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Tax Topic 6 - Job Related Tax Deductions

In this topic you will cover which expenses are subject to the 2% limit and which expenses are not. You will also learn which expenses you cannot deduct and how to report the expenses that are deductible. For example, some of the expenses that are deductible are unreimbursed employee expenses that are incurred during the year and that are ordinary and necessary. You may be able to deduct the the ordinary and necessary business-related expenses you have for travel, entertainment, gifts, or expenses for transportation. An expense does not have to be required to be considered necessary. This topic will cover what expenses are deductible and how to report them on a tax return. In addition you will become aware of which records you need to prove your deduction and what to do with reimbursements. On Schedule A (Form 1040), you may be able to deduct a portion of miscellaneous expenses covering a wide and varied range of items, such as employee travel and entertainment expenses, work clothes, union and employee professional dues, investment expenses, legal expenses, tax preparation expenses, and educational expenses. They all share the limitation of 2% of adjusted gross income (AGI) floor. If your expenses do not exceed this floor, you may not deduct any of them.

Unreimbursed employee travel expenses are deductible but are also subject to the 2% of adjusted gross income (AGI) floor on Schedule A, unless you are claiming these expenses on Schedule C as a self-employed individual.

2011 Filing Requirements Chart for Most Taxpayers

If your filing status is...	And at the end of 2011 you were...	Then file a return if your gross income was at least...**
Single	under 65	$9,500
	65 of older	$10,950
Head of household	under 65	$12,200
	65 or older	$13,650
married filing jointly	under 65 (both spouses)	$19,000
	65 or older (one spouse)	$20,150
	65 or older (both spouses)	$21,300
married filing separately	any age	$3,700
Qualifying widow (er) with dependent child	under 65	$15,300
	65 or older	$16,450

* If you were born before January 2, 1947, you are considered to be 65 or older at the end of 2011.

** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it).

2011 Filing Requirements for Dependents:

If your parent (or someone else) can claim you as a dependent, use this table to see
you must file a return.

In this table, unearned income includes taxable interest, ordinary dividends, and
capital gain distributions. It also includes unemployment compensation, taxable
social security benefits, pensions, annuities, and distributions of unearned income
from a trust. Earned income includes salaries, wages, tips, professional fees, and
taxable scholarship and fellowship grants. Gross income is the total of your unearned
and earned income.

Caution. If your gross income was $3,700 or more, you usually cannot be claimed
as a dependent unless you are a qualifying child. For details, see Exemptions for
Dependents.

Single dependents— Were you either age 65 or older or blind?
✓ No. You must file a return if any of the following apply.
1. Your unearned income was more than $950.
2. Your earned income was more than $5,800.
3. Your gross income was more than the larger of —
a. $950, or
b. Your earned income (up to $5,500) plus $300.

✓ Yes. You must file a return if any of the following apply.
1. Your unearned income was more than $2,400 ($3,850 if 65 or older and blind).
2. Your earned income was more than $7,250 ($8,700 if 65 or older and and blind).
3. Your gross income was more than the larger of–

a. $2,400 ($3,850 if 65 or older and blind), or
b. Your earned income (up to $5,500) plus $1,750 ($3,200 if 65 or older and blind).

Married dependents—Were you either age 65 or older or blind?
✓ No. You must file a return if any of the following apply.
1. Your gross income was at least $5 and your spouse files a separate
return and itemizes deductions.
2. Your unearned income was more than $950.
3. Your earned income was more than $5,800.
4. Your gross income was more than the larger of —
a. $950, or
b. Your earned income (up to $5,500) plus $300.

✓ Yes. You must file a return if any of the following apply.
1. Your gross income was at least $5 and your spouse files a separate
return and itemizes deductions.
2. Your unearned income was more than $2,100 ($3,250 if 65 or older and blind).

3. Your earned income was more than $6,950 ($8,100 if 65 or older and and blind).
4. Your gross income was more than the larger of–
a. $2,100 ($3,250 if 65 or older and blind), or
b. Your earned income (up to $5,500) plus $1,450 ($2,600 if 65 or older
and blind).

Other Situations When You Must File a 2011 Return:

1. You owe any special taxes, including any of the following.

a. Alternative minimum tax. (See Form 6251.)

b. Additional tax on a qualified plan, including an individual retirement
arrangement (IRA), or other tax-favored account. (See Publication 590, Individual
Retirement Arrangements (IRAs), and Publication 969, Health you and your spouse can
Savings Accounts and Other Tax-Favored Health Plans.) But if you are filing return
only because you owe this tax, you can file Form 5329 by itself.

c. Social security or Medicare tax on tips you did not report to your employer (see
Publication 531, Reporting Tip Income) or on wages you received from an
employer who did not withhold these taxes (see Form 8919).

d. Write-in taxes, including uncollected social security, Medicare, or railroad
retirement tax on tips you reported to your employer or on group-term life
insurance and additional tax on health savings accounts. (See Publication 531,
Publication 969, and the Form 1040 instructions for line 60.)

e. Household employment taxes. But if you are filing a return only because you
owe these taxes, you can file Schedule H by itself.

Recapture taxes. (See the Form 1040 instructions for lines 44, 59b, and 60.)

2. You (or your spouse, if filing jointly) received Archer MSA, Medicare Advantage
MSA, or health savings account distributions.

3. You had net earnings from self-employment of at least $400. (See Schedule SE
(Form 1040) and its instructions.)

4. You had wages of $108.28 or more from a church or qualified church-controlled
organization that is exempt from employer social security and Medicare taxes.
(See Schedule SE (Form 1040) and its instructions.)

Cost of Keeping Up a Home:

Keep for Your Records

	Amount You Paid	Total Cost
Property Taxes	$______	$______
Mortgage interest expense	______	______
Rent	______	______
Utility charges	______	______
Repairs/maintenance	______	______
Property insurance	______	______
Food consumed on premises	______	______
Other household expenses	______	______

Totals	$______	$______

Minus total amount you paid		(______)

Amount others paid		$______

If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home.

Who Is a Qualifying Person Qualifying You To File as Head of Household?

IF the person is your...	And...	Then that persons is...
qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2	he or she is single	a qualifying person, whether or not you can claim an exemption for the person.
	he or she is married and you can claim an exemption for him or her	a qualifying person.
	he or she is married and you cannot claim an exemption for him or her	not a qualifying person.3
qualifying relative4 who is your father or mother	you can claim an exemption for him or her 5	a qualifying person.6
	you cannot claim an exemption for him or her	not a qualifying person.
qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests).	he or she lived with you more than half the year and he or she is related to you in one of the ways for relatives who do not have to live with you, and you can claim an exemption for him or her 5	a qualifying person.
	he or she did not live with you more than half the year	not a qualifying person.
	he or she is not related to you in one of the ways for relatives who do not have to live with you, and is your qualifying relative only because he or she lived with you all year as a member of your household	not a qualifying person.
	you cannot claim an exemption for him or her	not a qualifying person.

1A person cannot qualify more than one taxpayer to use the head of household filing status for the year.
2The term “qualifying child” is defined under Exemptions for Dependents, later. Note: If you are a noncustodial parent, the term “qualifying child” for
head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described
under Children of divorced or separated parents or parents who live apart under Qualifying Child, later. If you are the custodial parent and those
rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom
you can claim an exemption.
3 This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone
else’s return.
4The term “qualifying relative” is defined under Exemptions for Dependents, later.
5If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. See Multiple
Support Agreement.
6See Special rule for parent for an additional requirement.

There are are five tests that must be met for a child to be qualifying child. The five tests are:

Relationship,
Age,
Residency,
Support, and
Joint return.

Relationship Test

To meet this test, a child must be:

	Your son, daughter, stepchild, fosterchild, or a descendent (for example, your grandchild) of any of them, or
	Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendent (for example, your niece or nephew) of any of them.

Age Test:

To meet this test, a child must be:

	Under age 19 at the end of the year and younger than you (or your spouse if filing jointly),
	A full-time student under age 24 at the end of the year and younger than you (or your spouse if filing jointly), or
	Permanently and totally disabled at any time during the year, regardless of age.

Residency Test:

To meet this test, your child must have lived with your for more than half of the year. There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents.

Support Test (to be a qualifying child):

To meet this test, the child cannot have provided more than half of his or her own support for the year. This test is different from the support test for a qualifying relative.

Joint Return Test (to be a qualifying child):

To meet this test, the child cannot file a joint return for the year unless the joint return was filed only as a claim of refund.

Qualifying Relative:

There are four tests that must be met for a person to be your qualifying relative. The four tests are:

Not a qualifying child test,
Member of household or relationship test,
Gross income test, and
Support test.

Not a qualifying child test:

A child is not your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer.

Member of household or relationship test:

To meet this test, a person must either:

Live with you all year as a member of your household, or
Be related to you in one of the ways as relatives who do not have to live with you.

If at any time during the year the person was your spouse, that person cannot be your qualifying relative.

Gross Income Test:

To meet this test, a person's gross income for the year must be less than $3,700.

Support Test (to be a qualifying relative):

To meet this test, you generally must provide more than half of a person's total support during the calendar year.

Overview of the Rules for Claiming an Exemption for a Dependent:

· You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer.
· You cannot claim a married person who files a joint return as a dependent unless that joint return is only a claim for refund
and there would be no tax liability for either spouse on separate returns.
· You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a
resident of Canada or Mexico.1
· You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative.

Tests To Be a Qualifying Child

Tests To Be a Qualifying Relative

The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
The child must be (a) under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), (b) under age 24 at the end of the year, a full-time student, and younger than you (or your spouse, if filing jointly), or (c) any age if permanently and totally disabled.
The child must have lived with you for more than half of the year.
The child must not have provided more than half of his or her own support for the year.
The child is not filing a joint return for the year (unless that joint return is filed only as a claim for refund).

If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child.

The person cannot be your qualifying child or the qualifying child of any other taxpayer.
The person either (a) must be related to you in one of the ways for relatives who do not have to live with you, or (b) must live with you all year as a member of your household 2 (and your relationship must not violate local law).
The person's gross income for the year must be less than $3,700.3
You must provide more than half of the person's total support for the year.4

1There is an exception for certain adopted children. 2There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents or
parents who live apart, and kidnapped children.
3There is an exception if the person is disabled and has income from a sheltered workshop.
4There are exceptions for multiple support agreements, children of divorced or separated parents or parents who live apart, and kidnapped
children.

When filing your return, you must choose the appropriate filing status from the five filing statuses available for 1040A and 1040 users. (Users of Form 1040EZ must file as single or as married filing jointly, with no dependents.) You select a status by checking the appropriate box directly below your name on page 1 of Form 1040 or Form 1040A, where it says “Filing Status”:
✓ Single
✓ Married filing jointly
✓ Married filing separately
✓ Head of household
✓ Qualifying widow(er) with dependent child

Standard Deduction Chart for Most People*:

If your filing status is...	Your Standard deduction is:
Single or Married filing separately	$5,800
Married filing jointly or Qualifying widow (er) with dependent child	$11,600
Head of household	$8,500

*Do not use this chart if you were born before January 2, 1947, or are blind, or if someone else can claim you (or your spouse if filing jointly) as a dependent. Use Table 7 or 8 instead.

