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Final Exam Question Bank with Answers |
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Federal Tax Updates |
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| Question | |||||||||||
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1 |
The tax rate of ________ affects singles whose
income exceeds $413,200 ($464,850 for married taxpayers filing a
joint return), up from $406,750 and $457,600, respectively.
| ___
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| Feedback | When new tax rates are announced and new tax laws are passed, annual inflation adjustments are taken into account for every tax provision for the new tax year. These include adjustments to tax rates, tax tables and also to the normal cost of living adjustments. For example, if you are single who earns more than $413,200, you can expect to be taxed at a federal tax rate of about 39.6 percent. Furthermore, if you are married and filing a joint tax return, your tax rate will be 39.6 percent if your income is over $464,850 for 2015. These amounts have increase from last year. Last year, singles who earned $406,750 were liable at the 39.6 percent federal tax rate and married taxpayers who filed married filing jointly were liable for the 39.6 percent federal tax rate if their income was more than $457,600. | ||||||||||
| 2 |
The standard deduction rises to _______ for
singles and married persons filing separate returns for tax year
2015.
| ___
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| Feedback | As a result of inflation adjustments, we see changes is the standard deductions for every filing status each year. For instance, the standard deduction rises to $6,300 for single and married persons who file separate returns for tax year 2015. | ||||||||||
| 3 |
The standard deduction rises to _______ for
married couples filing jointly for tax year 2015.
| ___
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| Feedback | The standard deduction rises to $12,600 for married couples filing jointly for tax year 2015. | ||||||||||
| 4 |
The standard deduction for heads of household
rises to _______ for tax year 2015.
| ___
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| Feedback | The standard deduction for heads of household rises to $9,250 for tax year 2015. | ||||||||||
| 5 |
The limitation for itemized deductions to be
claimed on tax year 2015 returns of individuals begins with
incomes of
| ___
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| Feedback | Additionally, the limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more. | ||||||||||
| 6 |
The limitation for itemized deductions to be
claimed on tax year 2015 returns of married filing jointly
individuals begins with incomes of
| ___
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| Feedback | The limitation for itemized deductions to be claimed on tax year 2015 returns of married filing jointly individuals begins with incomes of $309,900 or more. | ||||||||||
| 7 |
The personal exemption rises to
| ___
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| Feedback | The new personal exemption amounts rises to $4,000 for 2015. | ||||||||||
| 8 |
The exemption is subject to a phase-out that
begins with adjusted gross incomes of
| ___
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| Feedback | This exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 for singles in 2015. | ||||||||||
9 |
The exemption for married filing jointly is
subject to a phase-out at adjusted gross income of
| ___
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| Feedback | And the exemption amount for married filing jointly is subject to a phase-out at adjusted gross income of $309,900 for 2015. | ||||||||||
| 10 |
The Alternative Minimum Tax exemption amount for
tax year 2015 is
| ___
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| Feedback | The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600. | ||||||||||
| 11 |
The married filing jointly Alternative Minimum
Tax exemption amount for tax year 2015 is ______ for married
couples filing jointly.
| ___
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| Feedback | The married filing jointly Alternative Minimum Tax exemption amount for tax year 2015 is $83,400 for married couples filing jointly. | ||||||||||
| 12 |
The maximum Earned Income Credit amount is
________ for taxpayers filing jointly who have 3 or more
qualifying children,
| ___
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| Feedback | All the Earned Income Credit amounts rise also. For 2015, the maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children. | ||||||||||
| 13 |
Estates of decedents who die during 2015 have a
basic exclusion amount of
| ___
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| Feedback | Estates of decedents who die during 2015 have a basic exclusion amount of $5,340,000. | ||||||||||
| 14 |
The annual dollar limit on employee contributions
to employer-sponsored healthcare flexible spending arrangements
(FSA)
| ___
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| Feedback | The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) is $2,550 for tax year 2015. | ||||||||||
| 15 |
The small employer health insurance credit
provides that the maximum credit is phased out based on the
employer’s number of full-time equivalent employees in excess of
10 and the employer’s average annual wages in excess of
| ___
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| Feedback | The small employer health insurance credit provides that the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800. | ||||||||||
| 16 |
For tax years beginning after December 31, 2012,
a 0.9% Additional Medicare Tax applies to Medicare wages,
self-employment income, and railroad retirement (RRTA)
compensation based on incomes of married filing jointly
taxpayers that exceeds
| ___
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| Feedback | For tax years beginning after December 31, 2012, a 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation based on incomes of married filing jointly taxpayers that exceeds $250,000. | ||||||||||
| 17 |
For tax years beginning after December 31, 2012,
a 0.9% Additional Medicare Tax applies to Medicare wages,
self-employment income, and railroad retirement (RRTA)
compensation based on incomes of single taxpayers that exceeds
| ___
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| Feedback | For tax years beginning after December 31, 2012, a 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation based on incomes of single taxpayers that exceeds $200,000. | ||||||||||
| 18 |
For tax years beginning after December 31, 2012,
a 0.9% Additional Medicare Tax applies to Medicare wages,
self-employment income, and railroad retirement (RRTA)
compensation based on incomes of married filing separate
taxpayers that exceeds
| ___
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| Feedback | For tax years beginning after December 31, 2012, a 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation based on incomes of married filing separate taxpayers that exceeds $125,000. | ||||||||||
| 19 |
For tax years beginning after December 31, 2012,
a 0.9% Additional Medicare Tax applies to Medicare wages,
self-employment income, and railroad retirement (RRTA)
compensation based on incomes of head of household taxpayers
that exceeds
| ___
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| Feedback | For tax years beginning after December 31, 2012, a 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation based on incomes of head of household taxpayers that exceeds $200,000. | ||||||||||
| 20 |
All Medicare wages, railroad retirement (RRTA)
compensation, and self-employment income currently subject to
Medicare Tax are subject to Additional Medicare Tax
| ___
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| Feedback | All Medicare wages, railroad retirement (RRTA) compensation, and self-employment income currently subject to Medicare Tax are subject to Additional Medicare Tax if paid in excess of the applicable threshold for the taxpayer's filing status. | ||||||||||
| 21 |
These are combined to determine if income exceeds
the Additional Medicare Tax threshold
| ___
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| Feedback | Medicare wages and self-employment income are combined to determine if income exceeds the Additional Medicare Tax threshold. | ||||||||||
| 22 |
There are no special rules for nonresident aliens
and U.S. citizens living abroad for purposes of the additional
Medicare tax provision. Medicare wages, railroad retirement (RRTA)
compensation, and self-employment income earned by such
individuals will
| ___
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| Feedback | There are no special rules for nonresident aliens and U.S. citizens living abroad for purposes of the additional Medicare tax provision. Medicare wages, railroad retirement (RRTA) compensation, and self-employment income earned by such individuals will also be subject to Additional Medicare Tax, if in excess of the applicable threshold for their filing status. | ||||||||||
| 23 |
An employer is responsible for withholding the
Additional Medicare Tax from wages or railroad retirement (RRTA)
compensation it pays to an employee in excess of $200,000 in a
calendar year
| ___
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| Feedback | An employer is responsible for withholding the Additional Medicare Tax from wages or railroad retirement (RRTA) compensation it pays to an employee in excess of $200,000 in a calendar year regardless of filing status. | ||||||||||
| 24 |
An employer is required to begin withholding
Additional Medicare Tax in the pay period in which it pays wages
or railroad retirement (RRTA) compensation in excess of $200,000
to an employee
| ___
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| Feedback | An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or railroad retirement (RRTA) compensation in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. | ||||||||||
| 25 |
To account for their Additional Medicare Tax
liability, some taxpayers may need to
| ___
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| Feedback | To account for their Additional Medicare Tax liability, some taxpayers may need to adjust their withholding or make estimated tax payments. | ||||||||||
| 26 |
The Net Investment Income Tax (NIIT) applies in
the case of married filing separate individuals, at a rate of
3.8 percent on
___
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| Feedback | The Net Investment Income Tax (NIIT) applies in the case of married filing separate individuals, at a rate of 3.8 percent on the lesser of their net investment income or the excess of modified adjusted gross income over $125,000. | ||||||||||
| 27 |
The Net Investment Income Tax (NIIT) applies in
the case of married filing jointly individuals, at a rate of
3.8 percent on
___
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| Feedback | The Net Investment Income Tax (NIIT) applies in the case of married filing jointly individuals, at a rate of 3.8 percent on the lesser of their net investment income or the excess of their modified adjusted gross income over $125,000. | ||||||||||
| 28 |
The Net Investment Income Tax (NIIT) applies in
the case of filing single individuals, at a rate of 3.8 percent
on
___
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| Feedback | The Net Investment Income Tax (NIIT) applies in the case of filing single individuals, at a rate of 3.8 percent on the lesser of their net income or the excess of their modified gross income over $200,000. | ||||||||||
| 29 |
In the case of an estate or trust, the new tax of
3.8 percent applies on
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| Feedback | In the case of an estate or trust, the new tax of 3.8 percent applies on the lesser of the undistributed net investment income or the excess of the adjusted gross income over the dollar amount at which the highest tax bracket begins for an estate or trust for the tax year. | ||||||||||
| 30 |
In general, investment income, for purpose of
this tax, includes
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| Feedback | In general, investment income, for purpose of this tax, includes net gains from the disposition of property other than property held in a trade or business in which the NIIT does not apply. | ||||||||||
| 31 |
The NIIT does not apply to certain types of
income that are excluded for regular income tax purposes such as
___
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| Feedback | The NIIT does not apply to certain types of income that are excluded for regular income tax purposes such as tax-exempt state or municipal bond interest, Veteran Administration benefits or the excluded gain from the sale of a principal residence. | ||||||||||
| 32 |
The following is a true statement regarding same
sex marriage for tax purposes.
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| Feedback | The IRS has a general rule recognizing a marriage of same-sex spouses that was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage of two individuals of the same sex even if the married couple resides in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages. | ||||||||||
| 33 |
For tax year 2013 and going forward, same-sex
spouses generally must file using a married filing separately or
jointly filing status. Additionally,
___
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| Feedback | For tax year 2013 and going forward, same-sex spouses generally must file using a married filing separately or jointly filing status. Additionally, for tax year 2012 and all prior years, same-sex spouses who file an original tax return on or after Sept. 16, 2013, generally must file using a married filing separately or jointly filing status. | ||||||||||
| 34 |
For federal tax purposes, the IRS has a general
rule recognizing a marriage of same-sex individuals that
___
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| Feedback | For federal tax purposes, the IRS has a general rule recognizing a marriage of same-sex individuals that was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage of two individuals of the same sex. | ||||||||||
| 35 |
If same-sex spouses (who file using the married
filing separately status) have a child, which parent may claim
the child as a dependent?
___
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| Feedback | If same-sex spouses (who file using the married filing separately status) have a child, the parent who may claim the child as a dependent in the parent with whom the child resides for the longer period of time during the taxable year. | ||||||||||
| 36 |
If a taxpayer adopts the child of his or her
same-sex spouse as a second parent or co-parent, may the
taxpayer (“adopting parent”) claim the adoption credit for the
qualifying adoption expenses he or she pays or incurs to adopt
the child?
___
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| Feedback | If a taxpayer adopts the child of his or her same-sex spouse as a second parent or co-parent, the taxpayer may not claim an adoption credit for expenses incurred in adopting the child of the taxpayer’s spouse. | ||||||||||
| 37 |
If an employer provided health coverage for an
employee’s same-sex spouse and included the value of that
coverage in the employee’s gross income, can the employee file
an amended Form 1040 reflecting the employee’s status as a
married individual to recover federal income tax paid on the
value of the health coverage of the employee’s spouse?
___
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| Feedback | If an employer provided health coverage for an employee’s same-sex spouse and included the value of that coverage in the employee’s gross income, the employee can file an amended Form 1040 reflecting the employee’s status as a married individual to recover federal income tax paid on the value of the health coverage of the employee’s spouse for all years for which the period of limitations for filing a claim for refund is open. | ||||||||||
| 38 |
The Small Business Health Care Tax credit helps
small businesses and small tax-exempt organizations afford the
cost of covering their employees, and is specifically targeted
for those businesses with low and moderate income workers.
Furthermore,
___
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| Feedback | The Small Business Health Care Tax credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees, and is specifically targeted for those businesses with low and moderate income workers. Furthermore, The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. To qualify for the credit for tax years beginning in 2014 and forward, a small employer must contribute toward premiums on behalf of each employee enrolled in a qualified health plan (QHP) offered by the employer through a Small Business Health Options Program (SHOP Exchange). | ||||||||||
| 39 |
Tax-free treatment for employer-provided health
care to an employee’s child has been extended until the end of
the year in which the child turns
___
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| Feedback | Tax-free treatment for employer-provided health care to an employee’s child has been extended until the end of the year in which the child turns age 26. | ||||||||||
| 40 |
The costs and reimbursements under employer
health plans for coverage for an employee's eligible children
are
___
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| Feedback | The costs and reimbursements under employer health plans for coverage for an employee's eligible children are free of income taxes and FICA and FUTA taxes regardless of dependency tests. | ||||||||||
| 41 |
Employers with cafeteria plans (plans that allow
employees to choose from a menu of at least one qualified
benefit and a taxable benefit (such as cash)) can permit
employees to pay for health coverage for children with pre-tax
contributions and
___
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| Feedback | Cafeteria plans are plans that allow employees to choose from a menu of at least one qualified benefit and a taxable benefit (such as cash). Employers with cafeteria plans can permit employees to pay for health coverage for children with pre-tax contributions. This tax benefit also applies to self-employed individuals who qualify for the self-employed health insurance deduction. | ||||||||||
| 42 |
The Affordable Care Act requires employers to
report the cost of coverage under an employer-sponsored group
health plan on an employee’s Form W-2 and
___
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| Feedback | The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2. Reporting the cost of health care coverage on Form W-2 is for informational purposes only. | ||||||||||
| 43 |
Starting in 2014, individuals and families who
get their health insurance coverage through the Health Insurance
Marketplace may be eligible for the
___
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| Feedback | Starting in 2014, individuals and families who get their health insurance coverage through the Health Insurance Marketplace may be eligible for the Premium Tax Credit. | ||||||||||
| 44 |
In general, you may be eligible for the Premium
Tax Credit if you
___
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| Feedback | In general, you may be eligible for the Premium Tax Credit if you buy health insurance through the Health Insurance Marketplace or if you are ineligible for coverage through an employer or government plan and are within the income limits. | ||||||||||
| 45 |
If you file your tax return using the filing
status Single, Married Filing Jointly, Head of Household or
Qualifying Widow/Widower, you may be eligible for the premium
tax credit if you meet the other criteria. However,
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| Feedback | If you file your tax return using the filing status Single, Married Filing Jointly, Head of Household or Qualifying Widow/Widower, you may be eligible for the premium tax credit if you meet the other criteria. However, if you are married and you file your tax return using the filing status Married Filing Separately, generally you will not be eligible for the premium tax credit. | ||||||||||
| 46 |
During enrollment through the Marketplace, using
information you provide about your projected income and family
composition for the year,
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| Feedback | During enrollment through the Marketplace and using information you provide about your projected income and family composition for the year, the Martketplace will estimate the amount of the premium tax credit you will be able to claim on your tax return. | ||||||||||
| 47 |
For any tax year, if you receive advance Premium
tax credit payments in any amount or if you plan to claim the
premium tax credit,
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| Feedback | You must file a federal income tax return for any tax year that you receive advance Premium tax credit payments in any amount or if you plan to claim the premium tax credit. | ||||||||||
| 48 |
The individual shared responsibility provision
requires you and each member of your family to
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| Feedback | The individual shared responsibility provision requires you and each member of your family to have minimum essential coverage, an exemption from the responsibility of having minimum essential coverage, or make a share responsibility payment when you file your return in in 2016. | ||||||||||
| 49 |
If you and your family need to acquire minimum
essential coverage, you can acquire
___
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| Feedback | If you and your family need to acquire minimum essential coverage, you can acquire health insurance coverage provided by your employer or health insurance purchased directly from an insurance company. You can acquire health insurance purchased through the Health Insurance Marketplace in the area where you live, where you may qualify for financial assistance. You can also acquire coverage provided under a government-sponsored program for which you are eligible including Medicare, Medicaid, and health care programs for veterans. | ||||||||||
| 50 |
For purposes of the individual shared
responsibility payment, you are considered to have minimum
essential coverage for the entire month as long as you have
minimum essential coverage for
___
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| Feedback | For purposes of the individual shared responsibility payment, you are considered to have minimum essential coverage for the entire month as long as you have minimum essential coverage for at least one day during the month. | ||||||||||
| 51 |
You may be exempt from the requirement to
maintain minimum essential coverage and thus will not have to
make a shared responsibility payment when you file your 2015
federal income tax return in 2016, if you
___
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| Feedback | You may be exempt from the requirement to maintain minimum essential coverage and thus will not have to make a shared responsibility payment when you file your 2015 federal income tax return in 2016, if you have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income. Also, you may be exempt if you have a gap in coverage for less than three consecutive months. Additionally, you may be exempt from coverage if you qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement. | ||||||||||
| 52 |
Because of the Affordable Care Act, more
Americans have access to coverage that is affordable. However,
if there is no coverage available to you and your family that
costs less than eight percent of your household income, you
___
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| Feedback | Because of the Affordable Care Act, more Americans have access to coverage that is affordable. However, if there is no coverage available to you and your family that costs less than eight percent of your household income, you can qualify for an exemption. | ||||||||||
| 53 |
You can learn more at HealthCare.gov about which
health insurance options are available to you, how to purchase
health insurance coverage, and how to get financial assistance
with the cost of insurance. Additionally,
___
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| Feedback | You can learn more at HealthCare.gov about which health insurance options are available to you, how to purchase health insurance coverage, and how to get financial assistance with the cost of insurance. Additionally, an exemption applies to individuals who purchased their insurance through the Marketplace during the initial enrollment period for 2014, which ran from October 1, 2013, through March 31, 2014. Furthermore, a hardship exemption applied from January 1, 2014, until the start of your health care coverage, which, if you enrolled between March 16 and March 31 would generally have been May 1. This hardship exemption may apply if you have been notified that your health insurance policy will not be renewed and you consider the other plans available to you unaffordable. | ||||||||||
| 54 |
How you get an exemption from the requirement to
maintain minimum essential health insurance coverage depends
upon the type of exemption for which you are eligible. You can
obtain some exemptions
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| Feedback | How you get an exemption from the requirement to maintain minimum essential health insurance coverage depends upon the type of exemption for which you are eligible. You can obtain some exemptions only from the Marketplace. You can obtain some other exemptions from the IRS. You can get other exemptions from both the Marketplace and the IRS. | ||||||||||
| 55 |
The individual shared responsibility provision
went into effect in 2014 and
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| Feedback | The individual shared responsibility provision went into effect in 2014. You won’t need to report minimum essential coverage or exemptions or make any individual shared responsibility payment until you file your 2014 federal income tax return in 2015. | ||||||||||
| 56 |
If you or any of your dependents don’t have
minimum essential coverage and don’t have an exemption, you
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| Feedback | If you or any of your dependents don’t have minimum essential coverage and don’t have an exemption, you will need to make an additional shared responsibility payment on your tax return. | ||||||||||
| 57 |
If you must make an individual shared
responsibility payment, the annual payment amount is the greater
of a percentage of your household income or a flat dollar
amount, but is capped at the national average premium for a
bronze level health plan available through the Marketplace. You
will owe
___
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| Feedback | If you must make an individual shared responsibility payment, the annual payment amount is the greater of a percentage of your household income or a flat dollar amount, but is capped at the national average premium for a bronze level health plan available through the Marketplace. You will owe 1/12th of the annual payment for each month you or your dependents don't have coverage or 1/12th of the annual payment for each month you or your dependents don't have an exemption. | ||||||||||
| 58 |
For 2015, the annual payment amount for not
having essential health insurance coverage is
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| Feedback | For 2015, the annual payment amount for not having essential health insurance coverage is whichever is greater of 1 percent of your household income that is above the tax return filing threshold for your filing status or your family's flat dollar amount, which is $95 per adult and $47.50 per child for a maximum of $285. | ||||||||||
| 59 |
You can request an automatic extension of time to
file a U.S. individual income tax return by
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| Feedback | You can request an automatic extension of time to file a U.S. individual income tax return by electronically filing Form 4868. You can also request an automatic extension of time to file a U.S. income tax return by paying all or part of your estimated income tax due using a credit or debit card or by using EFTPS. Additionally, you can request an automatic extension of time to file a U.S. individual tax return by filling out Form 4868 and mailing it to the IRS. | ||||||||||
| 60 |
If you cannot file by the due date of your
return, then you can request an extension of time to file and
___
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| Feedback | If you cannot file by the due date of your return, then you can request an extension of time to file. It is extremely important that you know that an extension of time to file will not extend the time to pay. You must also realize that an extension of time to file will not save you money on interest and late payment penalties. Finally, an extension of time to file is not an extension of time to pay. | ||||||||||
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Federal Tax Law |
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| Question | |||||||||||
| 61 |
You must determine your filing status before you
can determine your filing requirements,
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| Feedback | You must determine your filing status before you can determine your filing requirements, the standard deduction and your correct tax. | ||||||||||
| 62 |
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 to qualify for the head of
household status.
