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Review Questions
Question  
1 of 100 When beginning your business, you must decide what form of business entity to establish because your form of business determines which reports you must file. Which one of the following business structures is fairly new structure allowed by state stature?
  • A. Sole proprietorship. 
  • B. Partnership. 
  • C. Limited Liability Company (LLC).
  • D. S corporation. 
2 of 100
Tax advisors should provide clients with the highest quality representation concerning federal tax issues by adhering to best practices in providing advice and in preparing or assisting in the preparation of a submission to the Internal Revenue Service. Best practice includes
  • A. Advising a client to take a position on a document, affidavit or other paper submitted to the Internal Revenue Service. 
  • B. Advising a client to submit a document, affidavit or other paper to the Internal Revenue Service even if this impedes the administration of the federal tax laws. 
  • C. Establishing the facts, determining which facts are relevant, evaluating the reasonableness of any assumptions or representations, relating the applicable law to the relevant facts, and arriving at a conclusion supported by the law and the facts.
  • D. Advising a client to take any step necessary to avoid the payment of tax at all cost. 
3 of 100
The self-employment tax rules apply
  • A. Only if you are old enough. 
  • B. If you are not already receiving Social Security or Medicare. 
  • C. Both A and B above. 
  • D. None of the above.
4 of 100
You may be eligible to file as Head of Household if the individual who qualifies you for this filing status is born or died during the year. You are considered to have provided more than half of the cost of keeping up a home for this individual if
  • A. That was the individual's main home for more than half of the period during which the qualifying individual lived. 
  • B. The qualifying individual lived for at least 6 months.
  • C. You spent a substantial amount that would be considered more than half if the individual had lived. 
  • D. None of the above.
5 of 100
Both you and your spouse must include all of your income, exemptions, and deductions on your tax return. In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint tax return. The type of relief available is
  • A. Innocent spouse relief. 
  • B. Separation of liability. 
  • C. Equitable relief. 
  • D. Any of the above. 
6 of 100
You can change your filing status by filing an amended tax return using Form 1040X. If you or your spouse (or both) file a separate tax return, you generally
  • A. Can change to a joint tax return any time within 3 years from the due date of the separate tax return or returns. 
  • B. Cannot choose to file separate tax returns for that year after the due date of the tax return. 
  • C. Can have your personal representative change from a joint return to a separate tax return.
  • D. None of the above. 
7 of 100
You may be eligible to file as head of household if the individual who is born or dies during the year qualifies you for this filing status and
  • A. You must have provided more than half of the cost of keeping up a home that was the individual's main home only if the individual lived for more than half of the year. 
  • B. You must have provided more than half of the cost of keeping up a home that was the individual's main home for the period during which the individual lived. 
  • C. Both A and B above. 
  • D. None of the above. 
8 of 100
The foreign earned income exclusion
  • A. Remains the same at $100,100 for tax year 2014. 
  • B. Rises to $99,200 for tax year 2014. 
  • C. Lowers to $97,600 for tax year 2014.
  • D. None of the above. 
9 of 100
You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. This deduction only affects
  • A. Your income tax. 
  • B. Your net earnings from self-employment.
  • C. Your self-employment tax. 
  • D. All of the above. 
10 of 100
You must give the payer of your interest income your correct social security number. If you do not, you may be subject to
  • A. A penalty. 
  • B. Backup withholding.
  • C. Both A and B above. 
  • D. None of the above. 
11 of 100
EITC is a refundable tax credit meaning you could qualify for a tax refund
  • A. Even if you did not have a valid Social Security Number. 
  • B. Even if your spouse does not have a valid Social Security Number. 
  • C. Even if you did not have federal income tax withheld. 
  • D. Even if you do not have any investment income. 
12 of 100
Internal Revenue Code and related regulations set out the EITC Due Diligence requirements and the penalties for failure to comply with them. Additionally,
  • A. There are four due diligence requirements. 
  • B. Generally, if you prepare EITC claims, you must ask all the questions required on Form 8867.
  • C. Ask additional questions when the information your client gives you seems incorrect, inconsistent or incomplete. 
  • D. All of the above. 
13 of 100
Generally, you must include in gross income everything you receive in payment for personal services such as
  • A. Wages, salaries and commissions.
  • B. Commissions, fees and or tips. 
  • C. Fringe benefits and stock options. 
  • D. Any of the above. 
14 of 100
If you are single dependent, you must file a return if
  • A. Your earned income was more than $1,000. 
  • B. Your earned income was more than $6,100. 
  • C. Your gross income was more than the larger of $1,000 or your earned income up to $5,750 plus $350.
  • D. Any of the above. 
15 of 100
A penalty will not be imposed on any part of an underpayment if there was reasonable cause for your position and you acted in good faith in taking that position. However, if you failed to keep proper books and records or failed to substantiate items properly, you
  • A. Can avoid the penalty by disclosure.
  • B. Cannot avoid the penalty by disclosure. 
  • C. Cannot file Form 8275-R.
  • D. Should just pay the preparer penalty. 
16 of 100
If more than one filing status applies to you, choose the one that will give you
  • A. More deductions and credits. 
  • B. The lowest tax.
  • C. A higher refund. 
  • D. All of the above. 
17 of 100
Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. As a result,
  • A. Health insurance coverage that is not recognized by the Department of Health & Human Services as minimum essential coverage will still qualify. 
  • C. You will pay for coverage when you file your 2014 federal income tax return in 2015. 
  • C. You will report minimum essential coverage, report exemptions, or make any individual shared responsibility payment when you file your 2014 federal income tax return in 2015. 
  • D. All of the above.
18 of 100