Standard Deduction Chart for People Born
Before January 2, 1947, or Who are Blind*

check the correct number of circles below. Then go to the chart.
You:	Born before January 2, 1947	Blind
Your spouse, if claiming spouse's exemption:	Born before January 2, 1947	Blind
Total number of circles you checked	___

If your filing status is...	AND the number of circles above is...	THEN your standard deduction is...
Single	1 2	$7,250 $8,700
Married filing jointly or Qualifying widow (er) with dependent child	1 2 3 4	$12,750 $13,900 $15,050 $16,200
Married filing separately	1 2 3 4	$6,950 $8,100 $9,250 $10,400
Head of household	1 2	$9,950 $11,400

*If someone else can claim you (or your spouse if filing jointly) as a dependent, use Standard deduction for dependent table instead.

Standard Deduction Worksheet for
Dependents

check the correct number of circles below. Then go to the worksheet.

You:

Born before January 2, 1947

Blind

Your spouse, if claiming spouse's exemption:

Born before January 2, 1947

Blind

Total number of circles you checked

___

1. Enter your earned income (defined below). If none, enter -0-.

1. __________

2. Additional amount.

2. $300

3. Add lines 1 and 2.

3. __________

4. Minimum standard deduction.

4. $950

5. Enter the larger of line 3 or line 4

5. __________

6. Enter the amount shown below for your filing status.

	Single or Married filing separately - $5,800
	Married filing jointly - $11,600
	Head of household - $8,500

6. __________

7. Standard deduction.

a. Enter the smaller of line 5 or line 6. If born after January 1, 1947, and not blind, stop here. This is your standard deduction. Otherwise, go on to line 7b.

b. If born before January 2, 1947, or blind, multiply $1,450 ($1,150 if married) by the number of circles in the box above.

c. Add lines 7a and 7b. This is your standard deduction for 2011.

7a. __________

7b. __________

7c. __________

Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in your income.

Tax Facts:

_The Taxpayer Advocate Service (TAS) is your voice at the IRS. They offer free help to guide you through the often-confusing process of resolving tax problems that you haven't been able to solve on your own. TAS can help you if you can't resolve your problem with the IRS and

	A. Your problem is causing financial difficulties for you, your family, or your business. (0 points)
	B. You face (or your business is facing) an immediate threat of adverse action. (0 points)
	C. You've tried repeatedly to contact the IRS but no one has responded to you, or the IRS has not responded by the date promised. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 4 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 2 of 241

The self-employment health insurance deduction is no longer allowed on Schedule SE,

	A. Because this tax deduction has expired in 2011. (0 points)
	B. But you can still take it on Form 1040, line 29. (10 points) Form 1040 inst. pg 6 (2 mins)
	C. However, you can still deduct it on Schedule C. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 3 of 241

You can claim the first-time homebuyer credit for 2011, if

	A. You were married. (0 points)
	B. You were a member of the uniformed services or Foreign service or an employee of the intelligence community on qualified official extended duty outside the U.S. (10 points) Form 1040 inst. pg 6 (2 mins)
	C. You rolled over an amount from a 401(k) plan to a designated Roth account. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 4 of 241

Beginning in 2011, you may use the busines standard mileage rate for a vehicle used for hire, such as a taxicab.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 6 (2 mins)

Incorrect

Question 5 of 241

If you converted or rolled over an amount to a Roth IRA in 2010 and did not elect to report the taxable amount on your 2010 tax return, you generally

	A. Must report half of it on your 2011 tax return. (0 points)
	B. Must report half of it on your 2012 tax return. (0 points)
	C. Both A and B above. (10 points) Form 1040 inst. pg 6 (2 mins)
	D. Must report all of the taxable amount on your 2011 tax return. (0 points)

(10 points) | ___

Correct

Incorrect

Question 6 of 241

The additional tax on distributions from HSA's and Archer MSAs not used for qualified medical expenses has increased to _______ for distribution after 2010.

	A. 20% (10 points) Form 1040 inst. pg 6 (2 mins)
	B. 30% (0 points)
	C. 40% (0 points)
	D. 50% (0 points)

(10 points) | ___

Correct

Incorrect

Question 7 of 241

You need Schedule L to figure your 2011 standard deduction.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct

Incorrect Form 1040 inst. pg 6 (2 mins)

Question 8 of 241

You need Schedule M to claim the making work pay credit in 2011.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct

Incorrect Form 1040 inst. pg 6 (2 mins)

Question 9 of 241

You cannot claim the alternative motor vehicle credit for a vehicle you bought after 2010 unless the vehicle is a new fuel cell motor vehicle.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 6 (2 mins)

Incorrect

Question 10 of 241

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

	A. A refundable credit for prior year minimum tax. (0 points)
	B. The American opportunity credit. (0 points)
	C. The Health coverage tax credit. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 7 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 11 of 241

You can get an automatic 6-month extension to file if no later than the due date of your tax return, you file Form 4868 and

	A. You will receive an automatic 6-month extension to extend the time to pay your tax. (0 points)
	B. You will not owe any interest on the unpaid tax. (0 points)
	C. Both A and B above. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 7 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 12 of 241

You must file a tax return if in 2011

	A. You owe any special taxes, such as the Alternative Minimum Tax. (0 points)
	B. You receive HSA, Archer MSA, or Medicare Advantage MSA distributions. (0 points)
	C. You had earnings from self-employment of at least $400 or wages of $108.28 or more from a church or qualified church controlled organization exempt from social security and Medicare taxes. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 9 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 13 of 241

Check that both the name and SSN on your Forms 1040, W-2, and 1099 agree with your social security card. If they do not

	A. Certain deductions and credits on your Form 1040 may be reduced or disallowed. (0 points)
	B. You may not receive credit for your social security earnings. (0 points)
	C. Both A and B above. (10 points) Form 1040 inst. pg 12 (2 mins)
	D. Your tax return may be returned to you unprocessed. (0 points)

(10 points) | ___

Correct

Incorrect

Question 14 of 241

If your spouse is a nonresident alien, he or she must have either an SSN or an ITIN if

	A. You file a joint tax return. (0 points)
	B. You file a separate tax return and claim an exemption for your spouse. (0 points)
	C. Your spouse is filing a separate tax return. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 12 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 15 of 241

You can check the single box on line 1 if on December 31, 2011,

	A. You were married. (0 points)
	B. Your divorce was not final (an interlocutory decree). (0 points)
	C. You had a dependent child. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 12 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 16 of 241

Once you file a joint tax return, you cannot choose to file separate tax returns for that year after the due date of the tax return.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 13 (2 mins)

Incorrect

Question 17 of 241

If you file a joint tax return, both you and your spouse are generally responsible for the tax and interest or penalties due on the tax return. This means that

	A. One spouse does not need to pay the tax due because the other spouse will. (0 points)
	B. One spouse does not need to report the correct tax because only one spouse is responsible for any additional taxes assessed by the IRS. (0 points)
	C. If one spouse does not pay the tax due, the other spouse may have to or if one spouse does not report the correct tax, both spouses may be liable. (10 points) Form 1040 inst. pg 13 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 18 of 241

Generally, a husband and a wife cannot file a joint tax return if either spouse is a nonresident alien at any time during the year, unless

	A. He or she is married to a U.S. citizen or resident alien at the end of 2011 and elect to be treated as a resident alien. (10 points) Form 1040 inst. pg 13 (2 mins)
	B. He or she is married to another nonresident alien at any time during the year. (0 points)
	C. He or she has a valid social security number that was issued by the social security administration. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 19 of 241

You may be able to file as head of household if you had a child living with you and you lived apart from your spouse during the last 6 months of 2011.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 13 (2 mins)

Incorrect

Question 20 of 241

You are considered unmarried for the Head of Household filing status purpose if

	A. You were legally separated according to your state law under a decree of divorce or separate maintenance at the end of 2012. (0 points)
	B. You are married but lived apart from your spouse for the last 6 months of 2011 and you meet the other rules for persons who live apart. (0 points)
	C. You are married to a nonresident alien at any time during the year and you do not choose to treat him or her as a resident alien. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 13 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 21 of 241

If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home,

	A. You can count these payments as money you paid. (0 points)
	B. You must include these payments in the total cost of keeping up your home to figure if you paid over half the cost. (10 points) Form 1040 inst. pg 13 (2 mins)
	C. Both A and B above. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 22 of 241

If you are married and file a separate tax return, you generally report only your own income, exemptions, deductions, credits and are responsible only for the tax on your own income, unless

	A. You live in a community property state. (10 points) Form 1040 inst. pg 13 (2 mins)
	B. You are filing as Head of Household. (0 points)
	C. You paid over half the cost of keeping up a home in which you lived. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 23 of 241

If you are filing as Head of Household and qualify to take an exemption for your spouse, then

	A. Check the box in line 6b of Form 1040. (0 points)
	B. Enter the name of your spouse on the dotted line next to line 6b of Form 1040. (0 points)
	C. Enter your spouse's social security number in the space provided at the top of your tax return. (0 points)
	D. All of the above. (10 points) Form 1040 inst. pg 14 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 24 of 241

A post-1984 and pre-2009 decree or agreement must state

	A. The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support. (0 points)
	B. The other parent will not claim the child as a dependent. (0 points)
	C. The years for which the claim is released. (0 points)
	D. All of the above. (10 points) Form 1040 inst. pg 17 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 25 of 241

A tax return filed only to get a refund of withheld income tax or estimated tax paid is

	A. A claim for refund. (10 points) Form 1040 inst. pg 17 (2 mins)
	B. Filing a tax return. (0 points)
	C. A business return. (0 points)
	D. A short form. (0 points)

(10 points) | ___

Correct

Incorrect

Question 26 of 241

A return is a claim for refund if the earned income credit or any other similar refundable credit is claimed on it.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Form 1040 inst. pg 17 (2 mins)

Incorrect

Question 27 of 241

If the person is married and files a joint return, you cannot claim that person as your dependent, unless

	A. He or she files a return only as a claim of refund. (0 points)
	B. He or she does not file a tax return. (0 points)
	C. Both A and B above. (10 points) Form 1040 inst. pg 17 (2 mins)
	D. He or she files a return and a tax liability of less than $1,000 results for either spouse if they filed separate tax returns. (0 points)

(10 points) | ___

Correct

Incorrect

Question 28 of 241

If a parent can claim a child as a qualifying child for any of the credits but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for 2011,

	A. But only if that person's AGI is higher than the lowest AGI of any parent of the child who can claim the child. (0 points)
	B. But only if that person's AGI is higher than the highest AGI of any parent of the child who can claim the child. (10 points) Form 1040 inst. pg 17 (2 mins)
	C. But only if the child lived with that person for all of 2011. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 29 of 241

You daughter meets the conditions to be a qualifying child for both you and your mother. Your daughter does not meet the conditions to a be a qualifying child of any other person, including her other parent. As a result,

	A. If you claim your daughter, your mother can claim any of the tax benefits for your daughter that you have not or elect not to claim. (0 points)
	B. You can claim your daughter as a qualifying child for all tax benefits for which you otherwise qualify. (10 points) Form 1040 inst. pg 18 (2 mins)
	C. If your mother's AGI is higher than yours, your daughter is the qualifying child of your mother. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 30 of 241

Generally, you must report all income on your tax return except income that is exempt from tax by law.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 19 (2 mins)

Incorrect

Question 31 of 241

If you worked abroad, you may be able to exclude part or all of your foreign earned income.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 19 (2 mins)

Incorrect

Question 32 of 241

You must complete Part III of Schedule B if you

	A. Had a foreign account. (0 points)
	B. Received a distribution from, or were a grantor of, or a transferor to, a foreign trust. (0 points)
	C. Had foreign financial assets in 2011. (0 points)
	D. Both A and B above. (10 points) Form 1040 inst. pg 19 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 33 of 241

If you and your spouse lived in a community property state, you must usually follow state law to determine your income. The following are community property states.