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| Feedback | 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 to qualify for the head of household status. | ||||||||||
| 63 |
If you do not itemize deductions, you are
entitled to a higher standard deduction if you are 65 or older
at the end of the tax year. You are considered 65 on the day
before your 65th birthday. Therefore, you can take a higher
standard deduction for 2015 if you were born before
___
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| Feedback | If you do not itemize deductions, you are entitled to a higher standard deduction if you are 65 or older at the end of the tax year. You are considered 65 on the day before your 65th birthday. Therefore, you can take a higher standard deduction for 2015 if you were born before January 1, 1951. | ||||||||||
| 64 |
Kevin's wife died January 20, 2013, and by the
end of 2013 Kevin had not remarried. During 2014, and 2015 he
had continued to keep up a home for himself and his child for
whom he can claim an exemption.
___
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| Feedback | If your spouse dies during the year, you may have many choices as to your filing status. For example, Kevin's wife died January 20, 2013, and by the end of 2013 Kevin had not remarried. During 2014, and 2015 he had continued to keep up a home for himself and his child for whom he can claim an exemption. Kevin can file Married Filing Jointly for 2013. Kevin, will be able to file his return as Qualifying widower if he has a dependent child in 2014. He will also be able to file Qualifying widower if he has a child and has not remarried in 2015. | ||||||||||
| 65 |
If you could be claimed as a dependent by another
person, you cannot claim yourself but you can claim anyone else
as a dependent.
___
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| Feedback | A dependent is someone you support and you must have provided at least half of the person's total support in order to claim them as dependents. You can get an exemption for each dependent that you claim on your tax return. If that dependent can be claimed as a dependent by you, they cannot claim him or herself or anyone else as a dependents. | ||||||||||
| 66 |
If you have a child who was placed with you by an
authorized placement agency, you may be able to claim an
exemption for that child. However, if you cannot get a SSN or an
ITIN for the child, you must
___
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| Feedback | If you have a child who was placed with you by an authorized placement agency, you may be able to claim an exemption for that child. However, if you cannot get a SSN or an ITIN for the child, you must get an adoption taxpayer identification number (ATIN) for the child from the IRS. The individual taxpayer identification number (ITIN) is for dependents who don't qualify for a regular Social Security number. You need to get an ATIN for a child that does not otherwise qualify for an SSN or ITIN. | ||||||||||
| 67 |
If you choose married filing separately as your
filing status, the following is reduced at income levels that
are half of those for a joint tax return.
___
|
||||||||||
| Feedback | If you choose married filing separately as your filing status, the Child Tax Credit and the Retirement Savings Contribution Credit are reduced at income levels that are half of those for a joint tax return. | ||||||||||
| 68 |
To qualify for Head of Household filing status,
at the end of the year, you must be
___
|
||||||||||
| Feedback | To qualify for Head of Household filing status, you must be unmarried or considered unmarried at the end of the year. | ||||||||||
| 69 |
If you and your spouse file separately, and your
spouse itemizes her deductions, you must
___
|
||||||||||
| Feedback | If you and your spouse file separately, and your spouse itemizes her deductions, you must generally also itemize your deductions. | ||||||||||
| 70 |
If you were married on or before December 31,
2014, what can your filing status be for tax year 2014?
___
|
||||||||||
| Feedback | If you were married on or before December 31, 2014, you can either be Married filing jointly or Married Filing separate for tax year 2014? You can probably qualify for Head of Household filing status if you can be considered unmarried for 2014 and otherwise meet the other requirements. | ||||||||||
| 71 |
You must provide over half of the cost of keeping
up a home for a child, parent, or other qualifying relative to
file as Head of Household.
___
|
||||||||||
| Feedback | You must provide over half of the cost of keeping up a home for a child, parent, or other qualifying relative to file as Head of Household. Among other things, the home you support must be the main home for your dependent. | ||||||||||
| 72 |
If your child is considered temporarily absent
from home, you can still claim him as living with you if he is
away because of
___
|
||||||||||
| Feedback | If your child is considered temporarily absent from home, you can still claim him as living with you if he is away because of illness, vacation, education, military service or if the child is away on a business trip. | ||||||||||
| 73 |
You may be eligible to file as Head of Household
even if the child who is your qualifying person has been
kidnapped. You can claim Head of Household filing status if
___
|
||||||||||
| Feedback | You may be eligible to file as Head of Household even if the child who is your qualifying person has been kidnapped. You can claim Head of Household filing status if the child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Also in the year of kidnapping, the child must have lived with you for more than half of the year before the kidnapping. Additionally, you must have met the requirements or would have met the Head of Household filing status requirements if the child had not been kidnapped. | ||||||||||
| 74 |
Marvyn is married to Clara and for 2014, due to
some marital problems, they filed married filing separate. Clara
will itemize her deductions of $11,000 because she had
qualifying car expenses. Marvyn wants to use the standard
deduction on his tax return, because his total itemized
deductions amount is only $4,100 for 2014 and it is less than
the standard deduction amount. Since Clara will itemize her
deductions,
___
|
||||||||||
| Feedback | You standard deduction is zero if you are filing Married Filing Separately and your spouse itemizes her deductions. For example, Marvyn is married to Clara and for 2014, due to some marital problems, they filed married filing separate. Clara will itemize her deductions of $11,000 because she had qualifying car expenses. Marvyn wants to use the standard deduction on his tax return, because his total itemized deductions amount is only $4,100 for 2014 and it is less than the standard deduction amount. Since Clara will itemize her deductions, Marvyn also has to itemize his deductions and use the $4,100 amount. | ||||||||||
| 75 |
For Head of Household filing purposes, if your
father is your qualifying relative and he does not live with
you, you must pay more than half the cost of keeping up his home
for the entire year.
___
|
||||||||||
| Feedback | For Head of Household filing purposes, if your father is your qualifying relative and he does not live with you, you must pay more than half the cost of keeping up his home for the entire year. | ||||||||||
| 76 |
If on the last day of your tax year you are
living together in a common law marriage that is recognized in a
state where you now live or in the state where the common law
marriage began, for the whole year you are
___
|
||||||||||
| Feedback | The IRS recognizes common-law marriages as legal marriages. This includes being known in your society as being married as husband and wife. If on the last day of your tax year you are living together in a common law marriage that is recognized in a state where you now live or in the state where the common law marriage began, you would be considered married for the entire year. If you have a valid common-law married that the IRS recognizes, then you can file a federal married filing jointly of married filing separate tax return. | ||||||||||
| 77 |
You must file an income tax return for a decedent
if
___
|
||||||||||
| Feedback | You will determine if a final tax return is required for a decedent if the decedent had a filing requirement at time of death. You must file an income tax return for a decedent if you are the surviving spouse, executor, administrator or legal representative. Write "DECEASED", the decedent's name along with the date of death across the top of the income tax return. However, if filing a joint return write the name and address of the decedent and the surviving spouse in the address field. | ||||||||||
| 78 |
You may have to pay a penalty if you are required
to file a tax return but fail to do so. If you willfully fail to
file a tax return, you may be subject to criminal prosecution.
___
|
||||||||||
| Feedback | If you fail to file a tax return, you may have to pay failure to file and/or a failure to pay penalty. If you do not file by the deadline, you could be liable for a failure to file penalty. You may have to failure to pay a penalty if you are required to file a tax return but fail to do so. If you willfully fail to file a tax return, especially after asked to do so by the IRS, you may be subject to criminal prosecution. Even though you are not able to pay the tax due on your tax return, you should at least file your tax return on time and ask for payment options. | ||||||||||
| 79 |
A person who is a dependent may still have to
file a tax return. This depends on the amount of the dependent's
___
|
||||||||||
| Feedback | A person who is a dependent may still have to file a tax return. This depends on the amount of the dependent's earned, unearned and gross income. A dependent who has earned income must file if the total is more than $1,000. The parent of a child under age 19 (or 24 if a student), may be able to elect to include the unearned income in the parent's return and the child will not have to file a return. If the child has both earned and unearned income, then the child must file a return if the income was $1,000 or his or her earned income up to the regular standard deduction plus $350. | ||||||||||
| 80 |
Age is a factor in determining if you must file a
tax return
___
|
||||||||||
| Feedback | Age is a factor in determining if you must file a tax return if you are 65 or older, you are a dependent or you have gross income of more than $3,900 at the end of your tax year. If the dependent's gross income was $3,900 or more, the dependent usually cannot be claimed as a dependent unless the dependent is a qualifying child. | ||||||||||
| 81 |
For purposes of determining whether you must file
a tax return, you must include in your gross income
___
|
||||||||||
| Feedback | For purposes of determining whether you must file a tax return, you must include in your gross income all income you earned or received abroad, and any income you exclude under the foreign earned income exclusion. | ||||||||||
| 82 |
Even if you are not required to file a tax
return, you should consider filing
___
|
||||||||||
| Feedback | Even if you are not required to file a tax return, you should consider filing if you had any tax withholding from your paycheck. You should also consider filing if you want to avoid any communication from the IRS. If box 3 (regarding basis of property) of your Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, is left blank. | ||||||||||
| 83 |
You must file a tax return if you owe only
household employment taxes.
___
|
||||||||||
| Feedback | You do not have to file a tax return if you owe only household employment taxes. If you hire any type of household employees, you may owe household employment taxes. These include housekeepers, maids, basysitters, and gardeners. These people are your employees if you control how they do their work. File Schedule H, Household Employment Taxes, instead. Schedule H can be filed by itself and if you paid any one household employee cash wages of $1,800 or more during the year. | ||||||||||
| 84 |
If more than one filing status applies to you,
choose the one that will give you the lowest tax. You obtained a
divorce on December 26, 2013. At the time of your divorce in
2013 you intended to and did remarry each other on August of
2014. You and your spouse must file your tax return as
___
|
||||||||||
| Feedback | If more than one filing status applies to you, choose the one that will give you the lowest tax. You obtained a divorce on December 26, 2013. At the time of your divorce in 2013 you intended to and did remarry each other on August of 2014. You and your spouse must file your tax return as Married Filing Jointly or Married Filing Separately. | ||||||||||
| 85 |
If you actively participated in a passive rental
real estate activity that produced a loss, you generally can
deduct the loss from your nonpassive income up to a certain
amount. This called a special allowance. Married persons filing
separate tax returns who live together at any time during the
tax year
___
|
||||||||||
| Feedback | If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income up to a certain amount. This called a special allowance. Married persons filing separate tax returns who live together at any time during the tax year cannot claim this special allowance. | ||||||||||
| 86 |
You can change your filing status by filing an
amended tax return using Form 1040X. If you and your spouse file
a joint tax return, you
___
|
||||||||||
| Feedback | You can change your filing status by filing an amended tax return using Form 1040X. If you and your spouse file a joint tax return, you cannot choose to file separate tax returns for that year after the due date of the tax return. | ||||||||||
| 87 |
A personal representative for a decedent can
change from a joint tax return elected by the surviving spouse
to a separate tax return for the decedent. The personal
representative has _______ from the due date (including
extensions) of the tax return to make the change.
___
|
||||||||||
| Feedback | A personal representative for a decedent can change from a joint tax return elected by the surviving spouse to a separate tax return for the decedent. The personal representative has 3 years from the due date (including extensions) of the tax return to make the change. | ||||||||||
| 88 |
In qualifying for head of household filing status
and in calculating the expenses of keeping up a home, include in
the cost of upkeep expenses such as rent, mortgage interest,
real estate taxes but do not include
___
|
||||||||||
| Feedback | In qualifying for head of household filing status and in calculating the expenses of keeping up a home, include in the cost of upkeep expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs and utilities, and food eaten in the home. The cost of upkeep expenses for calculating the cost of upkeep expenses would not include the rental value of a home you own. | ||||||||||
| 89 |
You can claim an exemption for a qualifying child
or qualifying relative if you meet the
___
|
||||||||||
| Feedback | There are five tests that must be met for a child to be your qualifying child to be claimed as a dependent. They are the relationship, age, residency, support and joint return tests. Likewise, there are four tests that must be met for a person to by your qualifying relative. These tests are the not your qualifying child test, the member or household or relationship test, the gross income test and the support test. In summary, you can claim an exemption for a qualifying child or qualifying relative if you meet the dependency taxpayer test, joint tax return test, and the citizen or resident test. | ||||||||||
| 90 |
If you file a separate tax return, you can claim
an exemption for your spouse,
___
|
||||||||||
| Feedback | If you file a separate tax return, you can claim an exemption for your spouse only if your spouse had no gross income and is not filing a tax return and was not a dependent of another taxpayer. | ||||||||||
| 91 |
You generally cannot claim a married person as a
dependent if he or she files a joint tax return, unless
___
|
||||||||||
| Feedback | You generally cannot claim a married person as a dependent if he or she files a joint tax return, unless he or she files only to claim for a refund and no tax liability would exist for either spouse on separate tax returns. | ||||||||||
| 92 |
You generally cannot claim a married person as a
dependent if he or she files a joint tax return, unless
___
|
||||||||||
| Feedback | Additionally, you generally cannot claim a married person as a dependent if he or she files a joint tax return only if they file a joint tax return to get a refund of the withheld taxes. | ||||||||||
| 93 |
An adopted child is always treated as your own
child.
___
|
||||||||||
| Feedback | An adopted child is always treated as your own child. | ||||||||||
| 94 |
Although a child can be a qualifying child of
more than one person, only one person can actually treat the
child as a qualifying child to take
___
|
||||||||||
| Feedback | Although a child can be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child to take an exemption for the child and the Head of Household filing status. Only one person can take the Child Tax Credit and the Earned Income Credit for that child. Also, only one person can claim the Credit for Child and Dependent Care Expenses and the exclusion from income for dependent care benefits. | ||||||||||
| 95 |
To determine which person can treat the child as
a qualifying child to claim certain tax benefits, the following
statement is true regarding the tiebreaker rules.
___
|
||||||||||
| Feedback | To determine which person can treat the child as a qualifying child to claim certain tax benefits, and in regards to the tiebreaker rules, if only one of the persons is the child's parent, the child is treated as the qualifying child of that parent. | ||||||||||
| 96 |
There are four tests that must be met for a
person to be your qualifying relative. The following is not one
of these tests.