In order to avoid certain penalties, taxpayers may

  • A. Not need to increase their tax withholding or estimated taxes in association with the NIIT. 
  • B. Send an additional tax payment by January 31st in consideration of the NIIT. 
  • C. Need to increase their income tax withholding or estimated taxes to consider any additional tax liability associated with the NIIT. 
  • D. None of the above.
19 of 100
Even if you do not otherwise have to file a tax return, you should file
  • A. To get a refund of any federal income tax withheld. 
  • B. If you are eligible for the Earned Income Credit. 
  • C. If you are eligible for a refundable credit for prior year minimum tax. 
  • D. Any of the above.
20 of 100
When figuring your estimated tax for the current year,
  • A. You can use the worksheet in Form 1040-ES to figure your estimated tax. 
  • B. Use your prior year's federal tax return as a guide. 
  • C. It may be helpful to use your income, deductions, and credits for prior year as a starting point.
  • D. Any of the above.
21 of 100
If you hold the asset for more than one year before you dispose of it, your capital gain or loss is
  • A. Short term
  • B. Long term.
  • C. Not a capital gain.
  • D. None of the above.

22 of 100

 
A scholarship or fellowship is tax free if
  • A. You are a candidate for a degree at an eligible educational institution. 
  • B. You use the scholarship or fellowship to pay qualified education expenses. 
  • C. Both A and B above. 
  • D. None of the above. 
23 of 100
If you do not provide information regarding the care provider, you
  • A. May not be eligible for the credit if you don't show the required information. 
  • B. May still be eligible for the credit if you can show that you exercised due diligence in attempting to provide the required information. 
  • C. May receive a penalty for not providing the information on the tax return. 
  • D. None of the above. 
24 of 100
The following is a types of deductible non-business tax.
  • A. State, local and foreign income taxes. 
  • B. State, and local personal property taxes. 
  • C. State and local general sales taxes. 
  • D. All of the above. 
25 of 100
To be deductible, charitable contributions
  • A. Must be made to qualified organizations. 
  • B. May include payments made to individuals if they are going through a hardship. 
  • C. Must be over a certain amount.
  • D. All of the above.
26 of 100
For self-employment income earned in 2013 and 2014, the self-employment tax rate is
  • A. 10% 
  • B. 15% 
  • C. 15.3%
  • D. 20% 
27 of 100
Your father lives with you and receives 25% of his support from social security, 40% from you, 24% from his brother (your uncle), and 11% from a friend.
  • A. You can claim the exemption for your father because you contributed more than anyone else. 
  • B. Either you or your uncle can take the exemption for your father if the other signs a statement agreeing not to take the exemption.
  • C. You can claim the exemption for your father because your father lived with you. 
  • D. No one can claim your father as a dependent because he received his own income. 
28 of 100
These are entities (colleges, financial institutions, accounting firms, etc.) who are authorized by the IRS to assist applicants in obtaining ITINs.
  • A. Acceptance Agents. 
  • B. IRS walk-in offices.
  • C. Tax preparer office. 
  • D. All of the above. 
29 of 100
The expenses qualifying for the computation of the child and dependent care credit must be reduced by
  • A. The amount of any dependent care benefits provided by your employer that you include in gross income.
  • B. Up to $3,000. 
  • C. The amount of any dependent care benefits provided by your employer that you exclude from gross income. 
  • D. None of the above.
30 of 100
If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you
  • A. Are considered unmarried only if you did not file joint returns for earlier years. 
  • B. Are considered unmarried even if you filed joint returns for earlier years. 
  • C. Are considered married if you filed joint returns for previous years and you don't need to file amended returns.