	A. Arizona, Louisiana and Wisconsin. (0 points)
	B. Idaho, California and Washington. (0 points)
	C. Nevada, New Mexico and Texas. (0 points)
	D. All of the above. (10 points) Form 1040 inst. pg 19 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 34 of 241

If you are a debtor in a Chapter 11 bankruptcy case, your income is taxable to the bankruptcy estate and reported on the estate's income tax return.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 19 (2 mins)

Incorrect

Question 35 of 241

You may not receive a W-2 for wages paid to you as a household employee if your employer pays you less than _________ in 2011.

	A. $1,700 (10 points) Form 1040 inst. pg 19 (2 mins)
	B. $1,900 (0 points)
	C. $600 (0 points)
	D. $400 (0 points)

(10 points) | ___

Correct

Incorrect

Question 36 of 241

This is tip income reported on box 8 of your Form W-2. You must include these tips in your income total on line 7 of Form 1040 unless you can prove that you did not receive them.

	A. Unreported tips. (0 points)
	B. Allocated tips. (10 points) Form 1040 inst. pg 19 (2 mins)
	C. Tip income. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 37 of 241

The following is a true statement regarding value of any non-cash tips you received, such as tickets, passes, or other items of value.

	A. You do not need to report these noncash tips on line 7 of Form 1040. (0 points)
	B. You need to report these non-cash tips to your employer. (0 points)
	C. Although you do not report these non-cash tips to your employer, you must report them on line 7 of Form 1040. (10 points) Form 1040 inst. pg 19 & 42 (2 mins)
	D. You may owe social security and Medicare tax on these noncash tips. (0 points)

(10 points) | ___

Correct

Incorrect

Question 38 of 241

You must include scholarship and fellowship grants not reported on Form W-2, unless

	A. You were a degree candidate, include on line 7 of Form 1040 only the amounts you used for expenses other than tuition and course-related expenses. (10 points) Form 1040 inst. pg 19 (2 mins)
	B. They were amounts used for room, board, and travel. (0 points)
	C. They were amounts used for non-course-related materials. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 39 of 241

The following income must be included in the total on line 7 of Form 1040.

	A. Excess salary deferrals of more than $5,000. (0 points)
	B. Disability pensions shown on Form 1099-R if you have not reached the minimum retirement age set by your employer. (10 points) Form 1040 inst. pg 19-20 (2 mins)
	C. Distributions from an IRA. (0 points)
	D. All of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 40 of 241

These include full-time life insurance salespeople, certain agent or commission drivers and traveling salespeople, and certain homeworkers. The ________ box in box 13 of your Form W-2 shouldx be checked if you were a

	A. Statutory employee. (10 points) Form 1040 inst. pg 20 (2 mins)
	B. Self-employed taxpayer. (0 points)
	C. Non-dividends distributor. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 41 of 241

You employer is required to provide or send Form W-2 to you no later than January 31, 2012. If you do not receive it by early February,

	A. Do not file your tax return until October 31, 2012. By this time the IRS will for sure have received the information. (0 points)
	B. You don't need to report your earnings on line 7 of Form 1040 because your employer did not report your wages. (0 points)
	C. You must still report your earnings on line 7 of Form 1040. (10 points) Form 1040 inst. pg 20 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 42 of 241

You must fill in and attach Schedule B to your Form 1040 if the total taxable interest on Form 1040 line 8a is over

	A. $1,900 (0 points)
	B. $1,500 (10 points) Form 1040 inst. pg 20 (2 mins)
	C. $600 (0 points)
	D. $5,000 (0 points)

(10 points) | ___

Correct

Incorrect

Question 43 of 241

The followign is a true statement regarding income that must be included on Form 1040 as taxable income.

	A. Interest credited in 2011 on deposits that you could not withdraw because of the bankruptcy or insolvency of the financial institution may have to be included in your 2011 income. (0 points)
	B. Interest income earned on your IRA, health savings account, Archer or Medicare Advantage MSA, or Coverdell education savings account. (0 points)
	C. Dividends that you received as a nominee. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 20 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 44 of 241

Some nondividend distributions are a return of your cost (or other basis). You must reduce your cost (or other basis) by these distributions. This means that yoru distributions

	A. Will not be taxed until you recover your cost (or other basis). (10 points) Form 1040 inst. pg 20 (2 mins)
	B. Will be taxed when distributed. (0 points)
	C. Will never be taxed. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 45 of 241

Dividends on insurance policies are a partial return of the premiums you paid. Do not report them as dividends. Include them in income on line 21 of Form 1040 only if they exceed the total of all net premiums you paid for the contract.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 20 (2 mins)

Incorrect

Question 46 of 241

Generally, qualified dividends are shown in box 1b of Form(s) 1099-DIV and they are entered on line 9b of Form 1040. Qualified dividends are also included in the ordinary dividends total required to be shown on line 9a of Form 1040. Additionally,

	A. Dividends you received as a nominee would not be qualified dividends. (0 points)
	B. Qualified dividends are eligible for a lower tax rate than other ordinary income. (0 points)
	C. Some dividends may be reported as qualified dividends in box 1b of Form 1099-DIV but are not qualified dividends. (0 points)
	D. All of the above. (10 points) Form 1040 inst. pg 20 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 47 of 241

The following are considered qualified dividends.

	A. Dividends you receive as a nominee. (0 points)
	B. Dividends on any share of stock to the extent that you are under an obligation (including a short sale) to make related payments with respect to positions in substantially similar or related property. (0 points)
	C. Payments in lieu of dividends, but only if you know or have reason to know that the payments are not qualified dividends. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 20 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 48 of 241

None of the state refund is taxable if, in the year you paid the tax, you

	A. Did not itemize deductions. (0 points)
	B. Elected to deduct state and local general sales taxes instead of state and local income taxes. (0 points)
	C. Both A and B above. (10 points) Form 1040 inst. pg 21 (2 mins)
	D. Itemized your deductions. (0 points)

(10 points) | ___

Correct

Incorrect

Question 49 of 241

If you received a refund, credit, or offset of state or local income taxes in 2011, you may receive a Form 1099-G. If you chose to appy part or all of the refund to your 2011 estimated state or local income tax,

	A. The amount applied is treated as received in 2012. (0 points)
	B. The amount applied is treated as received in 2011. (10 points) Form 1040 inst. pg 21 (2 mins)
	C. Use the worksheet to see if any amount is treated as received in 2011. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 50 of 241

Enter amounts received as alimony or separate maintenance on lin 11 of Form 1040. You must let the person who made the payments know your social security number or else

	A. You may have to pay a penalty. (10 points) Form 1040 inst. pg 22 (2 mins)
	B. You will not be able to deduct the alimony amount. (0 points)
	C. You will not be able to include the alimony amount. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 51 of 241

If you operated a business or practiced your profession as a sole proprietor, report your income and expenses on

	A. Schedule A (Form 1040) (0 points)
	B. Form 1040 line 12 only. (0 points)
	C. Schedule C or C-EZ. (10 points) Form 1040 inst. pg 22 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 52 of 241

You must file Schedule D but generally do not have to file Form 8949, if

	A. You have no capital losses, and your only capital gains are capital gain distributions from Form(s) 1099-DIV, box 2a. (0 points)
	B. None of the Form(s) 1099-DIV have an amount in box 2b (unrecaptured Section 1250 gain), box 2c (Section 1202 gain), or box 2d (collectibles (28%) gain). (0 points)
	C. Both A and B above. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 22 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 53 of 241

Enter the total distribution on line 15a of Form 1040 if you rolled over part or all of the distribution from

	A. One IRA to another IRA of the same type. (0 points)
	B. One SEP or SIMPLE IRA to a traditional IRA. (0 points)
	C. One IRA to a qualified plan other than an IRA. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 22 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 54 of 241

If you rolled over part or all of the distribution from an IRA, enter "Rollover" next to line 15b of Form 1040. If the total distribution was rolled over in a qualified rollover, enter 0 on line 15b of Form 1040. Generally, a qualified rollover must be made within ______ days after the day you received the distribution.

	A. 60 (10 points) Form 1040 inst. pg 22 (2 mins)
	B. 30 (0 points)
	C. 90 (0 points)
	D. 120 (0 points)

(10 points) | ___

Correct

Incorrect

Question 55 of 241

You cannot claim a charitable contribution deduction for any qualified charitable distribution not included in your income.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 23 (2 mins)

Incorrect

Question 56 of 241

If you converted part or all of an IRA to a Roth IRA in 2010 and did not elect to report the taxable amount on your 2010 tax return, include on line 15b of Form 1040 the amount from your 2010 Form 8606, line 20a. However, you may have to include a different amount on line 15d of Form 1040 if

	A. You received a distribution from a Roth IRA in 2010 or the owner of the Roth IRA died in 2011. (0 points)
	B. You received a distribution from a Roth IRA in 2011. (0 points)
	C. A or B above. (10 points) Form 1040 inst. pg 23 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 57 of 241

You may have to pay an additional tax if

	A. You received an early distribution from your IRA and the total was not rolled over. (0 points)
	B. You were born before July 1, 1949, and received less than the minimum required distribution from your traditional, SEP, and SIMPLE IRAs. (0 points)
	C. A or B above. (10 points) Form 1040 inst. pg 23 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 58 of 241

You should receive a Form 1099-R showing the total amount of your pension and annuity payments before income tax or other deductions were withheld. Include the following payments on line 16a and 16b of Form 1040.

	A. Disability pensions received before you reach the minimum retirement age set by your employer. (0 points)
	B. Corrective distributions (including any earnings) of excess salary deferrals or excess contributions to retirement plans. (0 points)
	C. A or B above. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 23 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 59 of 241

Attach Form(s) 1099-R to Form 1040 if any federal income tax was withheld.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 23 (2 mins)

Incorrect

Question 60 of 241

Your pensions and annuities payments are fully taxable if

	A. You contributed to the cost of your pension or annuity. (0 points)
	B. You did not get your entire cost back tax free before 2011. (0 points)
	C. Both A and B above. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 23 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 61 of 241

If your pension or annuity is fully taxable, enter the total pension or annuity payments (from Form(s) 1099-R, box 1) on line 16a of Form 1040.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct

Incorrect Form 1040 inst. pg 23 (2 mins)

Question 62 of 241

Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 25 (2 mins)

Incorrect

Question 63 of 241

You should receive a Form 1099-R showing the total amount of your pension and annuity payments before income tax or other deductions were withheld. The following statement is not correct regarding pensions and annuities.