___
|
||||||||||
| Feedback | There are four tests that must be met for a person to be your qualifying relative. The residency test is not one of these tests. | ||||||||||
| 97 |
Just like a qualifying child, a qualifying
relative must be under 19 at the end of the year and younger
than you.
___
|
||||||||||
| Feedback | A qualifying relative does not have to be under 19 at the end of the year and they don't have to be younger than you. | ||||||||||
| 98 |
To be your qualifying child, a child who is not
permanently and totally disabled must be
___
|
||||||||||
| Feedback | To be your qualifying child, a child who is not permanently and totally disabled must be younger than you or your spouse. As long as the qualifying child is younger than one spouse is enough to meet this test. | ||||||||||
| 99 |
The year you provide the support is the year you
pay for it. If you pay for support with borrowed funds then this
is not considered provided support by you until you repay the
loan.
___
|
||||||||||
| Feedback | The year you provide the support is the year you pay for it even if you pay for the support with borrowed funds. | ||||||||||
| 100 |
You have provided more than half of support in
the following situation.
___
|
||||||||||
| Feedback | Nor are you considered to have provided more than half of your child's support if your child, using his personal funds, buys a car for $4,500 and you provided only $4,000 towards his support. Also, you have not provided more than half of your son's support if your son receives $2,200 from the GI Bill and he uses this amount for his education and you provided only $2,000 towards his support. Another instance of you not meeting more than half of your child's support is when you and your brother each provide 20% of your mother's support for the year but a two other people not related to her provide the other 60%. | ||||||||||
| 101 |
You can claim an exemption under a multiple
support agreement only for someone who is related to you.
___
|
||||||||||
| Feedback | Hence, you do not have to be related to someone to claim an exemption for them under a multiple support agreement. | ||||||||||
| 102 |
The person who agrees not to take the exemption
must attach Form 2120, or a similar declaration, to his tax
return and must keep for his records the signed statements.
___
|
||||||||||
| Feedback | The person who agrees to take the exemption under a multiple support agreement must attach Form 2120, or a similar declaration, to his tax return and must keep for his records the signed statements. | ||||||||||
| 103 |
If the parents divorced or separated during the
year and the child lived with both parents before the
separation, the custodial parent is the one with whom the child
lived with for the greater number of nights during the rest of
the year. A child is treated as living with a parent for a night
if the child sleeps
___
|
||||||||||
| Feedback | If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived with for the greater number of nights during the rest of the year. A child is treated as living with a parent for a night if the child sleeps at a parent's home, with the parent either present or not present. Additionally, a child is treated as living with a parent for a night if the child sleeps in the company of the parent, when the child does not sleep at a parent's home. | ||||||||||
| 104 |
Most taxpayers have a choice of either taking a
standard deduction or itemizing their deductions. If you have a
choice, you use the method that gives you the higher tax.
___
|
||||||||||
| Feedback | Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions. If you have a choice, you use the method that gives you the lower tax and higher deduction. | ||||||||||
| 105 |
Thomas died May 6, 2014. Thomas was single and he
would have turned 65 on December 20, 2014. What is his standard
deduction amount for 2014?
___
|
||||||||||
| Feedback | Thomas died May 6, 2014. Thomas was single and he would have turned 65 on December 20, 2014. His standard deduction for 2014 is $7,750 because had he not died he would have turned 65 towards the end of the year. | ||||||||||
| 106 |
If your itemized deductions are less than the
amount of your standard deduction,
___
|
||||||||||
| Feedback | If your itemized deductions are less than the amount of your standard deduction, you can elect to itemize deductions on your federal tax return rather than take the standard deduction. Furthermore, you can itemize your deductions if the tax benefit of being able to itemize your deductions on your state tax return is greater than the tax benefit you lose on your federal tax return by not taking the standard deduction. At no time are you obligated to take the standard deduction. It is for the most part more beneficial to take advantage of the larger figure but not always as in the case with the state calculations. | ||||||||||
| 107 |
In some cases, your combined income tax on
separate tax returns may be less that it would be on a joint tax
return. The following is true if your filing status is married
filing separately.
___
|
||||||||||
| Feedback | In some cases, your combined income tax on separate tax returns may be less that it would be on a joint tax return. However, you should itemize deductions if your spouse itemizes deductions, and you are not allowed to claim the standard deduction. Also remember that you cannot exclude any interest income from qualified U.S. savings bonds that you used for higher education expenses when you file MFS. Also, when you file Married Filing Separately, more of your Social Security benefits you received during the year become taxable than if you filed a Married Filing Jointly tax return. | ||||||||||
| 108 |
Whether you must file a federal income tax return
depends on
___
|
||||||||||
| Feedback | Whether you must file a federal income tax return depends on many factors such as your gross income, your filing status used, your age and whether you are a dependent. | ||||||||||
| 109 |
If you are required to file a tax return but you
fail or willfully fail to do so
___
|
||||||||||
| Feedback | If you are required to file a tax return but you fail or willfully fail to do so you may have to pay a penalty. Not filing your return is serious business and you could be subject to criminal prosecution for choosing to not file. | ||||||||||
| 110 |
Gross income is all income your receive in the
form of money, goods, property or services which is not exempt
from tax. If you are married and lived with your spouse in a
community property state,
___
|
||||||||||
| Feedback | Gross income is all income your receive in the form of money, goods, property or services which is not exempt from tax. If you are married and lived with your spouse in a community property state, half of any income received by your spouse may be considered yours. | ||||||||||
| 111 |
You must file a tax return if
___
|
||||||||||
| Feedback | You must file a tax return if you owe any self-employment tax. Usually you would owe self employment tax if your self-employment income is at least $400. | ||||||||||
| 112 |
Your filing status generally depends on
___
|
||||||||||
| Feedback | Your filing status generally depends on whether you are single or married at the end of the year. You could be married in March and could have become single by the end of the year. What matters is what is true on December 31st. Therefore, if you could benefit on your taxes by getting married on the last day of the year, then get married. The IRS has no problem with that as long as you stay married and are not going to divorce the following month and try the same scheme every December 31st. | ||||||||||
| 113 |
Age is a factor in determining if you must file a
return
___
|
||||||||||
| Feedback | Age is a factor in determining if you must file a return only if you are 65 or older at the end of the year. | ||||||||||
| 114 |
You must file an income tax return for a decedent
if
___
|
||||||||||
| Feedback | You must file an income tax return for a decedent if you are the surviving spouse, executor, administrator, or legal representative. You must also file an income tax return for a decedent if the decedent was required to file at the time of death. | ||||||||||
| 115 |
If you are single dependent who is blind or age
65 or older, you must file a return if
___
|
||||||||||
| Feedback | If you are single dependent who is blind or age 65 or older, you must file a return if your unearned income was more than $2,500, your earned income was more than $7,600 or your gross income was the larger of $2,500 or your earned income plus $1,850. | ||||||||||
| 116 |
If you are a married dependent, and you were
either age over 65 or blind, you must file a return if
___
|
||||||||||
| Feedback | If you are a married dependent, and you were either age over 65 or blind, you must file a return if your gross income was at least $5 and your spouse files a separate return and itemizes deductions. | ||||||||||
| 117 |
If you are a married dependent, and you were
either age over 65 or blind, you must file a return if
___
|
||||||||||
| Feedback | If you are a married dependent, and you were either age over 65 or blind, you must file a return if your gross income was at least $5 and your spouse files a separate return and itemizes deductions. You must also file if your unearned income was more than $2,200 or your earned income was more than $7,300. If your gross income was more than the larger of $2,200 or your earned income plus $1,550 then you have an obligation to file. | ||||||||||
| 118 |
To determine whether you must file a return,
include in your gross income
___
|
||||||||||
| Feedback | To determine whether you must file a return, include in your gross income any income you earned or received abroad and any income you can exclude under the foreign earned income exclusion. | ||||||||||
| 119 |
If you are a U.S. citizen and also a bona fide
resident of Puerto Rico, you generally must file a U.S. income
tax return
___
|
||||||||||
| Feedback | If you are a U.S. citizen and also a bona fide resident of Puerto Rico, you generally must file a U.S. income tax return for any year in which you meet the filing requirements. Your income requirements include income from sources within Puerto Rico. Your income also includes income you received for your services as an employee of the United States or any U.S. agency. | ||||||||||
| 120 |
If you are a bona fide resident of Puerto Rico
for the whole year, your U.S. gross income
___
|
||||||||||
| Feedback | If you are a bona fide resident of Puerto Rico for the whole year, your U.S. gross income does not include income from sources within Puerto Rico. Your income does not include all income and does not include income for your services as an employee of the United States or any U.S. agency. | ||||||||||
| 121 |
If you had income from Guam, the Commonwealth of
the Northern Mariana Islands, American Samoa, or the U.S. Virgin
Islands,
___
|
||||||||||
| Feedback | If you had income from Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U.S. Virgin Islands, you may have to file a U.S. federal income tax return. Special rules may apply when determining whether you must file a U.S. federal income tax return and you may also have to file a tax return with the possession government. | ||||||||||
| 122 |
A person who is a dependent may have to file a
return depending on
___
|
||||||||||
| Feedback | A person who is a dependent may have to file a return depending on his earned income, unearned income or his gross income. | ||||||||||
| 123 |
If a dependent child must file an income tax
return but cannot file due to age or any other reason,
___
|
||||||||||
| Feedback | If a dependent child must file an income tax return but cannot file due to age or any other reason, a parent, guardian, or other legally responsible person must file it for the child. The child is obligated to file, only that this child must have a adult to supervise the filing. | ||||||||||
| 124 |
If a dependent child must file an income tax
return but cannot sign the return,
___
|
||||||||||
| Feedback | Additionally, if a dependent child must file an income tax return but cannot sign the return, the parent or guardian must sign the child's name followed by the words "By (your signature), parent for minor child". | ||||||||||
| 125 |
Earned income for purposes of filing requirements
and the standard deduction includes
___
|
||||||||||
| Feedback | Earned income for purposes of filing requirements and the standard deduction includes salaries, wages and professional fees. Earned income also includes amounts received as pay for work you actually performed and any part of a scholarship that you must include in your gross income. | ||||||||||
| 126 |
If under local law the child's parent has the
right to the earnings and actually receives the earnings,
___
|
||||||||||
| Feedback | If under local law the child's parent has the right to the earnings and actually receives the earnings, then the parent is liable for the tax and also the child. | ||||||||||
| 127 |
You may be able to include your child's interest
and dividend income on your tax return if
___
|
||||||||||
| Feedback | You may be able to include your child's interest and dividend income on your tax return if the interest and dividend income was less than $10,000. Additionally, you may be able to include your child's interest and dividend income on your tax return if your child was under age 19 and not federal income tax was withheld under backup withholding rules. | ||||||||||
| 128 |
You may have to file a tax return even if your
gross income is less than the required amounts if you
___
|
||||||||||
| Feedback | You may have to file a tax return even if your gross income is less than the required amounts if you liable for the Alternative minimum tax or have additional tax on a qualified retirement plan such as an IRA. | ||||||||||
| 129 |
Even if you do not have to file a tax return, you
should file a tax return if
___
|
||||||||||
| Feedback | Even if you do not have to file a tax return, you should file a tax return if you can get money back, you had income tax withheld or want to avoid any possibility of the IRS contacting you. | ||||||||||
| 130 |
You must determine your filing status before you
can determine whether you must file a tax return, your standard
deduction and your tax. You also use your filing status to
determine
___
|
||||||||||
| Feedback | You must determine your filing status before you can determine whether you must file a tax return, your standard deduction and your tax. You also use your filing status to determine whether you are eligible to claim certain deductions and credits. | ||||||||||
| 131 |
You are considered unmarried for the entire year
if
___
|
||||||||||
| Feedback | You are considered unmarried for the entire year if on the last day of your tax year, you are unmarried. You are also considered unmarried for the entire year on the last day of the year, you are legally separated under a divorce or separate maintenance decree. If you aer divorced under a final decree by the last day of the year, then you are considered single. | ||||||||||
| 132 |
If you obtain a divorce for the sole purpose of
filing a tax return as unmarried individuals, and at the time of
the divorce you intend to and and do, in fact, remarry each
other in the next tax year,
___
|
||||||||||
| Feedback | If you obtain a divorce for the sole purpose of filing a tax return as unmarried individuals, and at the time of the divorce you intend to and and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. | ||||||||||
| 133 |
If you are married and are considered unmarried,
you may be able to file as
___
|
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| Feedback | If you are married and are considered unmarried, you may be able to file as Head of household or as qualifying widow(er) with qualifying child. If you are married and are considered unmarried for tax purposes, it does not mean that you can file a return using the single filing status. | ||||||||||
| 134 |
If you are considered married, you and your
spouse must file as
___
|
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| Feedback | Therefore, if you are considered married, you and your spouse must file as either married filing jointly or married filing separately. | ||||||||||
| 135 |
If you are married and can be considered
unmarried for tax purposes, you and your spouse can file any of
the following, except
___
|
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| Feedback | Also, if you are married and can be considered unmarried for tax purposes, you and/or your spouse can file as Head of Household, married filing jointly, married filing separately, but never as single. | ||||||||||
| 136 |
You are considered married for the whole year if,
on the last day of your tax year, you and your spouse
___
|
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| Feedback | You are considered married for the whole year if, on the last day of your tax year, you and your spouse are married and living together. You cannot be considered unmarried for head of household tax purposes if you are married and living together at the end of the year. | ||||||||||
| 137 |
If individuals of the same sex are married, they
generally
___
|
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| Feedback | If individuals of the same sex are married, they generally must use the married filing jointly and married filing separate status. Furthermore, individuals of the same sex can generally use the Head of household filing status if they did not live together the last 6 months of the year and they have a dependent child and meet other requirements. | ||||||||||
| 138 |
If your spouse died during the year, you are
considered
___
|
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| Feedback | If your spouse died during the year, you are considered married for the entire year. You don't start filing as qualifying widow or widower until the following year. | ||||||||||
| 139 |
If your spouse died during the year and you
remarried before the end of the year,
___
|
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| Feedback | However, if your spouse died during the year and you remarried before the end of the year, you file a joint return with your new spouse. Consequently, your deceased spouse's filing status has to be married filing separately. | ||||||||||
| 140 |
If you live apart from your spouse and meet
certain tests, you may be able to file as head of household,
___
|
||||||||||
| Feedback | If you live apart from your spouse and meet certain tests, you may be able to file as head of household, even if you are not divorced or legally separated. One of the requirements to file as Head of Household, you must not have lived with your spouse for the last six months of the year. | ||||||||||
| 141 |
If you are married, you can use any of the
following filing statuses except
___
|
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| Feedback | Very important to know is that if you are married, you can use any filing status except single. | ||||||||||
| 142 |
If your taxable income is more than $100,000 you
can use form
___
|
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| Feedback | If your taxable income is more than $100,000 you cannot use form 1040EZ or Form 1040A. You are generally stuck and must use Form 1040. | ||||||||||
| 143 |
On a joint return, you and your spouse report
your combined income and deduct your combined allowable
expenses. You can file a joint return
___
|
||||||||||
| Feedback | On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions. In order to file jointly, you and your spouse must agree to file jointly. You must both sign the tax forms. | ||||||||||
| 144 |
Filing jointly with your spouse allows you many
benefits which includes
___
|
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| Feedback | Filing jointly with your spouse allows you many benefits which includes a lower tax than your combined tax for the other filing statuses. Filing jointly also allows you a higher standard deduction amount. Filing jointly gives you an advantage and access to certain tax benefits that do not apply to other filing statuses. | ||||||||||
| 145 |
If you and your spouse each have income, you may
want to figure your tax both on a joint return and on a separate
return and choose the one that
___
|
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| Feedback | If you and your spouse each have income, you may want to figure your tax both on a joint return and on a separate return and choose the one that gives you and your spouse the lower combined tax. | ||||||||||
| 146 |
If you are divorced under a final decree by the
last day of the year, you are considered unmarried for the whole
year and you
___
|
||||||||||
| Feedback | If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly or separately as your filing status. | ||||||||||
| 147 |
If you choose married filing separately as your
filing status special rules apply such as
___
|
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| Feedback | If you choose married filing separately as your filing status special rules apply such as you cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500. Also, if you choose married filing separate as your filing status you will not be allowed to claim the Earned income Credit, the American Opportunity credit, Lifetime Learning Credit or the deduction for student loan interest or tuition and fees deduction. | ||||||||||
| 148 |
If you choose married filing separately as your
filing status, and you lived with your spouse at any time during
the tax year,
___
|
||||||||||
| Feedback | If you choose married filing separately as your filing status, and you lived with your spouse at any time during the tax year, You cannot claim the credit for the elderly or the disabled and more of your social security or equivalent retirement benefits you receive may be taxable. | ||||||||||
| 149 |
The Taxpayer Identification Number (TIN) is an
identification number used by the Internal Revenue Service (IRS)
in the administration of tax laws. The following is this such
number.
___
|
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| Feedback | The Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. Such as the Social Security Number "SSN", the Employer Identification Number. and the Individual Taxpayer identification Number "ITIN". These numbers are what identify you and your dependents and your business on your tax return. | ||||||||||
| 150 |
A TIN must be furnished on returns, statements,
and other tax related documents. This number must be furnished
___
|
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| Feedback | A TIN must be furnished on returns, statements, and other tax related documents. This number must be furnished when filing your returns or when claiming tax treaty benefits. | ||||||||||
| 151 |
You generally must list on your individual income
tax return the social security number (SSN) of any person for
whom you claim an exemption. If your dependent or spouse is not
eligible to get a SSN, you
___
|
||||||||||
| Feedback | Furthermore, you generally must list on your individual income tax return the social security number (SSN) of any person for whom you claim an exemption. If your dependent or spouse is not eligible to get a SSN, you must list an ITIN instead. | ||||||||||
| 152 |
You will need to complete Form SS-5, Application
for a Social Secuirty Card, and also submit
___
|
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| Feedback | You should apply for a SSN by completing Form SS-5, Application for a Social Security Card, and also submit evidence of identity, age and citizenship or lawful alien status. | ||||||||||
| 153 |
This number is a tax processing number only
available for certain nonresident and resident aliens, their
spouses, and dependents who cannot get a Social Security Number
(SSN) that begins with the number 9 in the SSN format.