  • D. You have a choice to file single, married filing jointly or married filing separate. 
31 of 100
In addition to deducting your cash contributions, you generally can deduct
  • A. The fair market value of any other property you donate to any needy organization.
  • B. The amount that it would take for you to replace the item new. 
  • C. The fair market value of any other property you donate to qualified organizations.
  • D. Only A and B above.
32 of 100
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 credit allowable shall pay a penalty of
  • A. $500 for each such failure. 
  • B. $1,500 for each such failure. 
  • C. 6 month jail time due diligence failure. 
  • D. None of the above.
33 of 100
You generally are not an employee unless you are
  • A. Subject to the will and control of the person who employs you as to what you are to do and how you are to do it. 
  • B. Have your own business establishment. 
  • C. Get a form 1099 misc. form. 
  • D. Any of the above. 
34 of 100
Capital gains may be taxed at rates greater than 15% when
  • A. The taxable part of a gain from selling section 1202 qualified small business stock is taxed at a maximum 28% rate. 
  • B. Net capital gains from selling collectibles (like coins or art) are taxed at a maximum 28% rate. 
  • C. The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate. 
  • D. Any of the above. 
35 of 100
Generally, if your primary purpose is income or profit and your are involved in the rental activity with continuity and regularity, then
  • A. Your rental activity is a business. 
  • B. Your rental activity is not for profit. 
  • C. Your rental activity is not a taxable entity. 
  • D. None of the above. 
36 of 100
This applies to individuals, estates and trusts that have certain investment income above applicable threshold amounts.
  • A. The 3.8 percent Net Investment Income Tax.
  • B. The 15.3 percent Net Investment Income Tax 
  • C. The .09 percent Net Investment Income Tax
  • D. None of the above. 
37 of 100
If you began receiving annuity payments from a qualified retirement plan after July 1, 1986 and before November 19, 1996, you generally could have chosen to use either the Simplified Method or the General Rule to figure the tax-free part of the payments. If you receive annuity payments from a nonqualified retirement plan
  • A. You must use the General Rule. 
  • B. You must figure the taxable and tax-free parts of your annuity payments using life expectancy tables prescribed by the IRS. 
  • C. Both A and B above. 
  • D. None of the above. 
38 of 100
The director of the Office of Professional Responsibility must inform the EA enrollment applicant as to the reason for any denial of an applicant for enrollment. The applicant may
  • A. Petition to retake the EA examination to be reconsidered. 
  • B. Within 30 days after receipt of the notice of denial of enrollment, file a written appeal of the denial with the Secretary of the Treasury or his or her delegate. 
  • C. Be granted temporary recognition to practice pending a determination as to whether enrollment to practice should be granted. 
  • D. Within 6 months after receipt of the notice of denial of enrollment, file a written appeal of denial. 
39 of 100
The tuition and fees deduction can reduce the amount of your income subject to tax by up to
  • A. $2,500 
  • B. $3,500 
  • C. $4,000 
  • D. None of the above. 
40 of 100
For estates and trusts, the 2013 net investment income tax threshold is
  • A. $10,250 
  • B. $11,950
  • C. $12,990 
  • D. None of the above. 
41 of 100
Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals
  • A. Who work. 
  • B. Who work for themselves. 
  • C. Who own well established businesses 
  • D. All of the above. 
42 of 100
If your spouse died during the year and you did not remarry before the end of the year, your filing status will be
  • A. Married filing jointly. 
  • B. Qualifying Widow(er) with qualifying child. 
  • C. Single.
  • D. Any of the above. 
43 of 100
You cannot claim the tuition and fees deduction if