	A. Your costs is generally your net investment in the plan as of the annuity starting date including pre-tax contributions. (10 points) Form 1040 inst. pg 25 (2 mins)
	B. You must use the Simplified Method to calculate your pension or annuity if your annuity starting date was after July 1, 1986, and you used this method last year to figure the taxable part. (0 points)
	C. A qualified rollover to a Roth IRA or a designated Roth account is generally not a tax-free distribution. (0 points)
	D. All of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 64 of 241

You may be able to pay less tax on a lump-sum distribution if you wree born before January 2, 1936, or you are the beneficiary of a deceased employee who was born before January 2, 1936.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 25 (2 mins)

Incorrect

Question 65 of 241

If you received a lump-sum distribution from a profit-sharing or retirement plan, your Form 1099-R should have the "Total Distribution" box in box 2b checked. You may owe an additional tax if

	A. You received an early distribution from a qualified retirement plan and the total amount was not rolled over in a qualified rollover. (10 points) Form 1040 inst. pg 25 (2 mins)
	B. You received an early distribution from a qualified retirement plan and the total amount was rolled over in a qualified rollover. (0 points)
	C. Both A and B above. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 66 of 241

Taxable distributions from a health savings account (HSA) or an Archer MSA may be taxable if

	A. They are more than the unreimbursed qualified medical expenses of the account beneficiary or account holder in 2011. (0 points)
	B. They were not included in a qualified rollover. (0 points)
	C. Both A and B above. (10 points) Form 1040 inst. pg 27 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 67 of 241

Use line 21 of Form 1040 to report any taxable income not reported elsewhere on your tax return or other schedules. List the type and amount of income. Income reported on line 21 of Form 1040 include the following, except

	A. Reimbursements or other amounts received for items deducted in an earlier year, such as medical expenses, real estate taxes, general sales taxes, or home mortgage interest. (0 points)
	B. Income from the rental of personal property if you are in the business of renting such property. (10 points) Form 1040 inst. pg 27 (2 mins)
	C. The taxable part of any of your cancelled debts. (0 points)
	D. Jury duty pay. (0 points)

(10 points) | ___

Correct

Incorrect

Question 68 of 241

Use line 21 of Form 1040 to report any taxable income not reported elsewhere on your tax return or other schedules. Income reported on line 21 of Form 1040 include the following.

	A. Payments you received to help you pay your mortgage loan under the HFA Hardest Hit Fund or the Emergency Homeowner's Loan Program or similar state program. (0 points)
	B. Life insurance proceeds received because of someone's death (other than from certain employer-owned life insurance contracts). (0 points)
	C. Any pay-for-performance success payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 27 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 69 of 241

Include on line 21 of Form 1040 any NOL deduction from an earlier year. Subtract it from any income on line 21 and enter the result. If the result is less than zero,

	A. Enter zero. (0 points)
	B. Enter it in parentheses. (10 points) Form 1040 inst. pg 27 (2 mins)
	C. Do not enter anything on line 21 of Form 1040. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 70 of 241

If you were an eligible educator in 2011, you can deduct on line 23 of Form 1040 up to _______ of qualified expenses you paid in 2011.

	A. $150 (0 points)
	B. $500 (0 points)
	C. $250 (10 points) Form 1040 inst. pg 28 (2 mins)
	D. $1,000 (0 points)

(10 points) | ___

Correct

Incorrect

Question 71 of 241

If you are self-employed, you may be able to deduct the amount you paid for health insurance for yourself, your spouse, or your dependents. The insurance

	A. Can also cover your child who was under age 27 at the end of 2011, only if the child was your dependent. (0 points)
	B. Can also cover your child who was under age 19 at the end of 2011, even if the child was not your dependent. (0 points)
	C. Can also cover your child who was under 27 at the end of 2011, even if the child was not your dependent. (10 points) Form 1040 inst. pg 28 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 72 of 241

If you made contributions to a traditional IRA for 2011, you may be able to take an IRA deduction on line 32 of Form 1040. The following statement is true regarding IRA deductions.

	A. If you were age 70 1/2 or older at the end of 2011, you can only deduct half of any contributions made to your traditional IRA for 2011. (0 points)
	B. You can deduct contributions to a Roth IRA. (0 points)
	C. Include any qualified rollover contributions in figuring your IRA deduction. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 30 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 73 of 241

If you were covered by a retirement plan at work or through self-employment, your IRA deduction may be reduced or eliminated. You cannot make contributions to an IRA if you cannot deduct them.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct

Incorrect Form 1040 inst. pg 31 (2 mins)

Question 74 of 241

If you were not covered by a retirement plan but your spouse was, you are considered covered by a plan unless

	A. You lived apart from your spouse for all 2011. (10 points) Form 1040 inst. pg 31 (2 mins)
	B. You lived with your spouse for all 2011. (0 points)
	C. You sign a waver stating that you are not covered. (0 points)
	D. You elect to remain uncovered by the plan. (0 points)

(10 points) | ___

Correct

Incorrect

Question 75 of 241

You can take the student loan interest deduction only if

	A. You paid interest in 2011 on a qualified student loan and your filing status is not married filing separate. (0 points)
	B. Your modified adjusted gross income (AGI) is less than: $75,000 if single, head of household, or qualifying widow (er); $150,000 if married filing jointly. (0 points)
	C. You or your spouse if filing jointly, are not claimed as a dependent on someone else's (such as your parent's) 2011 tax return. (0 points)
	D. All of the above. (10 points) Form 1040 inst. pg 32 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 76 of 241

A qualified student loan is any loan you took out to pay the qualified higher education expenses for a qualifying individual.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 32 (2 mins)

Incorrect

Question 77 of 241

Qualified higher education expenses for the student loan interest deduction generally includes tuition, fees, room and board, and related expenses such as books and supplies. Additionally,

	A. The expenses must be for education in a degree, certificate, or similar program at an eligible educational institution. (0 points)
	B. An eligible educational institution includes most colleges, universities, and certain vocational schools. (0 points)
	C. You must reduce the expenses by certain benefits such as any scholarship, educational assistance allowance, or other payment (but not gifts, inheritances, etc.) excluded from income. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 32 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 78 of 241

An eligible student for the student loan interest deduction is a person who

	A. Was enrolled in a degree, certificate, or other program (including a program of study abroad that was approved for credit by the institution at which the student was enrolled) leading to a recognized educational credential. (0 points)
	B. Carried at least half the normal full-time workload for the course of study he or she was pursuing. (0 points)
	C. Both A and B above. (10 points) Form 1040 inst. pg 32 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 79 of 241

If you paid qualified tuition and fees for yourself, your spouse, or your dependent (s), you may be able to take the tuition and fees credit on Form 8917.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 33 (2 mins)

Incorrect

Question 80 of 241

You may be able to deduct up to 9% of your qualified production activities (Domestic production activities Deduction) from

	A. The sale of food and beverages you prepared at a retail establishment. (0 points)
	B. Property you leased, licensed, or rented for use by any related person. (0 points)
	C. Construction of real property performed in the United States. (10 points) Form 1040 inst. pg 33 (2 mins)
	D. Any of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 81 of 241

The following whould be a deduction to take on line 36 of Form 1040.

	A. Jury duty pay if you gave the pay to your employer because your employer paid your salary while you served on the jury. (0 points)
	B. Deductible expenses related to income reported on line 21 of Form 1040 from the rental of personal property engage in for profit. (0 points)
	C. Repayment of supplumental unemployment benefits under the Trade Act of 1974. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 33 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 82 of 241

Include on line 36 of Form 1040 all attorney fees and court costs you paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct

Incorrect Form 1040 inst. pg 33 (2 mins)

Question 83 of 241

If you were not totally blind as of December 31, 2011, you

	A. Must get a statement certified by your eye doctor that you cannot see better than 20/200 in you better eye with glasses or contact lenses. (0 points)
	B. Must get a statement certified by your eye doctor that your field of vision is 20 degrees or less. (0 points)
	C. Either A or B above. (10 points) Form 1040 inst. pg 33 (2 mins)
	D. Cannot check the box on line 39a of Form 1040 to claim a deduction for being blind. (0 points)

(10 points) | ___

Correct

Incorrect

Question 84 of 241

In most cases, your federal income tax will be less if you take the larger of your itemized deductions or standard deduction.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 33 (2 mins)

Incorrect

Question 85 of 241

If you received a refund in 2011 of an amount (such as real estate taxes) that increased your standard deduction in an earlier year, you

	A. Generally, have to include the refund in your income. (10 points) Form 1040 inst. pg 33 (2 mins)
	B. Do not have to include this refund in your income because you did not itemize your deductions. (0 points)
	C. Do not include in income because federal refunds are not taxable. (0 points)
	D. Don't have taxable income because you did not give anything in exchange for your federal refund. (0 points)

(10 points) | ___

Correct

Incorrect

Question 86 of 241

Include on line 44 of Form 1040 any taxes that apply such as

	A. Tax on your taxable income. (0 points)
	B. Tax from Form 8814 from the election to report child's interest or dividends. (0 points)
	C. Lump-sum distributions tax from Form 4972. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 35 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 87 of 241

You may have to pay a tax on recapture of an education credit. You may owe this tax if you claimed an education credit in an earlier year, and

	A. You received tax-free educational assistance in 2011 for the student. (0 points)
	B. You received a refund of qualified expenses in 2011 for the student. (0 points)
	C. Either A or B above. (10 points) Form 1040 inst. pg 35 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 88 of 241

Form 8615 generally must be used to figure the tax for any child who had more than ________ of investment income, such as taxable interest, ordinary dividends, or capital gains (including capital gain distributions).