___
|
||||||||||
| Feedback | The ITIN is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN) that begins with the number 9 in the SSN format. | ||||||||||
| 154 |
To obtain an ITIN, you must
___
|
||||||||||
| Feedback | To obtain the ITIN, you must complete Form W-7. In addition, you must substantiate your foreign or alien status and true identity by mail. Alternatively, you can substantiate foreign or alien status and true identity by going through an Acceptance Agent authorized by the IRS. | ||||||||||
| 155 |
An ITIN, or Individual Taxpayer Identification
Number is a 9-digit number, beginning with the number 9 and
formatted like an SSN. Additionally,
is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN).
___
|
||||||||||
| Feedback | An ITIN, or Individual Taxpayer Identification Number is a 9-digit number, beginning with the number 9 and formatted like an SSN. It is important that you be aware that you cannot claim the earned income credit using an ITIN. | ||||||||||
| 156 |
Foreign persons who are individual should apply
for a social security number (SSN, if permitted) on Form SS-5
with the Social Security Administration or get an get an ITIN.
Each ITIN applicant must now
___
|
||||||||||
| Feedback | Foreign persons who are individual should apply for a social security number (SSN, if permitted) on Form SS-5 with the Social Security Administration or get an get an ITIN. Each ITIN applicant must now apply using the revised Form W-7 and must attach a federal income tax return to the Form W-7. | ||||||||||
| 157 |
This is a temporary nine-digit number issued by
the IRS to individuals who are in the process of legally
adopting a U.S. citizen or resident child but who cannot get an
SSN for that child in to file their tax return.
___
|
||||||||||
| Feedback | There is an identifying for almost any situation. For example, you must apply for an ATIN which is a temporary nine-digit number issued by the IRS to individuals who are in the process of legally adopting a U.S. citizen or resident child but who cannot get an SSN for that child in to file their tax return. T | ||||||||||
| 158 |
You can receive income in the form of
___
|
||||||||||
| Feedback | Almost anything you receive as compensation in exchange for services is taxable. You can receive income in the form of money, property or services. | ||||||||||
| 159 |
Generally, an amount included in your income is
taxable unless it is
___
|
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| Feedback | Generally, an amount included in your income is taxable unless it is specifically exempted by law. | ||||||||||
| 160 |
You are generally taxed on income that is
available to you, regardless of whether it is actually in your
possession.
___
|
||||||||||
| Feedback | Thus, you are generally taxed on income that is available to you, regardless of whether it is actually in your possession. | ||||||||||
| 161 |
A valid check that you received or that was made
available to you before the end of the tax year is considered
income constructively received in that year,
___
|
||||||||||
| Feedback | For example, if you have a valid check that you received or that was made available to you before the end of the tax year it is considered income constructively received in that year even if you do not cash the check or deposit it to your account until the next year. | ||||||||||
| 162 |
If the post office tries to deliver a check to
you on the last day of the tax year but you are not at home to
receive it, you must
___
|
||||||||||
| Feedback | To demonstrate further, if the post office tries to deliver a check to you on the last day of the tax year but you are not at home to receive it, you must include the amount in your income for that year. | ||||||||||
| 163 |
A valid check was mailed to you so that it could
not possibly reach you until after the end of the tax year, and
you could not otherwise get the funds before the end of the
year,
___
|
||||||||||
| Feedback | Additionally, if a valid check was mailed to you so that it could not possibly reach you until after the end of the tax year, and you could not otherwise get the funds before the end of the year, then you include the amount in your income for the next year. | ||||||||||
| 164 |
If you agree by contract that a third party is to
receive income for you, you
___
|
||||||||||
| Feedback | So if you agree by contract that a third party is to receive income for you, you must include the amount in your income when the third party receives it. | ||||||||||
| 165 |
You and your employer agree that part of your
salary is to be paid directly to your former spouse.
___
|
||||||||||
| Feedback | Also if you and your employer agree that part of your salary is to be paid directly to your former spouse, you must include that amount in your income when your former spouse receives it. | ||||||||||
| 166 |
Fringe benefits you receive in connection with
the performance of your services are included in your income as
compensation unless
___
|
||||||||||
| Feedback | Fringe benefits you receive in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or if they are specifically excluded by law. Abstaining from the performance of services such as when you have a covenant not to compete would not be considered a fringe benefit. | ||||||||||
| 167 |
All of the following statements are true
regarding recipients of fringe benefits, except
___
|
||||||||||
| Feedback | A fringe benefit is a form of pay for the performance of services such as allowing an employee to use a business vehicle to commute to and from work. You are the recipient of a fringe benefit if you perform the services for which the fringe benefit is provided. You are considered to be the recipient of a fringe benefit even if it is given to another person. If you are a partner, director, or independent contractor, you can also be the recipient of a fringe benefit. You don't have to be an employee of the fringe benefit provider in order to be a recipient of a fringe benefit. | ||||||||||
| 168 |
If you rent out personal property, such as
equipment or vehicles, how you report your rental income and
expenses is generally determined by
___
|
||||||||||
| Feedback | Money you receive for the use of real estate or other property is taxable to you as rental income and you can deduct the expenses associated with such income. If you rent out personal property, such as equipment or vehicles, how you report your rental income and expenses is generally determined by whether or not the rental activity is a business and whether or not the rental activity is conducted for profit. | ||||||||||
| 169 |
Use Schedule B (Form 1040) if
___
|
||||||||||
| Feedback | Use Schedule B if you have over $1,500 in taxable interest or ordinary dividends. You also will use schedule B to report a financial interest in, or a signature authority over, a financial account in a foreign country or you if you received a distribution from, or were a grantor of, or transferor to, a foreign trust. If you received interest or ordinary dividends as a nominee in any amount report this interest or dividend amount that is in your name but does not belong to you. | ||||||||||
| 170 |
You file Schedule B (Form 1040) if your interest
income is
___
|
||||||||||
| Feedback | You report any amount of interest on your tax report because interest income is normally taxable. Consequently, you normally would file Schedule B if your interest income is over $1,500. | ||||||||||
| 171 |
Most interest that is taxable income is interest
that you either receive or is credited to your account and can
be
___
|
||||||||||
| Feedback | Most interest that is taxable income is interest that you either receive or is credited to your account and can be withdrawn without penalty. | ||||||||||
| 172 |
Interest that would be taxable income are
interest
___
|
||||||||||
| Feedback | Interest that would be taxable income is interest that you receive on bank accounts, money market accounts and interest received on certificates of deposit. | ||||||||||
| 173 |
All of the following interest is taxable income,
except
___
|
||||||||||
| Feedback | Taxable interest is any interest received that is from certain distributions commonly referred to as dividends or interest income from Treasury bill, notes and bonds. Interest on insurance dividends left on deposit with the U.S. Department of Veterans Affairs is is not taxable income interest. | ||||||||||
| 174 |
Form 1099-INT or a similar statement should be
received from each payer of interest of
___
|
||||||||||
| Feedback | Most interest received that is deemed taxable in any amount should be included on your tax return. A Form 1099-INT or a similar statement should be received from each payer of interest of $10 or more. | ||||||||||
| 175 |
Someone who receives, in his or her name, income
or interest that actually belongs to another individual.
___
|
||||||||||
| Feedback | A nominee recipient is someone who receives, in his or her name, income or interest that actually belongs to another individual. | ||||||||||
| 176 |
Generally, if you receive a Form 1099 for amounts
of interest that actually belong to another person, you are
considered a nominee recipient and
___
|
||||||||||
| Feedback | Therefore, if you receive a Form 1099 for amounts of interest that actually belong to another person, you are considered a nominee recipient and it may be necessary for you to file Form 1099 with the IRS and furnish a copy of this form to the other owner or owners. If you received interest as a nominee for the actual owner, you need to show that amount below a subtotal of all interest income listed on Schedule B. Hence, you must prepare a Form 1099-INT for the interest that is not yours and give Copy B to the actual owner and also send a copy to the IRS. | ||||||||||
| 177 |
Dividends may be paid in the following
manners, except
___
|
||||||||||
| Feedback | Dividends may be paid in cash, stock of another corporation and any kind of property such as interest in a partnership. | ||||||||||
| 178 |
A shareholder that provides services to a
corporation may be deemed to receive a dividend if the
corporation pays the shareholder service-provider
___
|
||||||||||
| Feedback | A shareholder that provides services to a corporation may be deemed to receive a dividend if the corporation pays the shareholder service-provider in excess of what it would pay a third party for the same services. | ||||||||||
| 179 |
You should receive a Form 1099-DIV, Dividends and
Distributions, from each payer for distributions of at least
___
|
||||||||||
| Feedback | You should receive a Form 1099-DIV, Dividends and Distributions, from each payer for distributions of at least $10. | ||||||||||
| 180 |
If you receive dividends through a partnership,
an estate, a trust, or a subchapter S corporation, you should
receive a ___________ from that entity indicating the amount of
dividends taxable to you
___
|
||||||||||
| Feedback | If you receive dividends through a partnership, an estate, a trust, or a subchapter S corporation, you should receive a Schedule K-1 from that entity indicating the amount of dividends taxable to you. | ||||||||||
| 181 |
These are the most common type of distribution
from a corporation. They are paid out of the earnings and
profits of the corporation and can either be classified as
ordinary or qualified.
___
|
||||||||||
| Feedback | Dividends are the most common type of distribution from a corporation. They are paid out of the earnings and profits of the corporation and can either be classified as ordinary or qualified. | ||||||||||
| 182 |
This a return of some or all of your investment
in the stock of the company, reduces the basis of your stock and
the corporation making the distribution does not have any
accumulated or current year earnings and profits.
___
|
||||||||||
| Feedback | A return of capital is a return of some or all of your investment in the stock of the company, reduces the basis of your stock and the corporation making the distribution does not have any accumulated or current year earnings and profits. | ||||||||||
| 183 |
You must give your correct social security number
to the payer of your dividend income. If you do not, you may be
subject to
___
|
||||||||||
| Feedback | You must give your correct social security number to the payer of your dividend income. If you do not, you may be subject to a penalty and also could be backup withholding. | ||||||||||
| 184 |
The Department of Treasury's Bureau of Fiscal
Service (BFS), which issues IRS tax refunds, has been authorized
by Congress to conduct the
___
|
||||||||||
| Feedback | The Department of Treasury's Bureau of Fiscal Service (BFS), which issues IRS tax refunds, has been authorized by Congress to conduct the Treasury Offset Program (TOP). | ||||||||||
| 185 |
Through the Treasury Offset Program (TOP), your
refund or overpayment may be reduced by BFS and offset to pay
___
|
||||||||||
| Feedback | Thus, through this Treasury Offset Program (TOP), your refund or overpayment may be reduced by BFS and offset to pay Past-due child support and other federal agency non-tax debts. Also, TOP is used to offset state income tax obligations and certain unemployment compensation debts owed to a state for compensation that was paid due to fraud or for contributions owing to a state fund that were not paid due to fraud. | ||||||||||
| 186 |
Generally, you are self-employed if you
___
|
||||||||||
| Feedback | Generally, you are self-employed if you carry on a trade or business as a sole proprietor or an independent contractor. You are also self-employed is you are member of a partnership that carries on a trade or business. Most self employed individuals are in business for themselves such as when they own a retail establishment. | ||||||||||
| 187 |
As a self-employed individual, generally you
___
|
||||||||||
| Feedback | Additionally, as a self-employed individual, generally you are required to file an annual tax return and to pay estimated taxes quarterly. Self employed individuals must pay self-employment tax as well as the normal income tax. | ||||||||||
| 188 |
Before you can determine if you are subject to
self-employment tax and income tax, you must figure your
___
|
||||||||||
| Feedback | Before you can determine if you are subject to self-employment tax and income tax, you must figure your net profit or net loss from your business. | ||||||||||
| 189 |
You have to file an income tax return if your net
earnings from self-employment were
___
|
||||||||||
| Feedback | You have to file an income tax return if your net earnings from self-employment were $400 or more. | ||||||||||
| 190 |
The following is a true statement when figuring
your estimated tax payments.
___
|
||||||||||
| Feedback | Most self-employed individuals must pay estimated taxes. Form 1040-ES, Estimated Tax for Individuals, is used to figure estimated taxes. Form 1040-ES contains a worksheet that is similar to Form 1040. In order to fill out Form 1040-ES correctly you should have your prior year's annual tax return. | ||||||||||
| 191 |
Form 1040-ES also contains blank vouchers you can
use when you mail your estimated tax payments or you may make
your payments using the Electronic Federal Tax Payment System
(EFTPS). If this is your first year being self-employed
___
|
||||||||||
| Feedback | Form 1040-ES also contains blank vouchers you can use when you mail your estimated tax payments or you may make your payments using the Electronic Federal Tax Payment System (EFTPS). If this is your first year being self-employed you will need to estimate the amount of income you expect to earn for the year. Also, if you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. Likewise, if you estimated your earnings too low, simply complete another Form 1040-ES worksheet to recalculate your estimated taxes for the next quarter. | ||||||||||
| 192 |
Small businesses and statutory employees with
expenses of _________ may be able to file Schedule C-EZ instead
of Schedule C.
___
|
||||||||||
| Feedback | Small businesses and statutory employees with expenses of $5,000 or less may be able to file Schedule C-EZ instead of its more complicated counterpart Schedule C. | ||||||||||
| 193 |
In order to report your Social Security and
Medicare taxes, you
___
|
||||||||||
| Feedback | In order to report your Social Security and Medicare taxes, you must file Schedule SE. You will need to the income or loss calculated on Schedule C or Schedule C-EZ to calculate the amount that needs to be paid for the year. | ||||||||||
| 194 |
If you made or received a payment as a small
business or self-employed individual, you
___
|
||||||||||
| Feedback | If you made or received a payment as a small business or self-employed individual, you are most likely required to file an information report with the IRS. | ||||||||||
| 195 |
A small business whose only owners are a husband
and wife filing a joint return,
___
|
||||||||||
| Feedback | A small business whose only owners are a husband and wife filing a joint return, can elect not to be treated as a partnership. Thus the husband and wife can file their business taxes directly on Schedule C as sole proprietors. | ||||||||||
| 196 |
All evidence of the degree of control and
independence in the worker and business relationship should be
considered and these facts fall into the following category.
___
|
||||||||||
| Feedback | All evidence of the degree of control and independence in the worker and business relationship should be considered. These facts fall into the category of behavioral and financial control. Additionally, the evidence of the degree of control and independence in worker and business or employer relationship is seen in the relationship of the parties involved. | ||||||||||
| 197 |
In examining the relationship between the worker
and the business, the following fact shows whether the business
has a right to direct or control the financial and business
aspects of the worker's job.
___
|
||||||||||
| Feedback | In examining the relationship between the worker and the business, the financial control fact shows whether the business has a right to direct or control the financial and business aspects of the worker's job. | ||||||||||
| 198 |
In examining the relationship between the worker
and the business, the following fact shows the type of
relationship the parties had.
___
|
||||||||||
| Feedback | In examining the relationship between the worker and the business, the relationship of the parties shows the type of relationship the parties had. | ||||||||||
| 199 |
Financial control covers facts that show whether
the business has a right to direct or control the financial and
business aspects of the worker's job such as
___
|
||||||||||
| Feedback | Furthermore, financial control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job such as the extent to which the worker has unreimbursed business expenses. Also, this fact covers the extent of the worker's investment in the facilities or tools used in performing services. In addition, this fact covers the extent to which the worker makes his or her services available to the relevant market and how the business pays the worker. | ||||||||||
| 200 |
Relationship of the Parties covers facts that
show the type of relationship the parties had such as
___
|
||||||||||
| Feedback | Relationship of the parties covers facts that show the type of relationship the parties had such as any written contracts describing the relationship the parties intent to create. This fact also covers the employee-type benefits if any provided by the business such as insurance, pension plans, vacation or sick pay. Also, The relationship fact covers the permanency of the relationship, and the extent to which the services performed by the workers are taken as a key aspect of the regular business of the employer. | ||||||||||
| 201 |
If you are married and file a joint return, you
and your spouse must combine your incomes and social security
benefits when figuring the taxable portion of your benefits.
Additionally,
___
|
||||||||||
| Feedback | If you are married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits. Additionally, even if your spouse did not receive any benefits, you must add your spouse's income to yours when figuring the taxable part if filing a joint return. | ||||||||||
| 202 |
This is a tax-favored personal savings
arrangement, which allows you to set aside money for retirement.
___
|
||||||||||
| Feedback | A traditional IRA is a way to save for retirement that gives you tax advantages. An IRA is one of the few legal tax shelters available to taxpayers. It is a tax-favored personal savings arrangement, which allows you to set aside money for retirement. | ||||||||||
| 203 |
The original IRA is often referred to as a
"traditional IRA." You may be eligible for a tax credit equal to
a percentage of your contribution. Amounts in your IRA,
including earnings from the IRA,
___
|
||||||||||
| Feedback | The original IRA is often referred to as a "traditional IRA." You may be eligible for a tax credit equal to a percentage of your contribution. Amounts in your IRA, including earnings from the IRA, are generally not taxed until distributed to you. | ||||||||||
| 204 |
The following is a true state regarding
traditional IRAs.