  • A. Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). 
  • B. You were a nonresident alien for any part of the year and did not elect to be treated as a resident alien for tax purposes. 
  • C. You or anyone else claims an education credit for expenses of the student for whom the qualified education expenses were paid. 
  • D. Any of the above.
44 of 100
An individual who prepares and signs a taxpayer's tax return as the preparer, or who prepares a tax return but is not required (by the instructions to the tax return or regulations) to sign the tax return may represent the taxpayer before revenue agents, customer service representatives or similar officers and employees of the Internal Revenue Service during an examination of the taxable year or period covered by that tax return,
  • A. And this right permits such individual to represent the taxpayer before appeal officers. 
  • B. And this right permits such individual to represent the taxpayer before employees of the Internal Revenue Service or the Department of Treasury. 
  • C. But, this right does not permit such individual to represent the taxpayer before the appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service. 
  • D. Is subject to rules of general applicability regarding standards of conduct and other matters as the Director of the Office of Professional Responsibility prescribes. 
45 of 100
The following statement is true regarding social security benefits.
  • A. Your income and filing status affect whether you must pay taxes on your social security. 
  • B. If your total income is more than the base amount for your filing status, then some of your benefits may be taxable. 
  • C. If Social Security was your only source of income, your benefits may not be taxable and you may not need to file a federal income tax return. 
  • D. All of the above. 
46 of 100
A shareholder of a corporation may be deemed to receive a dividend if
  • A. The corporation pays the debt of its shareholder. 
  • B. The shareholder receives services from the corporation.
  • C. The shareholder is allowed the use of the corporation's property. 
  • D. Any of the above. 
47 of 100
A taxpayer who is married cannot file using head of household filing status. However,
  • A. A married taxpayer may use the head-of-household filing status if the taxpayer lives apart from his or her spouse for the first 6 months of the year.
  • B. A married taxpayer may use the head of household filing status if the taxpayer provides more than half of the support for a dependent regardless of where the dependent lived. 
  • C. A same-sex spouse can file using the head of household filing status if he or she can be considered unmarried for tax purposes and lives apart from his or her spouse for the last 6 months of the tax year plus other requirements. 
  • D. None of the above. 
48 of 100
To file your annual business tax return, you will need to use _________ to report your income or loss from a business your operated or a profession you practiced as a sole proprietor.
  • A. Schedule C or Schedule C-EZ 
  • B. Schedule E 
  • C. Both A and B above. 
  • D. Schedule A
49 of 100
Complete and submit Form 8867 for all paper and electronic tax returns and for all other EITC claims for
  • A. Claims with a qualifying child. 
  • B. Claims with no qualifying child. 
  • C. Both A and B above. 
  • D. Only for claim with qualifying children.
50 of 100
April 15 of each year is the due date for filing your federal individual income tax return if your tax year ends on December 31. Also,
  • A. Your return is considered filed timely if the envelope is properly addressed and postmarked no later than April 15. 
  • B. If you use a fiscal year your return is due on or before the April 15th. 
  • C. If the due date falls on a Saturday, Sunday, or legal holiday, the due date will be the business day before the April 15th.
  • D. All of the above. 
51 of 100
You must fill out Form 8283, and attach it to your return, if your deduction for a noncash contribution is
  • A. More than $5,000.
  • B. More than $10,000.
  • C. More than $500.
  • D. None of the above.
  