	A. $600 (0 points)
	B. $1,000 (0 points)
	C. $1,900 (10 points) Form 1040 inst. pg 35 (2 mins)
	D. $5,000 (0 points)

(10 points) | ___

Correct

Incorrect

Question 89 of 241

Form 8615 generally must be used to figure the tax for any child who had more than $1,900 of investment income, such as taxable interest, ordinary dividends, or capital gains (including capital gain distributions), and who

	A. Was under age 18 at the end of 2011. (0 points)
	B. Was age 18 at the end of 2011 and did not have earned income that was more than half of the child's support. (0 points)
	C. Was a full-time student over age 18 and under age 24 at the end of 2011 and did not have earned income that was more than half of the child's support. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 35 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 90 of 241

You do not have to complete Form 1116 to take the Foreign Tax Credit if

	A. The total of your Foreign taxes was more than $300 (more than $600 if married filing jointly). (0 points)
	B. You are filing Form 4563 or excluding income from sources within Puerto Rico. (0 points)
	C. You had foreign taxes that were eligible for a refund or a reduced tax rate under a tax treaty. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 38 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 91 of 241

You may be able to take the credit for Child and Dependent Care Expenses if you paid someone to care for

	A. Your qualifying child under age 13 whom you claim as your dependent. (0 points)
	B. Your disabled spouse or any other disabled person who could not care for himself or herself. (0 points)
	C. Your child who you could not claim as a dependent because of the rules for children of divorced or separated parents. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 38 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 92 of 241

If your dependent paid qualified expenses in 2011 to enroll in or attend an eligible educational institution, only your dependent is able to take an education credit.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct

Incorrect Form 1040 inst. pg 38 (2 mins)

Question 93 of 241

You cannot take an education credit if

	A. You, or your spouse if filing jointly, are claimed as a dependent on someone else's (such as a parent's) 2011 tax return. (10 points) Form 1040 inst. pg 38 (2 mins)
	B. Your filing status is single. (0 points)
	C. The amount of Form 1040, line 38, is $60,000. (0 points)
	D. Any of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 94 of 241

You can take the Saver's Credit if

	A. The amount of Form 1040, line 38, is more than $28,250 ($42,375 if Head of Household; $156,500 if married filing jointly). (0 points)
	B. The person (s) who made the qualified contribution or elective deferral was born after January 1, 1994, is claimed as a dependent on someone else's 2011 tax return or was a student. (0 points)
	C. Either A or B above. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 38 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 95 of 241

You may be able to take the Residential Energy Credit by completing and attaching Form 5695 for doing the following improvement to your main home located in the United States in 2011 if they are new and meet certain requirements for energy efficiency.

	A. Any insulation material or system primarily designed to reduce heat gain or loss in your home. (0 points)
	B. Exterior windows (including skylights) and exterior doors. (0 points)
	C. A metal roof or asphalth roof with pigmented coatings or cooling granules primarily designed to reduce the heat gain in your home. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 42 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 96 of 241

You may be able to take the Residential Energy Credit (if the items meet certain performance and quality standards) for the cost of

	A. Certain electric heat pump water heaters, electric heat pumps, central air conditioners, and natural gas, propane, or oil water heaters. (0 points)
	B. A qualified furnace or hot water boiler that uses natural gas, propane, or oil. (0 points)
	C. A stove that burns biomass fuel to heat your home or to heat water for use in your home. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 42 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 97 of 241

You may be able to take the Residential Energy Efficient Property Credit by completing and attaching Form 5695 if you paid for

	A. Qualified solar electric property for use in your home located in the United States. (0 points)
	B. Qualified solar water heating property for use in your home located in the United States. (0 points)
	C. Qualified fuel cell property installed on or in conncection with your main home located in the United States. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 42 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 98 of 241

If you received tips on _________ in any month and you did not report the full amount to your employer, you must pay the social security and Medicare or Railroad retirement (RRTA) tax on the unreported tips.

	A. $50 or more. (0 points)
	B. $20 or more. (10 points) Form 1040 inst. pg 42 (2 mins)
	C. Any amount. (0 points)
	D. $10 or more. (0 points)

(10 points) | ___

Correct

Incorrect

Question 99 of 241

You may be charged a penalty equal to ______ of the social security and Medicare or RRTA tax due on tips you received but did not report to your employer.

	A. $50 (0 points)
	B. 50% (10 points) Form 1040 inst. pg 42 (2 mins)
	C. 100% (0 points)
	D. 10% (0 points)

(10 points) | ___

Correct

Incorrect

Question 100 of 241

You may owe additional tax on IRAs or other qualified retirement plans and may have to file Form 5329 if

	A. You received an early distribution form an IRA or other qualified retirement plan, an annuity, o a modified endowment contract entered into after June 20, 1988, and the total distribution was not rolled over in a qualified rollover contribution. (0 points)
	B. Excess contributions were made to your IRAs, Coverdell Eduction Savings Accounts (ESAs), Archer MSAs, or Health Savings Accounts (HSAs). (0 points)
	C. You were born before July 1, 1940, and did not take the minimum required distribution from your IRA or other qualified retirement plan. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 42 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 101 of 241

You may owe Household Employment Taxes if

	A. You paid any one household employee any cash wages in 2011. (0 points)
	B. You did not withhold federal income tax during 2011. (0 points)
	C. You paid total cash wages of $1,000 or more to any calendar quarter of 2010 or 2011 to household employees. (10 points) Form 1040 inst. pg 43 (2 mins)
	D. Any of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 102 of 241

Any person who does household work is a household employee even if you don't control what will be done and how it will be done.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct

Incorrect Form 1040 inst. pg 43 (2 mins)

Question 103 of 241

You may have to repay your first-time homebuyer credit and enter the repayment on line 59b of Form 1040 if you

	A. Disposed of the home within 36 months after buying it. (0 points)
	B. Stopped using the home as your main home within 36 months after buying it. (0 points)
	C. bought the home in 2008. (0 points)
	D. Any of the above. (10 points) Form 1040 inst. pg 43 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 104 of 241

If you and your spouse paid jont estimated tax but are now filing separate income tax returns, you must divide the payments in proportion to each spouse's individual tax as shown on your separate tax returns for 2011.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct

Incorrect Form 1040 inst. pg 44 (2 mins)

Question 105 of 241

You must file Form 8862 if your EIC for a year after 1996 was reduced or disabled for any reason other than a math or clerical error and if

	A. You filed Form 8862 for another year, the EIC was allowed for that year, and your EIC has not been reduced or disallowed again for any reason other than a math or clerical error. (0 points)
	B. You are taking the EIC without a qualifying child and the only reason your EIC was reduced or disallowed in the other year was because it was determined that a child listed on Schedule EIC was not your qualifying child. (0 points)
	C. 2 year have passed 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. (0 points)
	D. None of the above. (10 points) Form 1040 inst. pg 48 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 106 of 241

Even if a child meets the conditions to be the qualifying child of more than one person, only one person can claim the child as a qualifying child for most tax benefits. If any other person can claim the child as a qualifying child, the following is a correct statement.

	A. If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. (10 points) Form 1040 inst. pg 48 (2 mins)
	B. If a parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for 2011. (0 points)
	C. If a parent can claim the child as a qualifying child and a parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for 2011. (0 points)
	D. Any of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 107 of 241

Attach Forms W-2G and 1099-R to the front of your tax return only if federal income tax was withheld.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Form 1040 inst. pg 44 (2 mins)

Incorrect

Question 108 of 241

The additional child tax credit may give you a refund only if you owe tax.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Form 1040 inst. pg 69 (2 mins)

Incorrect

Question 109 of 241

You can take a credit for Excess Social Security and tier 1 RRTA Tax Withheld for an amount withheld in excess of $4,485.60 if

	A. Your employers withheld more than $4,485.60. (10 points) Form 1040 inst. pg 69 (2 mins)
	B. Any one employer withheld more than $4,485.60. (0 points)
	C. Your wages are not more than $106,800. (0 points)
	D,. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 110 of 241

You may owe the estimated tax penalty if

	A. You owe at least $1,000 and it is more than 10% of the tax shown on your tax return. (0 points)
	B. You did not pay enough estimated tax by any of the due dates (even if you are due a refund). (0 points)
	C. Either A or B above. (10 points) Form 1040 inst. pg 71 (2 mins)
	D. You did not pay enough estimated tax by any of the due dates and you are not due a refund. (0 points)

(10 points) | ___

Correct

Incorrect

Question 111 of 241

_You can deduct only part of your medical and dental expenses tha exceeds _______ of the amount on Form 1040, line 38.

	A. 7.5% (10 points) Schedule A inst pg A1 (2 mins)
	B. 2% (0 points)
	C. 10% (0 points)
	D. 20% (0 points)

(10 points) | ___

Correct

Incorrect

Question 112 of 241

The following is a medical and dental payment you would be able to deduct.

	A. Medical aids such as eyeglasses, contact lenses, hearing aids, braces, crutches, wheelchairs, and guide dogs, including the cost of maintaining them. (10 points) Schedule A inst pg A2 (2 mins)
	B. Imported drugs not approved by the U.S. Food and Drug Administration (FDA). (0 points)
	C. Travel that your doctor told you to take for rest or a change. (0 points)
	D. All of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 113 of 241

When figuring the amount of insurance premiums you can deduct on Schedule A, include

	A. Any amounts you include on Form 8885, line 4. (0 points)
	B. Any qualified health insurance premiums you paid to "U.S. Treasury - HCTC". (0 points)
	C. Any health coverage tax credit advance payments shown in box 1 and any additional credit reported in the box to the left of box 8 of Form 1099-H. (0 points)
	D. None of the above. (10 points) Schedule A inst pg A2 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 114 of 241

When medical and dental service where provided or when they were paid, you can include medical bills you paid for

	A. Yourself, your spouse and dependents you claim on your tax return. (0 points)
	B. Any person you could have claimed as a dependent on your tax return except that person received $3,700 or more of gross income or filed a joint tax return. (0 points)
	C. Any person you could claim as a dependent except that you or your spouse if filing jointly, can be claimed as a dependent on someone else's 2011 tax return. (0 points)
	D. Any of the above. (10 points) Schedule A inst pg A2 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 115 of 241

If your insurance company paid the provider directly for part of your expenses, and you paid only the amount that remained, include

	A. Only the amount you paid. (10 points) Schedule A inst pg A2 (2 mins)
	B. The total amount paid. (0 points)
	C. Reduce your 2011 expenses by this amount. (0 points)
	D. Include this reimbursement in income on Form 1040, line 21. (0 points)

(10 points) | ___

Correct

Incorrect

Question 116 of 241

If you deducted medical expenses in an earlier year and the deduction your took reduced your tax, you must include the reimbursement in income on

	A. Schedule A (Form 1040) (0 points)
	B. Schedule C (Form 1040) (0 points)
	C. Form 1040, line 21 (10 points) Schedule A inst pg A2 (2 mins)
	D. Box 1 of your Form (s) W-2 (0 points)

(10 points) | ___

Correct

Incorrect

Question 117 of 241

The following are taxes that you can deduct.