___
|
||||||||||
| Feedback | There are many common misconceptions about IRAs. First, many think that to contribute to a traditional IRA, you must be over 70 1/2 at the end of the year. This of course it not true. Another misconception is that if you are married both you and your spouse when filing a MFJ tax return, must have taxable compensation in order to contribute to an IRA. You and your spouse can each make IRA contributions even if only one of you has taxable compensation. You can make a contribution on behalf of your spouse and it does not even matter is she did not work or if she earned any compensation for the year. | ||||||||||
| 205 |
IRA distributions are subject to a 10% additional
tax if they were made prior to age
___
|
||||||||||
| Feedback | These IRA distributions are subject to a 10% additional tax if they were made prior to age 59 1/2. | ||||||||||
| 206 |
To be a Roth IRA, the account or annuity must be
designated as a Roth IRA when it is set up. Additionally,
___
|
||||||||||
| Feedback | A Roth IRA is an IRA very similar to a traditional IRA with a few exceptions. To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is set up. Amongst other things, you cannot deduct contributions to a Roth IRA but if you satisfy the requirements, qualified distributions can be tax-free. In addition, you can leave amounts in your Roth IRA as long as you live. Contrary to traditional IRAs, you can continue to make contributions to a Roth IRA even after you reach age 70 1/2. | ||||||||||
| 207 |
You can contribute to a Roth IRA if you have
taxable compensation and your modified AGI is within certain
limits. Additionally,
___
|
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| Feedback | You can contribute to a Roth IRA if you have taxable compensation and your modified AGI is within certain limits. Additionally, you may be able to roll over amounts from a qualified retirement plan to a Roth IRA. Furthermore, a Roth IRA differs from a traditional IRA in that contributions are not deductible and qualified distributions are not included in income. Regardless of the amount of your AGI, you may be able to convert amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. | ||||||||||
| 208 |
The pension or annuity payments that you receive
are fully taxable if you have no investment in the contract
because
___
|
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| Feedback | The pension or annuity payments that you receive are fully taxable if you have no investment in the contract because you did not contribute anything or are not considered to have contributed anything for the pension or annuity. Since your employer did not withhold contributions from your salary and you received all of your contributions tax free in prior years is another reason the payments are fully taxable. | ||||||||||
| 209 |
If you receive retirement benefits in the form of
pension or annuity payments from a qualified employer retirement
plan, all or some portion of the amounts you receive may be
taxable. Additionally,
___
|
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| Feedback | If you receive retirement benefits in the form of pension or annuity payments from a qualified employer retirement plan, all or some portion of the amounts you receive may be taxable. Additionally, if you contributed after-tax dollars to your pension or annuity, your pension payments are partially taxable. Furthermore, if you receive pension or annuity payments before age 59½, you may be subject to an additional 10% tax on early distributions unless the distribution qualifies for an exception. All in all, the taxable portion of your pension or annuity payment is generally subject to federal income tax withholding. | ||||||||||
| 210 |
Withholding from periodic payments of a pension
or annuity is generally figured the same way as for salaries and
wages. If you do not submit the withholding certificate, the
payer must withhold tax as if you were
___
|
||||||||||
| Feedback | Withholding from periodic payments of a pension or annuity is generally figured the same way as for salaries and wages. If you do not submit the withholding certificate, the payer must withhold tax as if you were married and claiming three withholding allowances. | ||||||||||
| 211 |
In regards to pension and annuities
distribution, if you pay your taxes through withholdings and
not enough is withheld, you
___
|
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| Feedback | In regards to pension and annuities distribution, if you pay your taxes through withholdings and not enough is withheld, you may also need to make estimated tax payments to ensure your taxes are not underpaid. | ||||||||||
| 212 |
If some contributions to your pensions and
annuity plan were previously included in income,
___
|
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| Feedback | If some contributions to your pensions and annuity plan were previously included in income, part of the distributions from the arrangement will be excluded from income and you must figure the tax-free portion at the start of payments. | ||||||||||
| 213 |
The tax-free part of the contributions to your
pension or annuity plan generally remains the same each year,
even if the amount of the payment changes. However, the total
amount of your pension or annuity that you can exclude from
income is
___
|
||||||||||
| Feedback | The tax-free part of the contributions to your pension or annuity plan generally remains the same each year, even if the amount of the payment changes. However, the total amount of your pension or annuity that you can exclude from income is generally limited to your total cost. | ||||||||||
| 214 |
If you begin receiving annuity payments from a
qualified retirement plan after November 18, 1996,
___
|
||||||||||
| Feedback | If you begin receiving annuity payments from a qualified retirement plan after November 18, 1996, generally you use the Simplified Method to figure the tax-free part of the payments. | ||||||||||
| 215 |
All of the participant's accounts under the
employer's qualified pension, profit-sharing, or stock bonus
plans must be distributed in order to be a lump-sum
distribution. Additionally,
___
|
||||||||||
| Feedback | All of the participant's accounts under the employer's qualified pension, profit-sharing, or stock bonus plans must be distributed in order to be a lump-sum distribution. Additionally, a lump-sum distribution is a distribution that was paid because of the plan participant's death. A lump-sum distribution is a distribution that was paid after the participant reaches age 59 1/2. A lump-sum distribution is also a distribution that was paid because the participant separates from service or becomes totally or permanently disabled. | ||||||||||
| 216 |
If the lump-sum distribution qualifies, you can
elect to treat the portion of the payment attributable to your
active participation in the plan using one of five options, such
as
___
|
||||||||||
| Feedback | If the lump-sum distribution qualifies, you can elect to treat the portion of the payment attributable to your active participation in the plan using one of five options, such as reporting the part of the distribution from participation before 1974 as a capital gain (if you qualify) and the part of the distribution from participation after 1973 as ordinary income. Use the 10-year tax option to figure the tax on the total taxable amount (if you qualify). You also roll over all or part of the distribution. No tax is currently due on the part rolled over. Report any part not rolled over as ordinary income. | ||||||||||
| 217 |
You may defer tax on all or part of a lump-sum
distribution by
___
|
||||||||||
| Feedback | You may defer tax on all or part of a lump-sum distribution by requesting the payer to directly roll over the taxable portion into an IRA. | ||||||||||
| 218 |
You can also defer tax on a distribution paid to
you by rolling over the taxable amount to an IRA within 60 days
after receipt of the distribution. However,
___
|
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| Feedback | You can also defer tax on a distribution paid to you by rolling over the taxable amount to an IRA within 60 days after receipt of the distribution. However, a rollover eliminates the possibility of using the special tax rules for any later distribution. | ||||||||||
| 219 |
Mandatory income tax withholding of ________
applies to most taxable distributions paid directly to you in a
lump sum from employer retirement plans regardless of whether
you plan to roll over the taxable amount within 60 days.
___
|
||||||||||
| Feedback | Mandatory income tax withholding of 20% applies to most taxable distributions paid directly to you in a lump sum from employer retirement plans regardless of whether you plan to roll over the taxable amount within 60 days. | ||||||||||
| 220 |
A rollover transaction is not taxable but it is
reportable on your federal tax return. You can roll over most
distributions from an eligible retirement plan such as
___
|
||||||||||
| Feedback | A rollover transaction is not taxable but it is reportable on your federal tax return. You can roll over most distributions from an eligible retirement plan except for the the nontaxable part of a distribution or a distribution that is one of a series of payments made for your life (or life expectancy). You cannot rollover a required minimum distribution or a hardship distribution. Neither could you rollover dividends paid on employer securities or the cost of life insurance coverage. | ||||||||||
| 221 |
You have 60 days to make a rollover from an
eligible retirement plan to another eligible retirement plan
happen. Additionally,
___
|
||||||||||
| Feedback | You have 60 days to make a rollover from an eligible retirement plan to another eligible retirement plan. In addition, the taxable amount of a distribution that is not rolled over must be included in income in the year of the distribution. As a consequence, any taxable eligible rollover distribution paid from an employer-sponsored retirement plan to you is subject to a mandatory income tax withholding of 20%. In general, if you are under age 59½ at the time of the distribution, any taxable portion not rolled over may be subject to a 10% additional tax on early distributions unless an exception applies. | ||||||||||
| 222 |
Almost everything you own and use for personal or
investment purposes is a/an
___
|
||||||||||
| Feedback | Almost everything you own and use for personal or investment purposes is a capital asset. | ||||||||||
| 223 |
Generally, for most taxpayers, net capital gain
is taxed at rates no higher than
___
|
||||||||||
| Feedback | Generally, for most taxpayers, net capital gain is taxed at rates no higher than 15%. | ||||||||||
| 224 |
Capital gains and deductible capital losses are
reported on
___
|
||||||||||
| Feedback | You report you capital gains and deductible capital losses on Schedule D and you may also need to use Form 8949. | ||||||||||
| 225 |
If your capital losses exceed your capital gains,
the amount of the excess loss that can be claimed in one year is
___
|
||||||||||
| Feedback | If your capital losses exceed your capital gains, the amount of the excess loss that can be claimed in one year is no more than $3,000. | ||||||||||
| 226 |
Anytime self-employment tax is mentioned, it only
refers to
___
|
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| Feedback | Anytime self-employment tax is mentioned, it only refers to social Security and Medicare taxes. | ||||||||||
| 227 |
All your combined wages, tips, and net earnings
in the current year are subject to
___
|
||||||||||
| Feedback | All your combined wages, tips, and net earnings in the current year are subject to 2.9% Medicare tax, the self-employment tax and also the social security tax or railroad retirement tax. | ||||||||||
| 228 |
In 2013 an additional Medicare tax rate of
_______ went into effect and applies to wages, compensation, and
self-employment income above a threshold amount received in
taxable years beginning after Dec. 31, 2012.
___
|
||||||||||
| Feedback | In 2013 an additional Medicare tax rate of 0.9 % went into effect and applies to wages, compensation, and self-employment income above a threshold amount received in taxable years beginning after Dec. 31, 2012. | ||||||||||
| 229 |
You must pay self-employment tax and file
Schedule SE (Form 1040) if
___
|
||||||||||
| Feedback | You must pay self-employment tax and file Schedule SE if your net earnings from self-employment were at least $400 or you had church employee income at least $108.28. | ||||||||||
| 230 |
Special rules apply to workers who perform
in-home services for elderly or disabled individuals
(caregivers). Caregivers are
___
|
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| Feedback | Special rules apply to workers who perform in-home services for elderly or disabled individuals (caregivers). Caregivers are typically employees of the individuals for whom they provide services because they work in the homes of the elderly or disabled individuals and these individuals have the right to tell the caregivers what needs to be done. | ||||||||||
| 231 |
Tax credits, deductions and savings plans can
help taxpayers with their expenses for higher education.
Additionally, the following is true about credits, deductions
and savings plans such as the ones seen in education benefits.
___
|
||||||||||
| Feedback | Tax credits, deductions and savings plans can help taxpayers with their expenses for higher education. Additionally, a tax credit reduces the amount of income tax you may have to pay. On the other hand, a deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay. Furthermore, certain savings plans allow the accumulated earnings to grow tax-free until money is taken out (known as a distribution), or allow the distribution to be tax-free, or both. | ||||||||||
| 232 |
An education credit helps with the cost of higher
education by
___
|
||||||||||
| Feedback | An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. | ||||||||||
| 233 |
Right now the IRS has the following education
credits available.
___
|
||||||||||
| Feedback | Currently there are two education credits available through the IRS. These credits are the American Opportunity Tax Credit and the Lifelong Learning Credit. There seems to be more credits, but the other benefits available are not considered credits. | ||||||||||
| 234 |
If you’re eligible to claim the lifetime learning
credit and are also eligible to claim the American opportunity
credit for the same student in the same year,
___
|
||||||||||
| Feedback | If you’re eligible to claim the lifetime learning credit and are also eligible to claim the American Opportunity Credit for the same student in the same year, you can choose to claim either credit, but not both. You usually would calculate both credits and take the one that allows you the most benefit. | ||||||||||
| 235 |
You may be able to deduct qualified education
expenses such as tuition and fees paid during the year for
yourself, your spouse or your dependent. In addition,
___
|
||||||||||
| Feedback | You may be able to deduct qualified education expenses such as tuition and fees paid during the year for yourself, your spouse or your dependent. In addition, these qualified expenses must be for higher education, which is usually at the university level. | ||||||||||
| 236 |
When considering your benefits for education
credits and deductions,
___
|
||||||||||
| Feedback | When considering your benefits for education credits and deductions, Tuition and Fees Deduction, is taken as an adjustment to income so this may be beneficial to you if your income is higher. Also consider that you may be able to take one of the education credits for your education expenses if it gives you a lower tax instead of a tuition and fees deduction. Remember that student-activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. | ||||||||||
| 237 |
Generally, you can claim the tuition and fees
deduction if
___
|
||||||||||
| Feedback | Generally, you can claim the tuition and fees deduction if you paid qualified education expenses of higher education and the education expenses incurred are for an eligible student. This eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. | ||||||||||
| 238 |
Another person can claim an exemption for you as
a dependent on his or her tax return. You
___
|
||||||||||
| Feedback | Another person can claim an exemption for you as a dependent on his or her tax return. If this is so, you cannot take the tuition and fees deduction even if the other person does not actually claim that exemption. | ||||||||||
| 239 |
For most taxpayers, MAGI is the adjusted gross
income as figured on their federal income tax return before
subtracting any deduction for student loan interest. This
deduction can reduce the amount of your income subject to tax by
up to
___
|
||||||||||
| Feedback | For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500. | ||||||||||
| 240 |
You can claim the student loan interest deduction
___
|
||||||||||
| Feedback | You can claim the student loan interest deduction even if you do not itemize deductions on your Form 1040's Schedule A. | ||||||||||
| 241 |
Loans you took out solely to pay qualified
education expenses from the following source/s are qualified
student loans.
___
|
||||||||||
| Feedback | Loans solely to pay qualified education expenses that you took out from certain sources are not considered qualified student loans. For examples, loans from related persons, from a qualified employer plan or a corporation where you are a majority stock holder, are not permitted. | ||||||||||
| 242 |
For purposes of the student loan interest
deduction, these expenses are the total costs of attending an
eligible educational institution, including graduate school.
These include
___
|
||||||||||
| Feedback | For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Such expenses include tuition and fees, room and board, books, supplies, equipment and other expenses such as the cost of transportation. | ||||||||||
| 243 |
To claim a business deduction for work-related
education, you must
___
|
||||||||||
| Feedback | To claim a business deduction for work-related education, you must be working and must itemize your deductions on Schedule A of Form 1040 if you are an employee. However, if you are a self-employed individual, you would file Schedule C (Form 1040), Schedule C-EZ or Schedule F if you are a farmer or fisherman. To claim the credit, you must also have expenses for education that meet the requirements for qualifying work-related education. | ||||||||||
| 244 |
You can deduct the costs of qualifying
work-related education as business expenses. This is education
that
___
|
||||||||||
| Feedback | You can deduct the costs of qualifying work-related education as business expenses. Remember that this is education that that is required by your employer or the law to keep your present salary, status or job. The required education must serve a bona fide business purpose of your employer. Also this education is education that maintains or improves skills needed in your present work. Generally this would not be education that qualifies you for a new profession. | ||||||||||
| 245 |
Even if the education meets one or both of the
qualifying tests, it is not qualifying work-related education if
it
___
|
||||||||||
| Feedback | Even if the education meets one or both of the qualifying tests, it is not qualifying work-related education if it is needed to meet the minimum educational requirements of your present trade or business or if it is part of a program of study that will qualify you for a new trade or business. | ||||||||||
| 246 |
You can deduct the costs of qualifying
work-related education as a business expense
___
|
||||||||||
| Feedback | However, you can deduct the costs of qualifying work-related education as a business expense even if the education could lead you to a degree. | ||||||||||
| 247 |
Generally, you must decide whether to itemize
deductions or to use the standard deduction. The following is a
true statement regarding itemizing deductions.
___
|
||||||||||
| Feedback | Generally, you must decide whether to itemize deductions or to use the standard deduction. You should itemize deductions if your allowable itemized deductions are greater than your standard deduction. Some taxpayers must itemize deductions because they cannot use the standard deduction. For example, you cannot use the standard deduction if you are married filing as married filing separately, and your spouse itemizes deductions. In this case you must also itemize your deductions regardless if the result is less than any of the standard deductions. | ||||||||||
| 248 |
You cannot use the standard deduction if
___
|
||||||||||
| Feedback | Therefore, you cannot use the standard deduction if you are married filing as married filing separately, and your spouse itemizes deductions. If you are filing a tax return for a period of less than 12 months because of a change in your annual accounting method then your standard deduction would also be zero or cannot be used at all. Nonresident aliens or dual-status aliens are also prohibited from using the standard deduction. | ||||||||||
| 249 |
The deduction for state and local general sales
taxes
___
|
||||||||||
| Feedback | However, the deduction for state and local general sales taxes is no longer available for tax years after 2013. | ||||||||||
| 250 |
The following state is true above state and local
general sales taxes.
___
|
||||||||||
| Feedback | So to recap, the deduction for state and local general sales taxes expired December 31, 2013. So before this, you can elect to deduct state and local general sales taxes instead of state and local income taxes. If you elect to deduct state and local general sales taxes, you can use either your actual expenses or the optional sales tax tables. | ||||||||||
| 251 |
Deductible real estate taxes are generally any
state, local, or foreign taxes on real property levied for the
general public welfare. Additionally,
___
|
||||||||||
| Feedback | Deductible real estate taxes are generally any state, local, or foreign taxes on real property levied for the general public welfare. Additionally, the deductible real estate taxes must be charged uniformly against all real property in the jurisdiction at a like rate. | ||||||||||
| 252 |
You may be able to deduct all of the points paid
on the mortgage if
___
|
||||||||||
| Feedback | As a result, you may be able to deduct all of the points paid on the mortgage if you can deduct all of the interest on your mortgage. | ||||||||||
| 253 |
You can deduct the points in full in the year
they are paid, if
___
|
||||||||||
| Feedback | You can deduct the points in full in the year they are paid, if you are using the cash method of accounting and paying points is an established business practice in your area. | ||||||||||
| 254 |
Interest is an amount you pay for the use of
borrowed money. To deduct interest you paid on a debt you
___
|
||||||||||
| Feedback | Interest is an amount you pay for the use of borrowed money. To deduct interest you paid on a debt you must be legally liable for the debt, you must have a true debtor-creditor relationship with your lender. You claim interest expenses on Schedule A of form 1040, so you must itemize your deductions to receive the benefit. | ||||||||||
| 255 |
If you prepay interest, you
___
|
||||||||||
| Feedback | If you prepay interest, you must allocate the interest over the tax years for which the interest applies. | ||||||||||
| 256 |
Types of interest you can deduct as itemized
deductions on Form 1040, Schedule A,
___
|
||||||||||
| Feedback | You can deduct as itemized deductions on Form 1040, Schedule A, your net investment income and qualified residence interest. The investment interest is limited to interest from your net investment income. In the old days, personal interest paid on any loan such as a loan on a car, and credit card debt interest paid were deductible. | ||||||||||
| 257 |
Qualified residence interest and points are
generally reported to you on Form 1098 by the financial
institution to which you made the payments such as the following
mortgages yield qualified residence interest.
