Tax Subject T4 - What's New

1. Several temporary tax benefits have been extended through 2013, including

A. A Deduction for educator expenses.
B. The Tuition and fees deduction.
C. A Credit for nonbusiness energy property.
D. All of the above.

2. 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.
B. Must report half of it on your 2012 tax return.
C. Both A and B above.
D. Must report the total amount on your 2012 tax return.

3. If you rolled over an amount from a 401(K) or 403(b) plan to a designated Roth account in 2010 and did not elect to report the taxable amount on your 2010 return, you generally,

A. Must report half of it on your 2011 return.
B. Must report half of it on your 2012 return.
C. Both A and B above.
D. Must report the total amount on your 2012 tax return.

4. To figure your additional child tax credit for 2012 use

A. Form 8812
B. Schedule 8812
C. Form 8313
D. None of the above

5. Use Form 8812 to figure your Additional Child Tax Credit for 2012.                         

True False

6. If you are filing a paper return, you may be mailing it to a different address this year because the IRS has changed the filing location for several areas.

True False

7. Generally, the amount of income you can receive before you must file a return has decreased for 2012.

True False

8. If you were born on ________, you are considered to be age 65 at the end of 2012.

A. January 1, 1948
B. April 6, 1948
C. March 15, 1948
D. Any of the above

9. If you did not live with your spouse at the end of 2012 (or on the date your spouse died) and your gross income was at least ______, you must file a tax return regardless of age.

A. $3,000
B. $3,800
C. $1,500
D. $5,000

10. You must file a tax return if

A. You owe any special taxes, such as the Alternative Minimum Tax.
B. You (or your spouse, if filing jointly) received HSA, Archer MSA, or Medicare Advantage MSA distributions.
C. You had net earnings from self-employment of at least $400 or you had wages of $108.28 or more from a church.
D. Any of the above.
 

11. Starting in 2013, the American Taxpayer Relief Act of 2012 expanded the rules for in-plan Roth rollovers to include

A. Traditional IRAs.
B. Other plans
C. More taxpayers.
D. None of the above.

12. To discourage the use of pension funds for purposes other than normal retirement, the law imposes additional taxes on early distributions of those funds and on failures to withdraw the funds timely. These special additional taxes are the taxes on:

A. Early distributions.
B. Excess accumulation.
C. Not receiving minimum distributions.
D. All of the above.

13. You musts include on your tax return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. In addition,

A. Income that is taxable must be reported on your tax return and is subject to tax.
B. Income that is nontaxable may have to be shown on your tax return but is not taxable.
C. Both A and B above.
D. None of the above.

14. Any portion of a distribution from an IRA in December 2012 contributed as cash (or cash equivalent) to a charity before January 1, 2013 can be treated as a QCD for 2012 if it meets certain requirements. Both of these transactions can count towards

A. Your minimum required distribution for 2012.
B. Your IRA contribution limit.
C. Your IRA deduction limit.
D. Your taxable compensation for the year.

15. If your modified adjusted gross income (AGI) is above a certain amount, your IRA contribution limit may be increased.

True False              

16. If you are married filing a separate return and your spouse itemizes deductions, or if you are a dual-status alien, you cannot take the standard deduction even if you were born before January 2, 1948, or are blind.

True False              

17. You can claim both the American Opportunity credit and the Lifetime Learning Credit on the same tax return for the same student.

True False              

18. If you worked for _________ and had too much Social Security or RRTA tax withheld during 2012, you may be entitled to a credit for the excess withholding.

A. Cash
B. More than one employer.
C. One employer.
D. Overtime
 

19. The education is qualifying work-related education if it

A. Is needed to meet the minimum educational requirements of your present trade or business.
B. Is part of a program of study that will qualify you for a new trade or business.
C. Either A or B above.
D. None of the above.

20. You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if

A. You filing status is married filing separately.
B. Another person can claim an exemption for you as a dependent on his or her tax return.
C. The qualified expenses are not for higher education.
D. All of the above.