	A. Federal income and most excise taxes. (0 points)
	B. Federal estate and gift taxes. (0 points)
	C. Social security, Medicare, federal unemployment (FUTA), and railroad retirement (RRTA) taxes. (0 points)
	D. None of the above. (10 points) Schedule A inst pg A2 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 118 of 241

You can elect to deduct both state and local general sales taxes and state and local income taxes.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Schedule A inst pg A2 (2 mins)

Incorrect

Question 119 of 241

If you elect to deduct stsate and local general sales taxes, you must check box b on line 5 of Schedule A (Form 1040). To figure your deduction, you can use

	A. Your actual expenses. (0 points)
	B. The optional sales tax table. (0 points)
	C. Either A or B above. (10 points) Schedule A inst pg A3 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 120 of 241

If your filing status is married filing separately, both you and your spouse elect to deducdt sales taxes, and your spouse elects to use the optional sales tax tables,

	A. You also must use the tables to figure your state and local general sales tax deduction. (10 points) Schedule A inst pg A3 (2 mins)
	B. Since you are filing separately, you can elect to claim the actual expenses or use the optional sales tax tables. (0 points)
	C. You must claim the actual expenses. (0 points)
	D. Any of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 121 of 241

When claiming state and local general sales tax deduction, your 2011 income is the amount shown on your Form 1040, line 38, plus

	A. Worker's compensation. (0 points)
	B. Nontaxable part of Social Security and railrod retirement benefits. (0 points)
	C. Public assistance payments. (0 points)
	D. Any of the above. (10 points) Schedule A inst pg A3 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 122 of 241

When claiming the state and local general sales tax deduction, and you lived in more than one state during 2011,

	A. Look up the table amount for the state where you lived the most. (0 points)
	B. Look up the table amount for each state using the applicable rules. (10 points) Schedule A inst pg A3 (2 mins)
	C. Look up the table amount for the state where you earned the most money. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 123 of 241

Include taxes (state, local, or foreign) you paid on real estate you own that was not used for business,

	A. But only if the taxes are based on the assessed value of the property. (0 points)
	B. The assessment must be made uniformly on property throughout the community. (0 points)
	C. The proceeds must be used for general community or governmental purposes. (0 points)
	D. All of the above. (10 points) Schedule A inst pg A3 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 124 of 241

Include the following amounts on line 6 of Schedule A (Form 1040):

	A. Itemized charges for services to specific property or persons. (0 points)
	B. A $20 monthly charge per house for trash collection. (0 points)
	C. Charges for improvements that tend to increase the value of your property. (0 points)
	D. None of the above. (10 points) Schedule A inst pg A5 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 125 of 241

If your mortgage payments include your real estate taxes, you can

	A. Deduct the amount you paid in 2011. (0 points)
	B. Deduct only the amount the mortgage company actually paid to the taxing authority in 2011. (10 points) Schedule A inst pg A5 (2 mins)
	C. Not deduct any amount because the mortgage company paid the taxes, not you. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 126 of 241

If you sold your home in 2011, any real estate tax charged to the buyer should be shown on your settlement statement and in box 5 of any form 1099-S you received because

	A. Reduce your real estate tax deduction by the amount of the charge. (10 points) Schedule A inst pg A5 (2 mins)
	B. You must include the amount in income on form 1040, line 21. (0 points)
	C. This amount is not considered a refund of real estate taxes. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 127 of 241

Enter on line 7 of Schedule A (Form 1040) state and local personal property taxes you paid only if the taxes were not based on the value alone or imposed on a yearly basis.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Schedule A inst pg A6 (2 mins)

Incorrect

Question 128 of 241

You paid a yearly fee for the registration of your car. Part of the fee was based on the car's value and part was based on its weight. You can deduct

	A. The total yearly fee paid. (0 points)
	B. Only the part of the fee that was based on th car's weight. (0 points)
	C. Only the part of the fee that was based on the car's value. (10 points) Schedule A inst pg A6 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 129 of 241

If you had any deductible tax not listed on line 5, 6, or 7 of Schedule A (Form 1040), list the type and amount of the tax on line 8 of Schedule A (Form 1040). Include on this line income tax you paid to a foreign country or U.S. possession. Additionally,

	A. you must also want to take a credit for the foreign tax. (0 points)
	B. You may want to take a credit for the foreign tax instead of a deduction. (10 points) Schedule A inst pg A6 (2 mins)
	C. You may have to include the amount of credit on line 21 of Form 1040. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 130 of 241

Whether the interest you paid is teated as investment interes, personal interest, or business interest depends on how and when you used the loan proceeds.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Schedule A inst pg A6 (2 mins)

Incorrect

Question 131 of 241

In general, and if you are a cash basis taxpayer, if you paid interest in 2011 that applies to any period after 2011, you

	A. Can deduct only amounts that apply for 2011. (10 points) Schedule A inst pg A6 (2 mins)
	B. Can deduct the whole amount in 2011 because you are a cash basis taxpayer. (0 points)
	C. Cannot deduct any amount for 2011. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 132 of 241

A home mortgage is any loan that is secured by your main home or second home. It includes

	A. First mortgages. (0 points)
	B. Second mortgages. (0 points)
	C. Home equity loans and refinanced mortgages. (0 points)
	D. Any of the above. (10 points) Schedule A inst pg A6 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 133 of 241

If you and at least one other person (other than your spouse if filing jointly) were liable for and paid interest on the mortgage, and the interest was reported on Form 1098 under the other person's social security number,

	A. Only the person who's social security number was reported on the form can report the interest and get a deduction for it. (0 points)
	B. Report your share of the interest on line 11 of Schedule A (Form 1040). (10 points) Schedule A inst pg A6 (2 mins)
	C. None of you can receive the interest deduction. (0 points)
	D. Ask the bank for a corrected Form 1098 that includes both names and social security numbers on the form. (0 points)

(10 points) | ___

Correct

Incorrect

Question 134 of 241

If you are claiming the mortgage interest credit (for holders of qualified mortgage credit certificates issued by state or local government units or agencies),

	A. Add the amount shown on Form 8396, line 3, to the total deductible interest you paid on your home mortgage. (0 points)
	B. Multiply the amount shown on Form 8396, line 3 by the percentage shown on line 10 of Schedule A (Form 1040). (0 points)
	C. Subtract the amount shown on Form 8396, line 3, from the total deductible interest you paid on your home mortgage. (10 points) Schedule A inst pg A6 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 135 of 241

If you did not receive a Form 1098 from the recipient and you bought your home from the recipient,

	A. Be sure to show that recipient's name, identifying number, and address on the dotted lines next to line 11, of Schedule A (Form 1040). (10 points) Schedule A inst pg A6 (2 mins)
	B. And if the recipient does not let you know his social security number, you can charge him $50 and send the money with your Form 1040. (0 points)
	C. And if the recipient is an individual you cannot claim a mortgage interest deduction on Schedule A (Form 1040). (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 136 of 241

Points are shown on your settlement statement. The following is true regarding points.

	A. Points paid for a lender's services are deductible. (0 points)
	B. Points you paid only to borrow money are generally deductible over the life of the loan. (10 points) Schedule A inst pg A6 (2 mins)
	C. If you used part of the proceeds of your loan to improve your main home, you may not be able to deduct points paid. (0 points)
	D. You must deduct points you paid to refinance a mortgage over the life of the loan unless the new mortgage is secured by your main home. (0 points)

(10 points) | ___

Correct

Incorrect

Question 137 of 241

If you used part of the proceeds to improve your main home, you may be able to deduct the part of the points related to the improvement in the year paid.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Schedule A inst pg A6 (2 mins)

Incorrect

Question 138 of 241

Mortgage insurance provided by the Department of Veterans Affairs and the Rural Housing Service is commonly know as a funding fee and guarantee fee respectively. These fees

	A. Can be deducted fully in 2011 if the mortgage insurance contract was issued in 2011. (10 points) Schedule A inst pg A7 (2 mins)
	B. Can be deducted fully in 2011 as long as the mortgage insurance contract was issued before 2011. (0 points)
	C. Can be deducted fully in 2011 if the mortgage insurance contract was issued after 2011. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 139 of 241

If you paid qualified mortgae insurance premiums that are allocable to periods after 2011, you must allocate them

	A. Over the stated term of the mortgage. (0 points)
	B. Over 84 months, beginning with the month the insurance was obtained. (0 points)
	C. Over the shorted of A or B above. (10 points) Schedule A inst pg A7 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 140 of 241

The premiums are treated as paid in the year to which they are allocated. If the mortgage is satisfied before its term, you can take a deduction for the unamortized balance.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Schedule A inst pg A7 (2 mins)

Incorrect

Question 141 of 241

Complete and attach Form 4952 to figure your investment interest deduction. Investment interest is interest paid on money you borrowed that is allocable to property held for investment. It includes

	A. Interest allocable to passive activities. (0 points)
	B. Interest allocable to securities that generate tax-exempt income. (0 points)
	C. Either A or B above. (0 points)
	D. None of the above. (10 points) Schedule A inst pg A7 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 142 of 241

You do not have to file Form 4952 if

	A. Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. (0 points)
	B. You have no other deductible investment expenses. (0 points)
	C. You have no disallowed investment interest expense from 2010. (0 points)
	D. All of the above. (10 points) Schedule A inst pg A7 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 143 of 241

Alaska Permanent Fund dividends, including those reported on Form 8814, are investment income.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Schedule A inst pg A7 (2 mins)

Incorrect

Question 144 of 241

To verify an organization's charitable status, you can

	A. Check with the organization to which you made the donation. (0 points)
	B. See Publication 78 for a list of most qualified organizations. (0 points)
	C. Call the IRS tax exempt and Government Entities Customer account services. (0 points)
	D. Any of the above. (10 points) Schedule A inst pg A7 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 145 of 241

The following are examples of charitable contributions that you can deduct.

	A. Travel expenses while away from home. (0 points)
	B. Political contributions. (0 points)
	C. Gifts to individuals and groups that are run for personal profit. (0 points)
	D. None of the above. (10 points) Schedule A inst pg A8 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 146 of 241

You paid $70 to a charitable organization to attend a fund-raising dinner and the value of the dinner was $40. You can deduct

	A. $70 (0 points)
	B. $30 (10 points) Schedule A inst pg A8 (2 mins)
	C. $40 (0 points)
	D. $10 (0 points)

(10 points) | ___

Correct

Incorrect

Question 147 of 241

If you gave property, you should keep a receipt or written statement from the organization you gave the property to, or a reliable written record, that shows the organization's name and address, the date and location of the gift, and a description of the property. For each gift of property, you should keep reliable written records that include

	A. How you figured the property's value at the time you gave it. (0 points)
	B. The cost or other basis of the property if you must reduce it by any ordinary income or capital gain that would have resulted if the property had been sold at its fair market value. (0 points)
	C. How you figured your deduction if you chose to reduce your deduction for gifts of capital gain property. (0 points)
	D. Any of the above. (10 points) Schedule A inst pg A9 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 148 of 241

You must complete and attach Form 8283 if the amount of your charitable deduction is more than

	A. $250 (0 points)
	B. $500 (10 points) Schedule A inst pg A8 (2 mins)
	C. $100 (0 points)
	D. $5,000 (0 points)

(10 points) | ___

Correct

Incorrect

Question 149 of 241

You may also have to get appraisals of the values of the donated property if your total charitable deduction is over

	A. $250 (0 points)
	B. $500 (0 points)
	C. $100 (0 points)
	D. $5,000 (10 points) Schedule A inst pg A8 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 150 of 241

A deduction for contributions of clothing and household items will be allowed only if the items are in good used condition or better unless

	A. A contribution of any single item for which a deduction of more than $500 is claimed and for which you include a qualified appraisal and Form 8283 with your tax return. (10 points) Schedule A inst pg A8-9 (2 mins)
	B. A contribution of any single item for which a deduction of more than $5,000 is claimed and for which you include a qualified appraisal and Form 8283 with your tax return. (0 points)
	C. The item you claim is included with a qualified appraisal with your tax return. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 151 of 241

There could be a limit on the amount of charitable contribution you can deduct if

	A. Your cash contribution or contributions of ordinary income property are more than 30% of the amount on Form 1040, line 38. (0 points)
	B. Your gifts of capital gain property are more than 20% of the amount on Form 1040, line 38. (0 points)
	C. You gave gifts of property that increased in value or you gave gifts of the use of property. (0 points)
	D. Any of the above. (10 points) Schedule A inst pg A8 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 152 of 241

You can deduct a gift of $250 or more only if you have a state ment from the charitable organization showing

	A. The amount of any money contributed and a description (but not value) of any property donated. (0 points)
	B. Whether the organization did or did not give you any goods or services in return for your contribution. (0 points)
	C. Both A and B above. (10 points) Schedule A inst pg A8 (2 mins)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 153 of 241

When figuring whether a gift is $250 or more, and if you gave your church $25 each week for a total of $1,300, treat

	A. Each $25 payment as a separate gift. (10 points) Schedule A inst pg A8 (2 mins)
	B. The total $1,300 as a separate gift. (0 points)
	C. Only $250 of the $1,300 as a qualified charitable donation gift. (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 154 of 241

For any contribtuion made in cash, regardless of the amount, you must maintain as a record of the contribution a bank record (such as a cancelled check or credit card stsatement) or a written record from the charity.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Schedule A inst pg A8 (2 mins)

Incorrect

Question 155 of 241

If your total deduction for gifts of property is over $500, and you gave less than your entire interst in the property, or you made a "qualified conservation contribution", your records should contain additional information.