___
|
||||||||||
| Feedback | Qualified residence interest and points are generally reported to you on Form 1098 by the financial institution to which you made the payments such as interest from grandfathered debts, and any mortgage taken out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt) up to a total of $1 million for this debt plus any grandfathered debt. Also, a home equity debt other than home acquisition debt taken out after October 13, 1987, up to a total of $100,000. | ||||||||||
| 258 |
You may be able to take a credit against your
federal income tax if you were issued a mortgage credit
certificate by a state or local government for low-income
housing. To figure the amount of the credit, use
___
|
||||||||||
| Feedback | You may be able to take a credit against your federal income tax if you were issued a mortgage credit certificate by a state or local government for low-income housing. To figure the amount of the credit, use Form 8396. | ||||||||||
| 259 |
Charitable contributions are deductible
___
|
||||||||||
| Feedback | Charitable contributions are deductible on your Schedule A itemized deductions. | ||||||||||
| 260 |
If your contribution entitles you to merchandise,
goods, or services, including admission to a charity ball,
banquet, theatrical performance, or sporting event, you can
deduct
___
|
||||||||||
| Feedback | If your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received. | ||||||||||
| 261 |
For a contribution of cash, check, or other
monetary gift (regardless of amount), you must maintain as a
record of the contribution a bank record or a written
communication from
___
|
||||||||||
| Feedback | For a contribution of cash, check, or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the date and amount of contribution. | ||||||||||
| 262 |
For any contribution of $250 or more (including
contributions of cash or property), you must obtain and keep in
your records a contemporaneous written acknowledgment from the
qualified organization indicating the amount of the cash and a
description of any property contributed. The acknowledgment
___
|
||||||||||
| Feedback | For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. | ||||||||||
| 263 |
You may qualify for the earned income tax credit
(EITC), if you worked last year
___
|
||||||||||
| Feedback | You may qualify for the earned income tax credit (EITC), if you worked last year but did not earn a lot of money. | ||||||||||
| 264 |
To qualify for the credit your adjusted gross
income (AGI) must be below a certain amount and you
___
|
||||||||||
| Feedback | To qualify for the credit your adjusted gross income (AGI) must be below a certain amount and you must not be a qualifying child of another person, have a qualifying child who meets four tests (the age, relationship, residency and joint return tests) and you are age 25 but under age 65 at the end of the year if you don't have a qualifying child. | ||||||||||
| 265 |
If you qualify, the amount of your EITC will
depend on your filing status,
___
|
||||||||||
| Feedback | If you qualify, the amount of your EITC will depend on your filing status, whether you have children and the number of children you have, and the amount of your wages and income. | ||||||||||
| 266 |
The Child Tax Credit is an important tax credit
because it may be worth as much as ____________ depending upon
your income.
___
|
||||||||||
| Feedback | The Child Tax Credit is an important tax credit because it may be worth as much as $1,000 depending upon your income. | ||||||||||
| 267 |
With the Child Tax Credit, you may be able to
reduce your federal income tax by
___
|
||||||||||
| Feedback | With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17. | ||||||||||
| 268 |
To claim a child for purposes of the Child Tax
Credit, they must either be your son, daughter, stepchild,
foster child, brother, sister, stepbrother, stepsister or a
descendant of any of these individuals, and does not include
___
|
||||||||||
| Feedback | To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, and includes a grandchild, an adopted child, a niece or nephew. | ||||||||||
| 269 |
If the amount of your Child Tax Credit is greater
than the amount of income tax you owe, you may be able to claim
___
|
||||||||||
| Feedback | If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit. | ||||||||||
| 270 |
You may be able to claim the child and dependent
care credit if you paid work-related expenses for the care of a
qualifying individual. Additionally,
___
|
||||||||||
| Feedback | You may be able to claim the child and dependent care credit if you paid work-related expenses for the care of a qualifying individual. Additionally, the credit is generally a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying individual. This percentage depends on your adjusted gross income. Also, the work-related expenses qualifying for the credit are those paid for the care of a qualifying individual to enable you to work or actively look for work. | ||||||||||
| 271 |
Expenses are paid for the care of a qualifying
individual if the primary function is to assure the individual's
well-being and protection. In general, amounts paid for services
outside your household qualify for the credit if the care is
provided for
___
|
||||||||||
| Feedback | Expenses are paid for the care of a qualifying individual if the primary function is to assure the individual's well-being and protection. In general, amounts paid for services outside your household qualify for the credit if the care is provided for a qualifying individual who is your qualifying child under age 13 or a qualifying individual who regularly spends at least 8 hours each day in your household. | ||||||||||
| 272 |
The total expenses that may be used to calculate
the child and dependent care credit are capped at
___
|
||||||||||
| Feedback | The total expenses that may be used to calculate the child and dependent care credit are capped at $3,000 for one qualifying individual. | ||||||||||
| 273 |
In general, you can exclude up to ___________ for
dependent care benefits received from your employer.
|
||||||||||
| Feedback | In general, you can exclude up to $5,000 for dependent care benefits received from your employer. | ||||||||||
| 274 |
The expenses qualifying for the computation of
the credit must be reduced by the amount of any dependent care
benefits provided by your employer that you exclude from gross
income. In general, the expenses claimed may not exceed
the lesser of your earned income or your spouse’s earned income.
___
|
||||||||||
| Feedback | The expenses qualifying for the computation of the credit must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from gross income. In general, the expenses claimed may not exceed your earned income or your spouse's earned income, whichever is less. | ||||||||||
| 275 |
For purposes of the child and dependent care
credit, a qualifying individual is
___
|
||||||||||
| Feedback | For purposes of the child and dependent care credit, a qualifying individual is your dependent qualifying child who is under age 13 when the care is provided. Your qualifying individual can also be your spouse who is physically or mentally incapable of self-care and who has the same principal place of abode as you for more than half of the year. In addition, your qualifying individual can be any dependent who is physically or mentally incapable of self-care, and who has the same principal place of abode as you for more than half of the year. | ||||||||||
| 276 |
For purposes of the child and dependent care
credit, an individual is physically or mentally incapable of
self-care if, as a result of a physical or mental defect, the
individual
___
|
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| Feedback | For purposes of the child and dependent care credit, an individual is physically or mentally incapable of self-care if, as a result of a physical or mental defect, the individual is incapable of caring for his or her hygiene or nutritional needs and whom requires the full-time attention of another person for the individual's safety or safety of others. | ||||||||||
| 277 |
A noncustodial parent may not treat a child as a
qualifying individual for purposes of the child and dependent
care credit,
___
|
||||||||||
| Feedback | A noncustodial parent may not treat a child as a qualifying individual for purposes of the child and dependent care credit, even if the noncustodial parent may claim an exemption for the child. | ||||||||||
| 278 |
This is the he method used to pay tax on income
that is not subject to withholding. This includes income from
self-employment, interest, dividends, alimony, rent, gains from
the sale of assets, prizes and awards.
___
|
||||||||||
| Feedback | Estimated tax is the the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. | ||||||||||
| 279 |
Estimated tax is the method used to pay tax on
income that is not subject to withholding. Additionally,
___
|
||||||||||
| Feedback | Estimated tax is the method used to pay tax on income that is not subject to withholding. You may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Additionally, estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. Always keep in mind that if you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return. | ||||||||||
| 280 |
If you are filing as a sole proprietor, partner,
S corporation shareholder, and/or a self-employed individual,
you generally have to make estimated tax payments if you expect
to owe tax of
___
|
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| Feedback | If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. | ||||||||||
| 281 |
If you are filing as a corporation you generally
have to make estimated tax payments for your corporation if you
expect it to owe tax of
___
|
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| Feedback | If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. | ||||||||||
| 282 |
You do not have to pay estimated tax for the
current year if
___
|
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| Feedback | You do not have to pay estimated tax for the current year if you had no tax liability for the prior year, you were a U.S. citizen or resident for the whole year and your prior tax year covered a 12 month period. | ||||||||||
| 283 |
If you do not pay enough tax by the due date of
each of the payment periods, you may be charged a penalty
___
|
||||||||||
| Feedback | If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return. | ||||||||||
| 284 |
If you did not pay enough tax throughout the
year, either through withholding or by making estimated tax
payments, you may have to pay a penalty for underpayment of
estimated tax. Generally, most taxpayers will avoid this penalty
___
|
||||||||||
| Feedback | If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty they owe less than $1,000 in tax after subtracting their withholdings and credits, if they paid at least 90% of the tax for the current year, or if they paid 100% of the tax shown on the return for the prior year, whichever is less. | ||||||||||
| 285 |
The penalty for underpayment of estimated tax may
be waived if
___
|
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| Feedback | The penalty for underpayment of estimated tax may be waived if the failure to make estimated payments was caused by a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty. The penalty may also be waived if you retired (after reaching age 62) or became disabled during the tax year for which estimated payments were required to be made or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect. | ||||||||||
| 286 |
Taxpayers often elect the Direct Deposit option
because it is the fastest way of receiving refunds. Providers
must accept any Direct Deposit election to qualified accounts in
the taxpayer’s name at any eligible financial institution
designated by the taxpayer. Additionally,
___
|
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| Feedback | Taxpayers often elect the Direct Deposit option because it is the fastest way of receiving refunds. Providers must accept any Direct Deposit election to qualified accounts in the taxpayer’s name at any eligible financial institution designated by the taxpayer. Additionally, providers should caution taxpayers that some financial institutions do not permit the deposit of joint individual income tax refunds into individual accounts or into check or share draft accounts that are "payable through" another institution. Providers are also obligated to advise taxpayers that they cannot rescind a Direct Deposit election and they cannot make changes to routing transit numbers of financial institutions or to their account numbers after the IRS has accepted the return. Providers can never alter the Direct Deposit information in the electronic record after taxpayers have signed the tax return only if they find a mistake. | ||||||||||
| 287 |
You may be eligible to apply for an online
payment agreement
___
|
||||||||||
| Feedback | You may be eligible to apply for an online payment agreement if you are an individual that owes $50,000 or less in combined individual income tax, penalties and interest, and have filed all required returns. You may also be eligible to apply for an online payment agreement if you are a businesses who owes $25,000 or less in payroll taxes and have filed all required returns. | ||||||||||
|
Ethics |
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| Question | |||||||||||
| 288 |
The following is a true statement regarding
practitioners.
___
|
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| Feedback | The practitioner must use reasonable effort to identify and ascertain the facts, which may relate to future events if a transaction is prospective, and to determine which facts are relevant. Therefore, a practitioner must never base an opinion on any unreasonable factual assumptions (including assumption as to future events). This means that a practitioner cannot base an opinion on any unreasonable factual representations, statements or findings or of the taxpayers or any other person. As a matter of fact, it would be unreasonable for a practitioner to rely on a projection, financial forecast or appraisal if the practitioner knows or should know that it is incorrect or incomplete or was prepared by a person lacking skills or qualifications. | ||||||||||
| 289 |
Any practitioner who has principal authority and
responsibility for overseeing a firm's practice of providing
advice concerning federal tax issues must take reasonable steps
to ensure that the firm has adequate procedures in effect for
all members, associates, and employees. Any such practitioner
will be subject to discipline for failing to comply with the
requirements if
___
|
||||||||||
| Feedback | Any practitioner who has principal authority and responsibility for overseeing a firm's practice of providing advice concerning federal tax issues must take reasonable steps to ensure that the firm has adequate procedures in effect for all members, associates, and employees. Any such practitioner will be subject to discipline for failing to comply with the requirements if the practitioner knows or should know that one or more individuals that don't comply with the code and the practitioner fails to take prompt action to correct the noncompliance. | ||||||||||
| 290 |
The Secretary of the Treasury, or delegate, after
notice and an opportunity for a proceeding, may censure,
suspend, or disbar any practitioner from practice before the
Internal Revenue Service if the practitioner
___
|
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| Feedback | The Secretary of the Treasury, or delegate, after notice and an opportunity for a proceeding, may censure, suspend, or disbar any practitioner from practice before the Internal Revenue Service if the practitioner is shown to be incompetent or disreputable or fails to comply with any regulation under the prohibited conduct standards or with intent to defraud. The Secretary may also censure, suspend, or disbar any practitioner from practice before the Internal Revenue Service if the practitioner willfully and knowingly misleads or threatens a client or prospective client. | ||||||||||
| 291 |
A complaint is not sufficient to just fairly
inform the respondent of the charges brought so that the
respondent is able to prepare a defense.
___
|
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| Feedback | A complaint is sufficient to just fairly inform the respondent of the charges brought so that the respondent is able to prepare a defense. | ||||||||||
| 292 |
To maintain active enrollment to practice before
the Internal Revenue Service, each individual is required to
have the enrollment renewed. The following statement is correct
regarding enrollment renewal.
___
|
||||||||||
| Feedback | To maintain active enrollment to practice before the Internal Revenue Service, each individual is required to have the enrollment renewed. The effective date of renewal is the first day of the fourth month following the close of the period for renewal. Consequently, if you don't receive notification from the Director of the Office of Professional Responsibility of the renewal requirement, the individual is required to renew regardless. | ||||||||||
293 |
A practitioner shall not represent a client
before the Internal Revenue Service if the representation
involves a conflict of interest. A conflict of interest exists
if
___
|
||||||||||
| Feedback | A practitioner shall not represent a client before the Internal Revenue Service if the representation involves a conflict of interest. A conflict of interest exists if the representation of one client will be directly adverse to another client. | ||||||||||
294 |
An understatement in the excess of the amount of
tax required to be shown on the tax return over the amount of
tax shown on the return for the tax year, reduced by any
rebates. There is a substantial understatement if the amount of
the understatement for any year exceeds
___
|
||||||||||
| Feedback | An understatement in the excess of the amount of tax required to be shown on the tax return over the amount of tax shown on the return for the tax year, reduced by any rebates. There is a substantial understatement if the amount of the understatement for any year exceeds 10% of the tax required to be shown on the return for the tax year. This amount would be the amount that exceeds 10% of the tax required to be shown on the return for the tax year or $5,000, whichever is greater. Likewise, for a corporation it would be the greater of the amount that exceeds 10% of the tax required to be shown on the return for the year or $10,000. | ||||||||||
| 295 |
The un-enrolled preparer who has been determined
ineligible for limited practice before the Internal Revenue
Service may request, after 6 months following the notice of
final determination of ineligibility or decision of appeal, that
eligibility for limited practice be reinstated.
___
|
||||||||||
| Feedback | The un-enrolled preparer who has been determined ineligible for limited practice before the Internal Revenue Service may request, after 2 years following the notice of final determination of ineligibility or decision of appeal, that eligibility for limited practice be reinstated. | ||||||||||
| 296 |
Enrollment as an enrolled agent based on an
applicant's former employment with the Internal Revenue Service
may be
___
|
||||||||||
| Feedback | Enrollment as an enrolled agent based on an applicant's former employment with the Internal Revenue Service may be of unlimited scope or limited to permit the presentation of matters only of the particular class for which the applicant's former employment has qualified the applicant. The enrollment may also be limited to permit the presentation of matters only before the particular unit or division of the Internal Revenue Service for which the applicant's former employment has qualified the applicant. | ||||||||||
| 297 |
Individuals may not appear on their own behalf
before the Internal Revenue Service that is why we have enrolled
agents.
___
|
||||||||||
| Feedback | Individuals may always appear on their own behalf before the Internal Revenue Service without the need of enrolled agents. | ||||||||||
| 298 |
An applicant for enrollment as an enrolled agent
who is requesting such enrollment based on former employment
with the Internal Revenue Service must have had a minimum number
of years of continuous employment with the Internal Revenue
Service during which the applicant must have been regularly
engaged in applying and interpreting the provisions of the
Internal Revenue Code and the regulations relating to income,
estate, gift, employment, or excise taxes. Minimum years of
continuous employment must be
___
|
||||||||||
| Feedback | An applicant for enrollment as an enrolled agent who is requesting such enrollment based on former employment with the Internal Revenue Service must have had a minimum number of years of continuous employment with the Internal Revenue Service during which the applicant must have been regularly engaged in applying and interpreting the provisions of the Internal Revenue Code and the regulations relating to income, estate, gift, employment, or excise taxes. Minimum years of continuous employment must be 5 years. | ||||||||||
| 299 |
Each individual applying for renewal of their EA
enrollment must retain for a period of 4 years following the
date of renewal of enrollment the information required with
regard to qualifying continuing professional education hours.
Such information does not include
___
|
||||||||||
| Feedback | Each individual applying for renewal of their EA enrollment must retain for a period of 4 years following the date of renewal of enrollment the information required with regard to qualifying continuing professional education hours. Include the name of the sponsoring organization, the location, title and description of the program. Also include written outlines, course syllabi, textbook or material required for the course. You don't need to include the publisher information of the study material used. | ||||||||||
| 300 |
Any individual may prepare a tax return, appear
as a witness for the taxpayer before the Internal Revenue
Service, or furnish information at the request of the Internal
Revenue Service or any of its officers or employees.