21. Most tax return preparers are now required to use IRS e-file. If you are asked if you want e-file, just give it a try. IRS e-file,

A. Is now the norm, not the exception.
B. Is now obligatory for every taxpayer.
C. Is only an option if you are receiving a refund.
D. All of the above.

22. If you have a balance due or owe estimated taxes, you can pay electronically either online or by phone, using your bank account or a credit or debit card. If you e-file your return, you can also schedule your payment by electronic Funds Withdrawal or by credit or debit card. Additionally,

A. It's convenient! You control when your payment is submitted and processed, and receive confirmation of your payment.
B. It's secure! The IRS uses the lates encryption technology to transmit your payment and does not store your bank information.
C. It's green! Electronica payments are paperless, so no check to write and not voucher to mail.
D. All of the above.

23. If you are a high-income household making more than $400,000 (single) or $450,000 (married filing jointly), your tax bracket will be up to 39.6% from 35% and

A. This will not affect your 2012 income tax return.
B. Will also be subject to a capital gains rate of 20%.
C. Will also be subject to a 3.8% surcharge from the Affordable Care Act.
D. All of the above.

24. In the fiscal cliff legislation, the Pease itemized deduction phase-out is reinstated and the personal exemption phase-out will be reinstated. The thresholds are $300,000 for married filing jointly, $275,000 for head of household, and $250,000 for single. This means that if you make this kind of money,

A. You will not be allowed to take all of your itemized deductions.
B. Your personal exemptions will increase.
C. An additional 0.09% will be withheld.
D. All of the above.

25. While Congress did take a scalpel to some tax deductions, others were left untouched and extended through 2013, such as

A. Discharge of qualified principal residence exclusion. Filers going through a foreclosure or short sale who may have had loan forgiveness should look into this as it will exclude most, if not all, of the forgiven amount from taxable income.
B. Educators may continue to deduct $250 in related job expenses as an adjustment to income.
C. The $1,000 Child Tax Credit, the enhanced Earned Income Tax Credit, and the enhanced American Opportunity Tax Credit will all be extended through 2017.
D. All of the above.

26. The IRA-to-Charity exclusion from taxable income remains including a special provision that allows transfers made in January 2013 to be treated as made in 2012.

True False

27. The IRS modified tax year 2012 Form 1099-K to improve from clarity, reduce taxpayer burden, and improve compliance effectiveness by

A. Modifying the title from Merchant Card to Payment Card to align with the statute.
B. Adding a box that includes the number of purchase transactions (not including refund transitions) that is optional for tax year 2012.
C. Adding a check box for a payment type (payment card or third party network).
D. All of the above.

28. If you sell items on an internet auction site and accept payment cards, the payment settlement entity reporting rules affect you if

A. You accept payment cards as a form of payment, you will receive a form 1099-K for the gross amount of proceeds for the goods or services purchased from you through the use of a payment card in a calendar year.
B. You accept payments from a third party settlement organization, you should receive a Form 1099-K from that organization only if the total number of transactions exceeds 200.
C. You accept payments from a third party settlement organization, you should receive a Form 1099-K from that organization only if the aggregate value exceeds $20,000 in a calendar year.
D. All of the above.

29. The American Opportunity Credit originally modified the existing Hope Credit for tax years 2009 and 2010, and was later extended for an additional two year - 2011 and 2012 - making the benefit available to

A. A broader range of taxpayers, including many with higher incomes and those who owe no tax.
B. Students attending below college level.
C. Only students pursuing postgraduate education.
D. None of the above.

30. The Hope Credit is for the payment of the first two years of tuition and related expenses for an eligible student for whom the taxpayer claims an exemption on the tax return. Generally, you can claim the Hope Credit if

A. You pay qualified education expenses of higher education.
B. You pay the education expenses for an eligible student.
C. The eligible student is either yourself, your spouse or a dependent for whom you claim an exemption on your tax return.
D. All of the above.

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