	True (10 points)
	False (0 points)

(10 points) | ___

Correct Schedule A inst pg A9 (2 mins)

Incorrect

Question 156 of 241

You can deduct only the part of job expenses and certain miscellaneous deductions that _______ of the amount on Form 1040, line 38.

	A. Exceeds 10% (0 points)
	B. Exceeds 2% (10 points) Schedule A inst pg A9 (2 mins)
	C. Exceeds 20% (0 points)
	D. None of the above. (0 points)

(10 points) | ___

Correct

Incorrect

Question 157 of 241

Do not include on line 21 of Schedule A (Form 1040) any educator expenses you deducted on Form 1040, line 23 or

	A. Safety equipment, small toos, and supplies needed for your job. (0 points)
	B. Physical examinations required by your employer. (0 points)
	C. Fees to employment agencies and other costs to look for a new job in your present occupation, even if you do not get a new job. (0 points)
	D. None of the above. (10 points) Schedule A inst pg A9 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 158 of 241

Enter the fees you paid for preparation of your tax return on line 22 of Schedule A (Form 1040), but do not include fees paid for filing your tax return electronically.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Schedule A inst pg A9 (2 mins)

Incorrect

Question 159 of 241

Enter on line 23 of Schedule A (Form 1040) the total amount you paid to produce or collect taxable income and manage or protect property held for earning income. List the type and amount on the dotted line next to line 23 of Schedule A (Form 1040) expenses such as

	A. Certain legal and accounting fees. (0 points)
	B. Deductions for repayment of amounts under a claim of right if $3,000 or less. (0 points)
	C. Custodial fees (such as from a trust account). (0 points)
	D. Any of the above. (10 points) Schedule A inst pg A10 (2 mins)

(10 points) | ___

Correct

Incorrect

Question 160 of 241

List on line 28 of Schedule A (Form 1040), Other Miscellaneous Deductions, only the expenses for

	A. Gambling losses only up the winnings. (0 points)
	B. Casualty and theft losses of income-producing property. (0 points)
	C. Certain unrecovered investment in a pension. (0 points)
	D. Any of the above. (10 points) Schedule A inst pg A10 (2 mins)

(10 points) | ___

Correct

Incorrect

_You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040).

You make a bona fide loan to a corporation you work for. The corporation fails to pay you back. You had to make the loan in order to keep your job. You have a business bad debt as an employee.

If you break an employment contract, you can deduct damages you pay your employer if the damages are not attributable to the pay you received from that employer.

You can deduct only un-reimbursed employee expenses that are paid or incurred during the year, for carrying on your trade or business of being an employee and ordinary and necessary.

You may be able to deduct business bad debt of an employee. You may be able to deduct malpractice insurance payments. You may not be able to deduct as un-reimbursed employee expenses passport expenses for a personal trip.

You can claim a depreciation deduction for a computer or cell phone that you use in your work as an employee if its use is for the convenience of your employer, required as a condition of your employment and for a substantial business reason of your employer.

Cellular telephones and similar telecommunications equipment may be deducted as a job related expense even though the use was not for the convenience of your employer and required as a condition of your employment.

You are an engineer with an engineering firm. You occasionally take work home at night rather than work late at the office. You own and use a computer that is similar to the one you use at the office to complete your work at home. You cannot claim a depreciation deduction for it.

You can deduct amounts you spend for preparing and mailing copies of a resume to prospective employers if you are looking for a new job in a new occupation.

You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if you are looking for a job in a new occupation, if there was a substantial break between the ending of your last job and your looking for a new one or you are looking for a job for the first time.

If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. This means that you may be able to deduct travel expenses even if you are away from your tax home for more than one year. To qualify, the attorney general must certify that you are traveling for the federal government, in a temporary duty status and to investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime.

You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Your diary of winnings and losses should contain at least the date and type of your specific wager or wagering activity and amounts won or lost, the name and address or location of the gambling establishment and the amount you won or lost and the names of others present with you at the winning establishment.

If you were an educator in 2012 and you had qualified expenses that you cannot take as an adjustment to gross income, you can deduct the rest as an itemized deduction subject to the 2% limit

If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. You can claim this deduction for the business use of part of your home only if you use that part of your home regularly and exclusively as your principal place of business for any trade or business, as a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business or in case of a separate structure not attached to your home, in connection with your trade or business.

You were blind and you must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader's services are only for your work. You can deduct your services for the reader as impairment-related work expenses for all working hours.

You can deduct the cost and upkeep of work clothes if you must wear the clothes as a condition of your employment, the clothes are not suitable for everyday wear and the uniforms are not suitable for taking the place of your regular clothing.

When deducting expenses you incur in looking for a new job, the job you are looking for must be in your present occupation.

You can deduct expenses you have for education, even if the education may lead to a degree, if the education maintains or improves skills required in your present work, is required by your employer or the law to keep your salary, status, or job, and the requirement serves as business purpose of your employer and is not to meet the minimum educational requirements to qualify you in your work or business.

You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with either doing or keeping your job, such those you paid to defend yourself against criminal charges arising out of your trade or business, the determination, collection, or refund of any tax or tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or those expenses that you pay in connection with collecting taxable alimony.

You can generally deduct up to $25 of business gifts you give to any one individual during the year. This $25 limit does not apply if the gifted items are identical, widely distributed items costing $ 4 or less that have your name clearly and permanently imprinted and signs, racks, and promotional materials to be displayed on the business premises of the recipient.

Martha works as a laboratory technician in a local hospital. She is considering returning to her former occupation of a bookkeeper. If she takes a computer course to refresh her skills in a specific computer bookkeeping system, she cannot deduct the cost of the course because although she has met the minimum education requirements for the bookkeeping job, she is not presently working as a bookkeeper.

You can deduct the cost and upkeep of work clothes if you wear them as a condition of your employment and they are not suitable for everyday wear. It is not enough that you wear distinctive clothing. The clothing must be specifically required by your employer. Nor is it enough that you do not, in fact, wear your clothes away from work. Clothing must not be suitable for taking the place of your regular clothing.

Tax preparation fees are reduced by the 2% limitation on miscellaneous deductions. Un-reimbursed employee expenses are reduced by the 2% limitation on miscellaneous deductions. Other expenses that go on Schedule A line 23 are reduced by the 2% limitation on miscellaneous deductions.

You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). You can claim the amount of expenses that is more than 2% of your adjusted gross income. You can also deduct items as miscellaneous itemized deductions that are not subject to the 2% limit. You can deduct gambling losses as miscellaneous itemized deductions subject to the 2% limit, but only up the the winnings. Lobbying expenses or investment-related seminars are not deductible in either case.

Local transportation expenses would NOT be deductible transportation between your home (residence) and your main or regular place of work. Transportation between the regular or main job and a temporary work location would be deductible. Transportation between the second job and a temporary work location would be deductible. Transportation between the regular or main job and the second job would be deductible.

If you play the slot machines in a casino you must keep a record of the machine number and all winning by date and time the machine was played. You must report the full amount of your winnings for the year on Form 1040, line 21. You deduct your losses for the year on Schedule A (Form 1040), line 28. You cannot deduct gambling losses that are more than your winnings.

Debra Smith is employed as a salesperson. However, she is not a statutory employee. Her adjusted gross income is $55,000, and she did not receive any reimbursement for her expenses. She has the following qualifying miscellaneous expenses for 2011:

Tax return preparation fees
$200.
Investment seminar
$300.
Gambling losses (reported $200 as income)
$200.

The total that would be deductible by Debra on Schedule A is $400.

If you are an employee, you generally must complete Form 2106 (or 2106-EZ) to deduct your travel, transportation, and entertainment expenses. Generally, you cannot deduct travel expenses paid or incurred in connection with an indefinite work assignment.

Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase.

You can deduct 80% of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's "hours of service" limits.

You can deduct expenses incurred in going between your home and a temporary work location if the work location is outside the metropolitan area where you live and normally work or you have at least one regular work location (other than your home) for the same trade or business.

You cannot deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Pub 529 pg 7 (3 minutes)

Incorrect

You can deduct 50% of your business-related meal and entertainment expenses unless the expenses meet certain exceptions.

You cannot deduct expenses you have for education if the education is needed to meet the minimum educational requirements to qualify you in your trade or business, or is part of a program of study that will lead to qualifying you in a new trade or business.

A French language teacher cannot deduct the cost of travel to France to maintain his general familiarity with the French language and culture as an educational expense.

The 2011 rate for business use of a vehicle is 51 cents per mile for miles driven from January 1 to July 1, 2011 and 55.5 cents per mile for miles driven after June 30, 2011.

Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. These are not deductible even if they are for conducting entertainment activities for members or their guests. Likewise, you are not able to deduct them for providing members or their guests with access to entertainment facilities.

You cannot deduct commuting expenses. If you haul tools, instruments, or other items in your car to and from work, you can deduct only the additional cost of hauling the items, such as the rent on a trailer to carry the items.

You cannot deduct health spa expenses if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer.

You apply the 50% of your business-related meal and entertainment expenses limit after you apply the 2%-of-adjusted-gross-income limit.

	True (0 points)
	False (10 points)

(10 points) | ___

Correct Pub 529 pg 2 (3 minutes)

Incorrect

_With regard to deductible travel expenses when attending a convention, all of the following statements are correct except if you establish that a meeting held on a cruise ship is directly related to your trade or business, you may be able to deduct expenses of up to $2,000 per trip.

To meet the directly related test for entertainment expenses, you must show you did engage in business with the person during the entertainment period, the main purpose of the combined business and entertainment was the active conduct of business and you had more than a general expectation of receiving income or some other specific business benefit at some future time.

You are a self-employed caterer. To encourage the continuation of an existing business relationship, you took one of your clients to a Broadway show. The visit to the show occurred directly after a substantial business discussion with the client. You paid a ticket broker $300 for two tickets to that show. The face value of each ticket was $100 ($200 total). Your total deductible expense for both tickets is $200.