___
|
||||||||||
| Feedback | Any individual who prepares the tax return, may appear as a witness for the taxpayer before the Internal Revenue Service, or furnish information at the request of the Internal Revenue Service or any of its officers or employees. | ||||||||||
| 301 |
__Providers are not tax return preparers for the
purpose of assessing most preparer penalties as long as their
services are
___
|
||||||||||
| Feedback | Providers are not tax return preparers for the purpose of assessing most preparer penalties as long as their services are limited to "typing, reproduction or other mechanical assistance in the preparation of a return or claim of refund". | ||||||||||
| 302 |
If an ERO, Intermediate Service Provider,
Transmitter or the product of a Software Developer alters the
return in a way that does not come under the "mechanical
assistance" exception,
___
|
||||||||||
| Feedback | If an ERO, Intermediate Service Provider, Transmitter or the product of a Software Developer alters the return in a way that does not come under the "mechanical assistance" exception, the IRS may hold the Provider liable for income tax return preparer penalties. | ||||||||||
| 303 |
A penalty may be imposed on a return preparer who
endorses or negotiates a refund check issued to any taxpayer
other than the return preparer in the amount of
___
|
||||||||||
| Feedback | A penalty may be imposed on a return preparer who endorses or negotiates a refund check issued to any taxpayer other than the return preparer. The amounts can add up since there is a penalty of $500 for each check endorsed. | ||||||||||
| 304 |
The prohibition on return preparers negotiating a
refund check is limited to
___
|
||||||||||
| Feedback | The prohibition on return preparers negotiating a refund check is limited to a refund check for return they prepared. | ||||||||||
| 305 |
The prohibition on return preparers negotiating a
refund check is limited to
___
|
||||||||||
| Feedback | The prohibition on return preparers negotiating a refund check is limited to cash a refund check and remit all of the cash to the taxpayer, accept a refund check for deposit in full to a taxpayer's account provided the bank does not initially endorse or negotiate the check and to endorse a refund check for deposit in full to a taxpayer’s account pursuant to a written authorization of the taxpayer. | ||||||||||
| 306 |
Any person who is a tax return preparer with
respect to any return or claim for refund who fails to comply
with due diligence requirements imposed by the Secretary by
regulations with respect to determining eligibility for, or the
amount of, the allowable EITC credit. There is the diligence
requirement to
___
|
||||||||||
| Feedback | Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining eligibility for, or the amount of, the allowable EITC credit. There is the diligence requirement to ask all the questions required on Form 8867 and to keep a copy of form and EITC calculation worksheets. You also must ask additional questions when the information your client gives you seems incorrect, inconsistent or incomplete. Remember, you must complete and submit the Form 8867 for all paper and electronic tax returns and for all other EITC claims regardless if with children or claims with no children. | ||||||||||
| 307 |
To meet your earned income credit due diligence
requirements, you must
___
|
||||||||||
| Feedback | To meet your earned income credit due diligence requirements, you must complete the form with information you get from your client. And, you must document, at the time of the interview, any additional questions you asked and your client’s replies. I cannot iterate enough, complete all required parts! You must complete Parts I, IV and V for every client, and, either Part II or Part III as required. Always, submit the completed Form 8867 with each EITC electronic return you send or attach the completed Form 8867 to any EITC return or claim for refund you prepare and present to your client to send. Remind your client that Form 8867 must be send in order for their Earned Income Credit be processed correctly. If too many of your clients leave Form 8867 out, the IRS for sure will come knocking on your door. | ||||||||||
| 308 |
You need to answer the questions covering EITC
eligibility on the Form 8867 using information from your client.
But, we don't recommend you ask your clients the questions
listed on the form. Use words and terms your client knows and
won't misunderstand. For example:
___
|
||||||||||
| Feedback | You need to answer the questions covering EITC eligibility on the Form 8867 using information from your client. But, we don't recommend you ask your clients the questions listed on the form. Use words and terms your client knows and won't misunderstand. For example: Don't ask: What's your marital status? Ask: Are you single or married? Don't ask: Are you head of household? Find out if they qualify by asking all the right questions. Don't ask if they have a qualifying child or a dependent, find out who they lived with during the tax year and for how long. The manner in which you ask the interview questions will determine the accuracy of the responses. Also, you want to avoid any possibility of fraud, so gear your questions in such a way as to be clear of fraud. | ||||||||||
| 309 |
If you give your client an EITC return or
electronic version to sign and send in, you must attach the
completed Form 8867 to it. Be sure
___
|
||||||||||
| Feedback | If you give your client an EITC return or electronic version to sign and send in, you must attach the completed Form 8867 to it. Be sure to stress the importance of sending in all the forms to the IRS. Form 8867 is extremely important. Follow and make sure the questions are answered on it correctly. If you suspect any wrongdoing or anything wrong with the responses, ask more questions. Ultimately, you are given the responsibility of the accuracy of information that goes on this form. There are high penalties at stake for you and you must do everything is your power to avoid these due diligence penalties. | ||||||||||
| 310 |
If the Form 8867 is not included with EITC
returns you prepared, you
___
|
||||||||||
| Feedback | If the Form 8867 is not included with EITC returns you prepared, you may get a warning letter from the IRS during the filing season. You may also start getting alerts with your acknowledgements that Form 8867 is not being included. You can use all the help you can get, and the IRS is there to help you after all. | ||||||||||
| 311 |
If the Form 8867 is not included with EITC
returns you prepared, you may get
___
|
||||||||||
| Feedback | Furthermore, if Form 8867 is not included with EITC returns you prepared, you may get letter 5364 which is sent to those who prepare paper EITC returns without a Form 8867. Receiving acknowledgement Alerts which are sent electronically to those preparers who e-file EITC returns without Form 8867, is a good thing. You may inadvertently be excluding this extremely important document from your filings and these notifications could be a blessing. | ||||||||||
| 312 |
Don't submit the form 8867 separately without a
tax return because
___
|
||||||||||
| Feedback | If you have been leaving this form out of your filings, you don't want to submit Form 8867 separately without a tax return because the IRS cannot associate a Form 8867 with a tax return that has already been processed. Therefore, doing so will have no effect on the tax preparer's penalty assessments. You should never send Form 8867 separately. | ||||||||||
| 313 |
If the IRS continues to receive EITC claims
prepared by you missing the Form 8867,
___
|
||||||||||
| Feedback | If the IRS continues to receive EITC claims prepared by you missing the Form 8867, they will continue to send warning letters. The IRS can only take so much abuse and may start sending Letter 1125 with the Form 5816, assessing the EITC Due Diligence penalty of $500 for each missing form. | ||||||||||
| 314 |
If you receive a warning for not submitting Form
8867 with returns,
___
|
||||||||||
| Feedback | You should start changing your procedures to ensure the Form 8867 is completed and submitted with every EITC claim to avoid the warnings for not submitting Form 8867 with returns. The last thing you want to do is ignore the letters. You could also make sure that your tax return software is not automatically excluding Form 8867. | ||||||||||
| 315 |
If the IRS examines your client's return and deny
all or a part of EITC, your client
___
|
||||||||||
| Feedback | If the IRS examines your client's return and deny all or a part of EITC, your client must pay back the amount in error with interest. Furthermore, you client may need to file Form 8862 and may be banned from claiming EITC for the next two years if the IRS finds the error is because of reckless or intentional disregard of the rules. If the error is extreme and due to fraud, your client may be banned from claiming the Earned Income Credit for the next ten years. | ||||||||||
| 316 |
If the IRS examines the EITC claims you
prepared and they find you did not meet all four due diligence
requirements, you can get
___
|
||||||||||
| Feedback | If the IRS examines the EITC claims you prepared and they find you did not meet all four due diligence requirements, you can get A $500 penalty for each failure to comply with EITC due diligence requirements. You will get a minimum penalty of $1,000 if you prepare a client return and IRS finds any part of the amount of taxes owed is due to an unreasonable position. If you just don't care and exercise reckless or intentional disregard for the rules, you will be liable for a minimum penalty of $5,000. | ||||||||||
| 317 |
IRS can also penalize an employer or employing
firm if an employee fails to comply with the EITC due diligence
requirements. Furthermore,
___
|
||||||||||
| Feedback | IRS can also penalize an employer or employing firm if an employee fails to comply with the EITC due diligence requirements. However, there are only specific circumstances when an employer is subject to the due diligence penalty. | ||||||||||
| 318 |
If you receive a return-related penalty, you can
also face
___
|
||||||||||
| Feedback | You should be careful. Tax preparation is your profession and you should always follow the due diligence rules. If you receive a return-related penalty, you can also face suspension or expulsion. Your firm can also face expulsion from the IRS e-file program. There are so many penalties involved, such as many disciplinary actions by the IRS Office of Professional Responsibility. If you deteriorate your service to such an extent, you can also face injunctions barring you from preparing tax returns or imposing conditions on the tax returns you may prepare. | ||||||||||
| 319 |
__The ERO must have either prepared the return or
collected it from a taxpayer. An ERO originates the electronic
submission by
___
|
||||||||||
| Feedback | To review an ERO has many duties and responsibilities. The ERO must have either prepared the return or collected it from a taxpayer. An ERO originates the electronic submission by electronically sending the return to a Transmitter that transmits the return to the IRS or directly transmitting the return to the IRS. The ERO could also be working with a third party transmitter and be providing a return to an Intermediate Service Provider for processing prior to transmission to the IRS. | ||||||||||
| 320 |
A Provider, including an ERO, may
___
|
||||||||||
| Feedback | A Provider, including an ERO, may choose to originate returns that it has not prepared. The ERO may also disclose tax return information to other Providers in connection with e-filing a tax return. Additionally, the ERO may pass on return information to an Intermediate Service Provider or a Transmitter for the purpose of having an electronic return formatted or transmitted to the IRS. | ||||||||||
| 321 |
An ERO that chooses to originate returns that it
has not prepared, but only collected and that as a result of
entering the data, it discovers errors that require substantive
changes and then makes the changes,
___
|
||||||||||
| Feedback | An ERO that chooses to originate returns that it has not prepared, but only collected and that as a result of entering the data, it discovers errors that require substantive changes and then makes the changes, becomes an income tax return preparer of the returns. | ||||||||||
| 322 |
A non-substantive change is a correction limited
to a transposition error, misplaced entry, spelling error or
arithmetic correction. The IRS considers all other changes
substantive, and the ERO becomes a tax return preparer. As such,
___
|
||||||||||
| Feedback | A non-substantive change is a correction limited to a transposition error, misplaced entry, spelling error or arithmetic correction. The IRS considers all other changes substantive, and the ERO becomes a tax return preparer. As such, the ERO may be required to sign the tax return as the tax return preparer. | ||||||||||
| 323 |
EROs can do a number of things for clients and
customers to avoid rejects and refund delays such as
___
|
||||||||||
| Feedback | The EROs job in on the line if he or she does not exercise proper operation. EROs can do a number of things for clients and customers to avoid rejects and refund delays. The ERO should always insist on identification and documentation of social security and other identification numbers for all taxpayers and dependents. The ERO should never submit returns claiming dubious items on tax returns or present altered or suspicious documents. Remember to always ask those extra questions! An ERO should ask taxpayers if there were problems with last year’s refund. If the taxpayer does acknowledge that there were problems, then the ERO should see if the conditions that caused the problems have been corrected or can be avoided this year. | ||||||||||
| California Specific Tax Course | |||||||||||
| 324 |
If two or more taxpayers including a parent claim
the same child as a qualifying child for a particular tax year, the
person shall be treated as the qualifying child of the taxpayer in the
following situation:
___
|
||||||||||
| Feedback | If two or more taxpayers including a parent claim the same child as a qualifying child for a particular tax year, the person shall be treated as the qualifying child of the taxpayer who is the parent or if none of the taxpayers is the parent, then the taxpayer with the highest adjusted gross income for taxable year shall be able to claim the exemption. | ||||||||||
| 325 |
To be head of household, you must provide more than half
of a person's total support during the calendar year to meet the support
test. To determine whether you have provided more than half the support,
___
|
||||||||||
| Feedback | To be head of household, you must provide more than half of a person's total support during the calendar year to meet the support test. To determine whether you have provided more than half the support compare the amount you contributed for the person's support to the entire amount of support the person received from all sources. | ||||||||||
| 326 |
You are considered to have chosen to treat your
nonresident alien spouse/RDP as a resident alien if
___
|
||||||||||
| Feedback | You are considered to have chosen to treat your nonresident alien spouse/RDP as a resident alien if you and your nonresident alien spouse or RDP filed a joint tax return in a previous year. You are also considered to have chosen to treat your nonresident alien spouse/RDP as a resident alien if you choose to treat your nonresident alien spouse/RDP as a resident so you can file a joint tax return. Furthermore, you are considered to have chosen to treat your nonresident alien spouse/RDP as a resident alien if you have not revoked the choice by the extended due date for filing the tax return at issue. | ||||||||||
| 327 |
If you are married at the end of the year, neither a
child not anyone else qualify you for the head of household filing
status
| ___
|
||||||||||
| Feedback | If you are married at the end of the year, no one can qualify you for the Head of Household filing status because you are married. This is true unless you qualify to be considered unmarried for tax purposes. | ||||||||||
| 328 |
If the person that qualifies you for the head of
household filing status did not live with your during the year, you
cannot qualify for the head of household filing status unless
| ___
|
||||||||||
| Feedback | If the person is your parent, he or she does not have to live with you to qualify you for the Head of Household filing status. | ||||||||||
| 329 |
If you were married at the end of the year, you cannot qualify for
the Head of Household filing status if you lived with your wife during
any part
of the last six months of the year
| ___
|
||||||||||
| Feedback | If you are married at the end of the year, you cannot qualify for the Head of Household filing status if you lived with your wife during any part of the last six months of the year. If you are married and living with your spouse at any time during the year and therefore you do not meet the requirements to be considered unmarried. | ||||||||||
| 330 |
A taxpayer cannot qualify for the head of household
filing status if the qualifying person is not the taxpayer's relative
because
| ___
|
||||||||||
| Feedback | Only certain relatives can qualify you for the head of household filing status. If the qualifying person is not your relative, you cannot qualify for the Head of Household filing status. | ||||||||||
| 331 |
You paid $5,100 in child care, you are single and you
earned $28,000 for the entire year. You have one qualifying child. What
is your child and dependent care expenses credit for tax year 2015?
| ___
|
||||||||||
| Feedback | You paid $5,100 in child care, you are single and you earned $28,000 for the entire year. You have on qualifying child. Your child and dependent care expenses credit for tax year 2015 is $420. | ||||||||||
| 332 |
If you want to file your California tax return and have no tax
liability, in order to claim the child and dependent care expenses credit,
would you still get a refund for California based on your Child and
Dependent Care expenses credit?
| ___
|
||||||||||
| Feedback | In order to get a refund for the child and dependent care credit, you must have a tax liability. If you have no tax liability for California, you cannot get a refund because the child and dependent care expenses credit is a nonrefundable credit. Non refundable credits only cancel tax liability. Refundable credit are calculated at the end and it is refundable even if there is no tax liability and it is applied to the tax liability if there is any. | ||||||||||
333 |
Juan and Maria Escobedo are married and keep up a home
for their two pre-school children. In tax year 2015, they claimed their
children as dependents. Juan earned $25,200 and Maria earned $8,200.
They paid $5,900 in work related child care expenses. What is their
credit amount before taking into account any tax calculations?
| ___
|
||||||||||
| Feedback | For example, Juan and Maria Escobedo are married and keep up a home for their two pre-school children. In tax year 2015, they claimed their children as dependents. Juan earned $25,200 and Maria earned $8,200. They paid $5,900 in work related child care expenses. Their child and dependent care expenses credit amount before taking into account any tax calculations is $738. | ||||||||||
| 334 |
To claim the Child and Dependent Care Expenses Credit for
California, you must complete and attach it to your California tax
return the following:
| ___
|
||||||||||
| Feedback | To claim the Child and Dependent Care Expenses Credit for California, you must complete and attach FTB Form 3506 to your California tax return. | ||||||||||
| 335 |
In tax year 2015, if your gross income is $45,000 and
your federal child and dependent care expenses credit amount was $480,
then your California Credit is
| ___
|
||||||||||
| Feedback | In tax year 2015, if your gross income is $45,000 and your federal child and dependent care expenses credit amount was $480, then your California Credit is $206. | ||||||||||
| 336 |
For Federal the Child and Dependent care expenses credit
is a non-refundable credit and for California the credit is
| ___
|
||||||||||
| Feedback | For Federal the Child and Dependent care expenses credit is a non-refundable credit and for California the credit is also nonrefundable. It used to be that the credit was a refundable credit for California, but recently the rules were changed and now the credit is nonrefundable just like the federal child and dependent care credit. | ||||||||||
| 337 |
What is the percentage of the federal Child and Dependent
Expenses Care credit that is allowed for California for taxpayers who
earned more than $90,000 in 2015?
| ___
|
||||||||||
| Feedback | The percentage of the federal Child and Dependent Expenses Care credit that is allowed for California for taxpayers who earned more than $90,000 in 2015 is 34%. | ||||||||||
| 338 |
In tax year 2015, to qualify for the California child and
dependent care expenses credit, your federal adjusted gross income must
be
| ___
|
||||||||||
| Feedback | In tax year 2015, to qualify for the California child and dependent care expenses credit, your federal adjusted gross income must be $100,000 or less. | ||||||||||
339 |
In tax 2014, if you are head of household and you would
like to qualify for renter's credit, you would not qualify if your
income is over what amount?
| ___
|
||||||||||
| Feedback | In tax 2014, if you are head of household and you would like to qualify for renter's credit, you would not qualify if your income is over $75,536. | ||||||||||
340 |
If for more than half of the year, you lived in the home
of a parent, foster parent, or legal guardian in 2015 who can claim you
as a dependent, then
| ___
|
||||||||||
| Feedback | If for more than half of the year, you lived in the home of a parent, foster parent, or legal guardian in 2015 who can claim you as a dependent, then you do not qualify for the renter's credit. | ||||||||||
| 341 |
The non-refundable renter's credit qualification record
must be kept with your records; therefore, you should not mail it.
