Your employer must provide or send Form W-2 to you no later than January 31, 2015. If you do not get a Form W-2, you

A. Can file your tax return without it.

B. Can call the IRS and ask them for a copy for a $57 fee.

C. Still have to report your earnings on your tax return.

D. Can ask your employer for one and if he refuses, file a complaint with the IRS.

32 of 50

When you receive interest income as a nominee, it means that

A. You are responsible to report this income in your tax return.

B. The IRS has named you the owner of such income.

C. The income is in your name, but it actually belongs to someone else.

D. You can choose whomever you want as the owner of this income.

33 of 50

For 2014, report on your tax return unemployment compensation that you receive that is

A. The total unemployment compensation paid to you in 2014.

B. More than $2,400.

C. Up to $2,400.

D. Due to contributions to a government unemployment compensation program.

34 of 50

In 1862, Congress enacted the nation's first income tax law

A. In order for the government to give bonuses to its employees.

B. In order for the government to have more spending money for leisure activities.

C. In order to support the campaigns of political parties.

D. In order to support the Civil War effort.

35 of 50

The Act of 1862 established the office of the Commissioner of Internal Revenue. The Commissioner was given the power to

A. Assess taxes.

B. To enforce the tax laws through seizure of property and income and through prosecution.

C. Levy and collect taxes.

D. All of the above.

36 of 50

The powers and authority of the office of Commissioner of Internal Revenue remain very much the same today.

True

False

37 of 50

In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. The amendment gave Congress legal authority to tax income and resulted in a revenue law that taxed income of both individuals and corporations.

True

False

38 of 50

On October 22, 1986, President Reagan signed into law the Tax Reform Act of 1986. The act called for an increase in individual taxation over a five-year period.

True

False

39 of 50

On October 22, 1986, President Reagan signed into law the Tax Reform Act of 1986. The top rate on individual income was

A. Increased from 28% to 50%.

B. Increased from 3% to 15%.

C. Lowered from 50% to 28%.

D. To reduce the federal deficit.

40 of 50

The Revenue Reconciliation Act of 1990 was signed into law on November 5, 1990. The emphasis of the 1990 act was increased taxes on the wealthy.

True

False

41 of 50

On August 10, 1993, President Clinton signed the Revenue Reconciliation Act of 1993 into law. The act's main purpose was to

A. Decrease taxation on corporations.

B. Increase taxation of small business.

C. Reduce taxes of individuals.

D. Reduce the federal deficit.

42 of 50

In 1997, President Clinton signed a tax revenue act which

A. Cut taxes by $152 billion.

B. Included a cut in capital-gains tax for individuals.

C. Included a $500 per child tax credit and tax incentives for education.

D. All of the above.

43 of 50

From 1791 to 1802, the United States government was supported by internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves.

True

False

44 of 50

In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law and it was a forerunner of our modern income tax.

True

False

45 of 50

The nation's first sales taxes were on gold, silverware, jewelry and watches due to

A. The War of 1817.

B. The high cost of the War of 1812.

C. Tariffs on imported goods.

D. Sufficient funds to run the government.

46 of 50

During the Civil War, a person earning from $600 to $10,000 per year paid tax at the rate of

A. 50%

B. 15%

C. 3%

D. 28%

47 of 50

In 1868, Congress focused its taxation efforts on tobacco and distilled spirits and

A. Eliminated the income tax in 1872.

B. Increased taxation on small business.

C. Increased the tax rate to 3%.

D. Property sold at auction, corporate bonds, and slaves.

48 of 50

In 1895, the U.S. Supreme Court decided that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.

True

False

49 of 50

In 2004, the U.S. was forced to eliminate a corporate tax provision that had been ruled illegal by

A. The Internal Revenue Service.

B. The World Trade Organization.

C. The Constitution.

D. The Supreme Court.

50 of 50

A. Persuade individuals to save more for retirement.

B. Pursue their college education.

C. Invest in stocks and bonds.

D. Extend to individuals a cornucopia of tax breaks.

Please Note: If you filled out the answers directly on this page, please print this page or write down the answers before you proceed to submit them by clicking on "Review Questions" link in step 3 above.

Back to Tax School Homepage

Revised: 07/26/15