A businessman can deduct up to $2,000 per year of expenses for attending conventions, seminars, or similar meetings held on cruise ships. The convention, seminar, or meeting is directly related to your trade or business. You attach a statement signed by you that includes information about (1) the total days of the trip; (2) the number of hours each day that you devoted to scheduled business activities; (3) A program of the scheduled business activities. However, the cruise ship company does not need to provide a statement that it has adequate facilities to accommodate the needs of the convention, seminar, or meetings.

Horse and Carriage Partnership distributed the following gifts to their clients: 100 clipboards with their company logo on them, valued at $3 each ($300); 50 bottles of wine to clients who had orders over $50,000 in 2011 costing $35 each ($1,750) at Christmas. The amount that Horse and Carriage Partnership can deduct for business gifts in 2011 of $2,050.

Bart, a partner in the B&A Partnership attended the Comdex Computer Convention in Las Vegas. The partnership repairs and upgrades commercial computers for business use. At the convention, a new advanced computer hard drive was introduced that would make current machines run faster and more efficiently. Bart is responsible for purchasing hard drives for the computers used in the partnership. Bart's travel expenses excluding meals, were $950. Part of that amount includes a rental car of $100 incurred to visit his mother and $50 for flowers and candy he bought for her. Before any limitations $800 is deductible as a business expense.

You are not considered to be traveling away from home if you are on a temporary assignment. However, you are considered to be traveling away from home if your duties require you to be away from your general area of your tax home substantially longer than an ordinary day's work or you need to sleep or rest to meet the demands of your work while away from home.

You are traveling away from your home if you need to sleep or rest to meet the demands of your work while away from home. The rest requirement cannot be satisfied by merely napping in your car.

You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or driving a car between your home and your main or regular place of work on any day.

You can deduct the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business and the meal is business-related entertainment. It does not matter if the meals do not take place in luxury restaurant.

In deducting meals, the term "incidental expenses" means fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards and others on ships, and hotel servants in foreign countries, transportation between places of lodging or business and places where meals are taken, if suitable meals can be obtained at the temporary site and mailing costs associated with filing travel vouchers and payment of employer-separated charge card billings.

You can deduct all of your travel expenses if your trip was entirely business related. If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct your business-related travel expenses, your cost of travel of getting to and from your business destination or any business-related expenses at your business destination.

If your trip was for some business but primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense.

Your trip is considered entirely for business if you did not have substantial control over arranging the trip. The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. You do not have substantial control over your trip if you are an employee who was reimbursed or paid a travel expenses allowance.

If you travel outside the United States primarily for business but spend some of your time on other activities, you generally cannot deduct all of your travel expenses. You can only deduct the business portion of your cost of getting to and from your destination.

Tomer, a travel agent, traveled by ocean liner from New York to London, England, on business in May. His expense for the 6-day cruise was $3,900. Tomer's deduction for the cruise is $3,900.

You entertain a customer. The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. The customer's spouse joins you because it is impractical to entertain the customer without the spouse. You can deduct the cost of entertaining the customer's spouse and can deduct the cost of entertaining your spouse when she joins the party because the customer's spouse is present. Generally can deduct the cost of entertainment for your spouse or for the spouse of a customer.

If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you can treat the tickets as either a gift expense or an entertainment expense, whichever is to your advantage.

You must determine whether your assignment is temporary or indefinite when you start work. Normally, your job or assignment is temporary if you expect it to last for one year or less.

Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home.

You are a construction worker. You live and regularly work in Los Angeles. You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Because of a shortage of work, you took a job in a construction project in Fresno. Your job was scheduled to end in 8 months. The job actually lasted 10 months. You realistically expected the job in Fresno to last 8 months. The job is temporary and your tax home is still in Los Angeles.

You can deduct entertainment expenses only if they are both ordinary and necessary and meet the directly related test and the associated test. To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that the main purpose of the combined business and entertainment was the active conduct of business, you did engage in business with the person during the entertainment period and you had more than a general expectation of getting income or some other specific business benefit at some future time.

If your principal place of business is your home, you can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business.

If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of your car. The information asked is date vehicle was placed in service and mileage (total, business, commuting, and your personal mileage), percentage of vehicle business use, after-work use, and the use of other vehicles and whether you have evidence to support your deduction and whether or not the evidence is written.

For 8 months of each year Mr. Kim lives in Ocala, Florida training horses for several owners and earning approximately $20,000. He rents an apartment for the 8 months. He stays in motels or rented rooms at various racetracks in other states for the other 4 months on the year during horse race season and earns approximately $10,000. Only his meals and lodging for the 4 months he is away from his tax home, Ocala is the part of Mr. Kim's travel expenses that can be deducted.

For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. An expense does not have to be required to be considered necessary.

The 50% limit on deductibility of business related expenses applies to meals and entertainment while traveling away from home on business (Whether eating alone or with others), attending a business convention or reception, business meeting, or business luncheon at a club or entertaining customers at your place of business, a restaurant, or other location.

Transportation expenses other than the traveling away from the home are also deductible. Allowable transportation expenses does not include expenses of traveling away from the home overnight.

If you have more than one job, you must determine which one is your regular or main job. Consider the total time you ordinarily spend in each place, the level of your business activity you have at each place and also consider whether your income from each place is significant or insignificant.

If you keep timely and accurate records, you will have support to show the IRS if your tax return is ever examined. You will also have proof of expenses that your employer may require if you are reimbursed under an accountable plan. You cannot deduct amounts that you approximate or estimate. You should keep proof you need in an account book, diary, statement of expense, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense and documentary evidence, such as receipts, cancelled checks, or bills, to support your expenses.

If you regularly work at two or more places in one day, whether or not for the same employer, you can deduct your transportation expenses of getting from one workplace to another. You cannot deduct your transportation costs between your home and a part-time job on a day off from your main job.

If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. This means you may be able to deduct travel expenses even if you are away from your tax home for more than one year provided you meet other requirements. For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling for the federal government, in a temporary duty status and to investigate or prosecute, or provide support services for the investigation or prosecution or a federal crime.

If you use your car 50% or less for qualified business use either in the year the car is placed in service or in a later year, special rules apply. For the year the business use drops to 50% or less and all later years in the recovery period, you must use the straight line depreciation method over a 5-year recovery period.

If you use your car 50% or less for qualified business use, then you cannot take the section 179 deduction, or take the special depreciation allowance, and you must figure depreciation using the straight line method over a 5-year recovery period.

If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. In this case, you figure the percentage of business use following the change by multiplying the percentage use for the period following the change by the number of months the car is used for business divided by 12 months.

If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. To claim this deduction you generally need to know you basis in the car, the date you placed the car in service and the method of depreciation and recovery period that you will use.

For 2011, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000.

To claim actual car expenses, if you do not use the standard mileage rate, you may be able to deduct your actual car expenses. If you qualify to use both methods, you can figure your deduction both ways and claim only one deduction. Claim the deduction that will give you the lowest tax.

Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. A meeting or discussion at a nightclub, theater, or sporting event is a situation with substantial distractions. A meeting or discussion during what is essentially a social gathering, such as a cocktail party is a situation with substantial distractions. Another situation would be a meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts.

The daily limit on luxury water travel does not apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship.

You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community.

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.

Tax Return Situation 1:

Complete a Form 2106 for Dave (553-55-6789). He is a painter and works for a company that caters to large homes in the community.

Then, complete a Schedule A, Form 1040.

Expenses:

Union Dues	$503.00
Tax preparation fees	$955.00
Safe deposit box at bank	$50.00 (to keep his jewelry safe)
His total actual gas expenses	$3,200.00
Parking while at a work site	$150.00
DMV vehicle license tax (2011 dodge)	$326.00
DMV vehicle license tax (1993 ford pick-up)	$90.00
Gambling losses	$800.00
Costs of meals while working late	$150.00
Check writing fees for 2011	$90.00
Speeding ticket (fine) while driving for work	$430.00
His lunches with co-workers while at work	$980.00 (lunch with co-workers while talking about work improvements).

Dave had no lottery winnings in tax year 2011.

His profession requires special white uniforms consisting of a white cap, white shirt (or jacket for cold weather), white bib overalls, and white work shoes required by his union to wear on the job. The following is the itemized list of expenses.

4 white caps with Company logo imprinted	$25.00 each
8 white shirts with company logo imprinted	$48.00 each
4 white bib overalls with company logo imprinted	$46.00 each
5 painter pants not suitable for regular use	$26.00 each
2 pairs of white Nike shoes	$75.00 each pair
Cleaning/ laundry of work clothes	$530.00

Dave paid a total of $ 9, 600 in rent for his 1 bedroom apartment for 2011.

Dave used his automobile (2003 Ford Pick-up) for his job and used a total of 23,000 miles for the whole year. He started using his car car for work on January 1, 2011. His daily roundtrip miles are about 15 per day for a total of 5,400 for the whole year. Other miles were 2,600. He sometimes uses this pick-up truck to help his friends when they are moving. He kept a detailed record of his miles to and from work and his miles used at work to and from jobs.

He has another car (2011 Dodge Ram) that he purchased in November of 2010. He does not use this car for his job.

In addition to his earnings from work, Dave had the following:

Interest income from Bank	$672.00
Unemployment compensation	$125.00

Dave also had educational expenses. He is trying to become a real estate agent. His total investment was the following:

books and supplies	$370.00
registration in real estate class	$499.99

In addition, Dave has resume printing and distributing costs for a total of $120.00 to land him a job in his new chosen real estate career.

Mr. Bolayog is not married and has no children. All information on the following W-2 is current.

Tax Return Situation 2:

Complete a Form 2106, Schedule A, Form 1040 for Jorge Morales (SSN: 604-10-6710).

Jorge is getting a promotion. He will undergo training to become store manager. On behalf of his employer, he will attend training for 6 days for managerial training at the main restaurant. The company is paying for half of all his expenses. Jorge has to bring a statement of his expenses and his receipts to his employer. None of the expenses were included on line 1 of his W-2.

Jorge's employer reimbursement was $1,408 (including $375.00 for meals and entertainment).

His expenses incurred are the following.

Plane ticket	$650.00
Food cost	$300.00
Hotel	$955.00
Entertainment	$450.00
Car Rental	$460.00

Jorge is single and has no dependents. Get all their basic information from the following W2, including income information. All information is current.

1. Look at the Form 1040 you prepared for Dave. What is the amount on Form 1040, Line 40a?

A. $13,003.
B. $11,528.
C. $11,353.
D. $12,225.

2. Look at the Form 1040 you prepared for Dave. What is the amount on Form 1040, Line 43?

A. $20,288.
B. $35,466.
C. $23,938.
D. $0.

3. Look at the Form 2106 you prepared for Jorge Morales. What is the amount on Form 2106, Line 9 column B?

A. $1,032.
B. $188.
C. $1,220.
D. $0.

4. Look at the Form 2106 you prepared for Jorge Morales. What is the amount on Form 2106, Line 10?

A. $1,032.
B. $188.
C. $1,220.
D. $0.

Refer to IRS Publication 529 , IRS Publication 463, Form 1040 Instructions (Form 1040 instructions only up to page 98) and Schedule A (1040) instructions for a more detailed explanation.