___
|
||||||||||
| Feedback | The non-refundable renter's credit qualification record must be kept with your records; therefore, you should not mail it. | ||||||||||
| 342 |
To qualify for Renter's credit, you must have paid rent
for at least 6 months of the tax year and your principal resident must
have been in California.
___
|
||||||||||
| Feedback | To qualify for Renter's credit, you must have paid rent for at least 6 months of the tax year and your principal resident must have been in California. | ||||||||||
| 343 |
If your filing status was married filing separate, you
cannot claim the California renter's credit.
___
|
||||||||||
| Feedback | If your filing status was married filing separate, you are still able to claim the California renter's credit. | ||||||||||
| 344 |
If a single employer withheld California State Disability
Insurance (SDI) from your wages at more than .9% of your gross wages,
| ___
|
||||||||||
| Feedback | If a single employer withheld California State Disability Insurance (SDI) from your wages at more than .9% of your gross wages you should contact the employer for a refund. | ||||||||||
| 345 |
You may be entitled to claim a credit for excess SDI on
Form 540 if
| ___
|
||||||||||
| Feedback | You may be entitled to claim a credit for excess SDI on Form 540 if you had two or more employers during 2015, you received more than $104,378 in wages and if the amounts of SDI (or VPDI) withheld appear on your Forms W-2. | ||||||||||
| 346 |
If you discover that you made an error on your California
income tax return after you filed it, use Form 540X to amend your tax
return.
___
|
||||||||||
| Feedback | If you discover that you made an error on your California income tax return after you filed it, use Form 540X to amend your tax return. | ||||||||||
| 347 |
For purposes of claiming the California Child and
Dependent Care Expenses Credit, if your child turns age 13 during the
year,
| ___
|
||||||||||
| Feedback | For purposes of claiming the California Child and Dependent Care Expenses Credit, if your child turns age 13 during the year, the child is a qualifying person only for the part of the year he or she was 12 years old. | ||||||||||
| 348 |
How much child and dependent care credit
do you qualify for if in 2015 your wife does not work all year because
she was not able to care for herself for the entire year and you earned
$21,050, have one qualifying child and paid $2,000 in child care?
___
|
||||||||||
| Feedback | In tax year 2015, if your wife did not work all year because she was not able to care for herself for the entire year there are special considerations to take into account. For example, if you worked and earned $21,050 and have have one qualifying child for the Child and Dependent Care Credit, paid $2,000 for child care, you can qualify for $310 child and dependent dependent expense credit. The $310 amount is 1/2 of the $620 federal amount. | ||||||||||
| 349 |
You are single and only paid rent for one month in 2015.
You qualify to claim the renter's credit.
___
|
||||||||||
| Feedback | If you only paid rent for one month in 2015, you don't qualify to claim the renter's credit. | ||||||||||
| 350 |
Beginning in taxable year 2010, persons who have entered
into a same-sex marriage outside the State of California that is valid
according to the laws of the jurisdiction in which the marriage was
contracted must file their California income tax return using either the
joint or separate filing status.
___
|
||||||||||
| Feedback | Beginning in taxable year 2010, persons who have entered into a same-sex marriage outside the State of California that is valid according to the laws of the jurisdiction in which the marriage was contracted must file their California income tax return using either the joint or separate filing status. Starting in 2013, this same rule or benefit also applies for federal tax returns. | ||||||||||
| 351 |
If there is no difference between your federal and
California income or deductions, do not file a Schedule CA (540).
___
|
||||||||||
| Feedback | If there is no difference between your federal and California income or deductions, do not file a Schedule CA (540). | ||||||||||
| 352 |
Who is a qualifying individual for the Child and
Dependent Care Credit?
___
|
||||||||||
| Feedback | Many individuals can be your qualifying persons for the Child and Dependent Card Credit. A child who is under the age of 13 can qualify you for the dependent care credit. A dependent of the taxpayer who is physically or mentally unable to care for himself or herself can be a qualifying person. Furthermore, a spouse of the taxpayer who is physically or mentally unable to care for himself or herself can be a qualifying person for the dependent care credit. | ||||||||||
| 353 |
One of the requirements to qualify to claim the Child and
Dependent Care Credit for California is that
___
|
||||||||||
| Feedback | Additionally, one of the requirements to qualify to claim the Child and Dependent Care Credit for California is that you pay for care or have paid for care in order for you and you spouse can work or can look for work. | ||||||||||
| 354 |
You must pay at least 50% of the amount owed by April 15,
2016 to avoid interest and penalty charges.
___
|
||||||||||
| Feedback | California and federal coincide with many credit and tax rules. For example, both California and federal obligate you to timely pay 100% of your tax or you will be faced interest and penalty charges. On time filing for both entities is usually April 15th of every year. You can always pay later, but if you do, you must know that you will be responsible for interest and penalties on the unpaid amounts. | ||||||||||
| 355 |
You qualify for the Nonrefundable Renter's Credit if you
rented a property for more than half the year than was exempt from
California property tax in 2015.
___
|
||||||||||
| Feedback | For California, you qualify for the Nonrefundable Renter's Credit if you rented a property for more than half the year that was not exempt from California property tax in 2015. Rents are getting very high and many cannot afford to pay rent anymore. The Internal Revenue Service allows for mortgage interest deductions and it is only fair that this same benefit be allowed in form of a renter's credit for the ones who cannot qualify or who don't care to buy a home and pay a mortgage. | ||||||||||
| 356 |
All domestic partners are required to file joint or
separate tax returns under the new law.
___
|
||||||||||
| Feedback | Slowly the IRS is coinciding with the state of California in tax rules. For the longest time, California has been allowing same sex couples to file their tax returns jointly. In California, all domestic partners are required to either file joint or separate tax returns under the new law. Now, under the federal new law, same sex couples can file jointly for federal tax purposes. Now the way same sex couples file for federal will just transfer over to California tax returns and adjustments or filing status are no longer needed in the California tax return. That sure makes every one's job easier. | ||||||||||
| 357 |
You may not claim the Credit for Dependent Parent if you
used the single, head of household, qualifying widow (er), or married/RDP
filing jointly filing status. Claim this credit only if
___
|
||||||||||
| Feedback | Another credit to look into for California is the Credit for Dependent Parent. You may not claim the Credit for Dependent Parent if you used the single, head of household, qualifying widow (er), or married/RDP filing jointly filing status. Claim this credit only if you were married at the end of 2015 and you used the married filing separately, qualifying widow(er) filing status. In order to claim this credit, you spouse must not have been a member of your household during the last six months of the year. Additionally, you must have furnished over one-half the household expenses for your dependent mother's or father's home, whether or not they lived in your home. | ||||||||||
| 358 |
You may be entitled to claim a credit for excess SDI (or
VPDI) only if more than _____ of your wages was over withheld from more
than one employer.
___
|
||||||||||
| Feedback | Your federal tax return does not allow an excess SDI credit. That must be so due to the fact that federal does not have SDI withholding. You may be entitled to claim a credit for excess SDI (or VPDI) only if more than .9% of your wages was over withheld from more than one employer. You only have to worry about calculating this if you received more than $104,378 in wages and if you had more than one employer. If you only had one employer and the withholding was more than .9% was withheld, then you need to ask your employer to refund the overwithheld amount. | ||||||||||
| 359 |
If you and your spouse/RDP paid joint estimated taxes but
are now filing separate income tax returns, none of you may claim the
entire amount paid.
___
|
||||||||||
| Feedback | If you and your spouse paid joint estimated taxes but are now filing separate income tax returns, one of you may claim the entire amount paid or both can split the amount in whichever way you wish. | ||||||||||
| 360 |
Attach a doctor's statement to the back of Form 540
indicating you or your spouse are visually impaired every time you
file a tax return to claim the blind exemption credit.
___
|
||||||||||
| Feedback | Attach a doctor's statement to the back of Form 540 indicating you or your spouse are visually impaired the first time you file a tax return to claim the blind exemption credit. | ||||||||||
| 361 |
If you can't file your tax return by April 15, 2016
and you think you owe
tax,
___
|
||||||||||
| Feedback | If you can't file your tax return by April 15, 2016 and you think you owe tax, you can estimate the amount you owe by completing Form 3519 and sending the estimated amount with your extension of time file. You do not have to file until you are ready to file but do have to pay by the original due date. You will not be able to avoid penalties or interest by just filing on time without sending in the money. Once you are ready to file or once the automatic extension time is up, you must indicate on that form that you have paid the amount owed in a timely manner. | ||||||||||
| 362 |
If all your Form W-2s were not received by January 31,
2016, file your tax return only with the W-2 forms you did not receive.
___
|
||||||||||
| Feedback | If all your Form W-2s were not received by January 31, 2016, you need to file your tax return with the Forms W-2 you receive and also with the Form W-2s you did not received. You should be able to get a copy by visiting your employer. If, after you tried to get the form, you were not successful, then you can file a substitute Form W2. This substitute Form W-2 can be used for both your federal tax return and your state tax return. | ||||||||||
| 363 |
You never received a Form W-2 and you asked your employer
for one and employer refuses to issue a form, you should
___
|
||||||||||
| Feedback | Therefore, if you never received a Form W-2 and you asked your employer for one and employer refuses to issue a form, you should complete Form FTB 3525 with your wage and withholding information in order for you to file your tax return. | ||||||||||
| 364 |
If you didn't itemize deductions on your federal tax
return it is possible to itemize deductions on your California tax
return.
___
|
||||||||||
| Feedback | You don't always have to prepare your tax return in the same manner as your prepare your federal. For example, if you didn't itemize deductions on your federal tax return it is possible to itemize deductions on your California tax return. | ||||||||||
| 365 |
The following statement is true regarding the head of
household filing status.
___
|
||||||||||
| Feedback | The head of household filing status is for taxpayers who are either unmarried and or meet the requirements to be considered unmarried or considered not in a registered domestic partnership and maintain a home for a relative who lived in them for more than half the year. | ||||||||||
| 366 |
An eligible foster child is a child for head of household
purposes is a child
___
|
||||||||||
| Feedback | An eligible foster child is a child for head of household purposes is a child placed with you by an authorized placement agency or by a judgment, decree, or other order of a court of competent jurisdiction. | ||||||||||
| 367 |
Generally, if two or more people keep up the same home,
only one of the people could pay more than half the costs and qualify
for the head of household filing status. When two or more families
occupy the same dwelling,
___
|
||||||||||
| Feedback | Generally, if two or more people keep up the same home, only one of the people could pay more than half the costs and qualify for the head of household filing status. When two or more families occupy the same dwelling, each family may be treated as keeping up a separate home if each family maintains separate finances and neither contributes to the support of the other family. | ||||||||||
| 368 |
The taxpayer who provides more than half the cost of
maintaining a separate home is treated as keeping up that separate home.
To determine whether you paid more than half the cost of keeping up your
home include
___
|
||||||||||
| Feedback | The taxpayer who provides more than half the cost of maintaining a separate home is treated as keeping up that separate home. To determine whether you paid more than half the cost of keeping up your home do not include costs of clothing and vacations, costs for education and transportation, or costs for medical treatment and life insurance. | ||||||||||
| 369 |
If someone lived with you for six months means that the
person lived with you more than half the year for head of household
purposes.
___
|
||||||||||
| Feedback | If someone lived with you for exactly six months does not mean that the person lived with you more than half the year for head of household purposes. The rule is the the individual must have lived with you for more than half of the year. If the child lived with you exactly six months and exactly six months with another person, you cannot go choosing who will be able to claim head of household for that child. The rule is that the child must have lived with you for more than six months. | ||||||||||
| 370 |
If you have joint custody of your child, to qualify for
head of household filing status, you must
___
|
||||||||||
| Feedback | If you have joint custody of your child, to qualify for head of household filing status, you must still meet all the requirements for the filing status. You must have a child that must have lived with you for more than half the year. In addition, you must have paid more than half the cost of keeping up your home for that qualifying individual. | ||||||||||
| 371 |
If you were married as of the last day of the year, and
you did not live with your spouse at any time during the last six months
of the year, to determine how many days your home was your qualifying
person's main home,
___
|
||||||||||
| Feedback | If you were married as of the last day of the year, and you did not live with your spouse at any time during the last six months of the year, to determine how many days your home was your qualifying person's main home, add together half the number of days that you, your spouse, and your qualifying person lived together in your home. Then you add together all the days that you and your qualifying person lived together in your home without your spouse. | ||||||||||
| 372 |
If you were married as of the last day of the year and
you lived with your spouse at any time during the last six months of the
year, you can qualify for the head of household filing status.
___
|
||||||||||
| Feedback | If you were married as of the last day of the year and you lived with your spouse at any time during the last six months of the year, you cannot qualify for the head of household filing status. | ||||||||||
| 373 |
You are considered to have chosen to treat your
nonresident alien spouse/RDP as a resident alien if
___
|
||||||||||
| Feedback | You are considered to have chosen to treat your nonresident alien spouse/RDP as a resident alien if you and your nonresident alien spouse/RDP filed as joint return in a previous year. You are also considered to have made this choice if you chose to treat your nonresident alien spouse/RDP as a resident so you could file the joint tax return. Furthermore, you are considered to have chosen to treat your nonresident alien spouse as a resident alien if you have not revoked the choice to treat your nonresident alien spouse as a resident by the extended due date for filing the return at issue. | ||||||||||
| 374 |
The Head of Household (HOH) filing status gives you the
benefit of
___
|
||||||||||
| Feedback | The Head of Household (HOH) filing status gives you the benefit of a lower tax and a higher standard deduction that that of a Single or Married Filing separate filing status. | ||||||||||
| 375 |
You are not in a domestic partnership if
___
|
||||||||||
| Feedback | For same sex couples, you are in a domestic partnership if you have entered into a registered domestic partnership. You are also in a domestic partnership if you have not filed a notice of termination of domestic partnership with the Secretary of State and the six month waiting period for the notice to become final has passed. If your registered domestic partnership was not annulled or you have entered into another registered domestic partnership after the annulment. | ||||||||||
| 376 |
Effective for taxable years beginning on or after January
1, 2007, RDPs under California law must file their California income tax
returns using either the married/RDP filing jointly or married/RDP
filing separately filing status. If you are an RDP, you may qualify to
use the head of household filing status if
___
|
||||||||||
| Feedback | Effective for taxable years beginning on or after January 1, 2007, RDPs under California law must file their California income tax returns using either the married/RDP filing jointly or married/RDP filing separately filing status. If you are an RDP, you may qualify to use the head of household filing status if you are in the process of ending your relationship or you meet the requirements to be considered not in a registered domestic partnership. | ||||||||||
| 377 |
You were not in a registered domestic partnership if your
registered domestic partnership was legally terminated under a final
decree of dissolution. Neither a petition for termination nor an
interlocutory decree of termination is the same as a final decree. Until
the final decree is issued, an RDP remains in a registered domestic
partnership.
___
|
||||||||||
| Feedback | You were not in a registered domestic partnership if your registered domestic partnership was legally terminated under a final decree of dissolution. Neither a petition for termination nor an interlocutory decree of termination is the same as a final decree. Until the final decree is issued, an RDP remains in a registered domestic partnership. | ||||||||||
| 378 |
The 2015 SDI (or VPDI) limit is
___
|
||||||||||
| Feedback | The 2014 SDI (or VPDI) limit is $101,636. However, for 2015 the SDI taxable wage limit amount is $104,378. | ||||||||||
| 379 |
A registered domestic partner is a person who has filed a
Declaration of Domestic Partnership with the California Secretary of
State.
___
|
||||||||||
| Feedback | A registered domestic partner is a person who has filed a Declaration of Domestic Partnership with the California Secretary of State. | ||||||||||
| 380 |
You must be entitled to claim a dependent exemption
credit for your parent to be head of household. That is
___
|
||||||||||
| Feedback | You must be entitled to claim a dependent exemption credit for your parent to be head of household. That is true if your parent meets the requirements of a qualifying relative. That is also true if you have paid more than half the cost of keeping up a home that was your parent's main home for the entire year. Your parent's main home could have been his or her own home or any other living accommodation. | ||||||||||
| 381 |
For 2015, you were married or an RDP at the end of the
year if
___
|
||||||||||
| Feedback | For 2015, you were married or an RDP at the end of the year if you were married, of course. You are not considered married at the end of 2015 if you received a domestic partnership, or you filed a Notice of Termination of Domestic Partnership with the California Secretary of State and the six-month waiting period for the notice to become final has passed. You are are considered married if your spouse/RDP died in 2015 and you did not remarry or enter into another registered domestic partnership. | ||||||||||
| 382 |
In meeting the residency test, a temporary absence may be
for all of the following, except:
___
|
||||||||||
| Feedback | In meeting the residency test, a temporary absence may be due to illness, education, business vacation or military service. An extended absence can also due to incarceration. | ||||||||||
| 383 |
To qualify for head of household filing status, your
qualifying relative's gross income must be less than the federal
exemption amount for the year in question.
___
|
||||||||||
| Feedback | To qualify for head of household filing status, your qualifying relative's gross income must be less than the federal exemption amount for the year in question. | ||||||||||
| Copyright © 2015 [Hera's Income Tax School]. All Annual Filing Season Program rights reserved. | |||||||||||
| Revised: 07/27/15 | |||||||||||
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