52 of 100
What is the federal standard deduction amount for a dependent who earned $4,000 from her job?
  • A. $4,350
  • B. $950
  • C. $4,000
  • D. $5,950
53 of 100
A qualified student loan is a loan you took out solely to pay qualified education expenses that were
  • A. For you, your spouse, or a person who was your dependent when you took out the loan.
  • B. Paid or incurred within a reasonable period of time before or after you took out the loan.
  • C. For education provided during an academic period for an eligible student.
  • D. All of the above. 
  
54 of 100
You may be able to claim the child and dependent care credit if you paid work-related expenses for
  • A. Only the care of children under 13 years old.
  • B. Your dependent children regardless of age.
  • C. The care of a qualifying individual. 
  • D. Any of the above. 
55 of 100
A practitioner may take acknowledgments, administer oaths, certify papers, or perform official acts as a notary public with respect to any matter administered by the Internal Revenue Service.
  • True
  • False
  
56 of 100
Some persons are not eligible for the standard deduction. Your standard deduction is zero and you should itemize any deductions you have if
  • A. Your filing status is married filing separately, and your spouse itemizes deductions on his or her tax return.
  • B. You are filing a tax return for a short tax year because of a change in your annual accounting period. 
  • C. You are a non-resident or dual-status alien during the year.
  • D. Any of the above.
  
57 of 100
If you are married or considered married, you and your spouse can file any of the following, except
  • A. Single. 
  • B. Married filing Jointly.
  • C. Married Filing Separately. 
  • D. Any of the above. 
  
58 of 100
If you use part of your home for business, you may be able to deduct expenses for the business use of your home and this deduction is available for
  • A. Only for homeowners. 
  • B. Only for renters. 
  • C. Only for designated areas and districts.
  • D. None of the above. 
59 of 100
A TIN must be on a withholding certificate if the beneficial owner is claiming
  • A. Tax treaty benefits (other than for income from marketable securities). 
  • B. Exemption for effectively connected income.
  • C. Exemption for certain annuities.
  • D. Any of the above.
60 of 100
This may be paid by regulated investment companies (eg mutual funds, exchange traded funds, money market funds, etc.) and real estate investment trusts (REITs) and are always reported as long-term.
  • A. Capital gain distribution 
  • B. Common Stock 
  • C. Preferred Stock 
  • D. Return of Capital. 
61 of 100
BFS will send you a notice if an offset occurs. The notice will reflect
  • A. The original refund amount. 
  • B. Your offset amount.
  • C. The name, address and telephone number of the agency receiving the payment. 
  • D. All of the above. 
  
62 of 100
A preparer that is also a financial institution, but has not made a loan to the taxpayer on the basis of the taxpayer’s anticipated refund, may
  • A. Cash a refund check and remit all of the cash to the taxpayer.
  • B. Accept a refund check for deposit in full to a taxpayer’s account provided the bank does not initially endorse or negotiate the check. 
  • C. Endorse a refund check for deposit in full to a taxpayer’s account pursuant to a written authorization of the taxpayer.
  • D. Any of the above. 
63 of 100
There is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Additionally,
  • A. Student loan interest is interest you paid during the year on a qualified student loan. 
  • B. Student loan interest is only interest that are required interest payments.
  • C. This deduction can reduce the amount of your income subject to tax by up to $4,500. 
  • D. All of the above. 
64 of 100
If your spouse died during the tax year, you are considered married for the whole tax year for filing status purposes. If you remarried before the end of the tax year, you must file a joint tax return with your new spouse and
  • A. A joint tax return with your deceased spouse. 
  • B. Your deceased spouse's filing status is married filing separately. 
  • C. Your deceased spouse's filing status is single. 
  • D. Your deceased spouse does not file a tax return because a fiduciary is filed for her.
65 of 100
If you claim a deduction for a contribution of noncash property worth more than ______, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B.
  • A. More than $5,000. 
  • B. More than $10,000.
  • C. More than $500. 
  • D. None of the above. 
66 of 100
This is prepaid interest and may be deductible as home mortgage interest, if you itemize deductions on Schedule A (of Form 1040).
  • A. Home mortgage interest.
  • B. Points 
  • C. County property tax 
  • D. All of the above. 
  
67 of 100
You may benefit from itemizing your deductions on Form 1040, Schedule A if you
  • A. Had large unreimbursed employee business expenses. 
  • B. Had large uninsured casualty or theft losses, or made large charitable contributions.
  • C. Had large uninsured medical and dental expenses. 
  • D. Any of the above. 
68 of 100
These are distributions of property a corporation pays you because you own stock in that corporation.
  • A. Interest 
  • B. Dividends 
  • C. An estate or trust. 
  • D. Any of the above. 
69 of 100
Incompetence or disreputable conduct for which a practitioner may be sanctioned includes
  • A. Willfully disclosing or otherwise using a tax return or tax return information in a manner authorized by the Internal Revenue Service. 
  • B. Failing to sign a tax return prepared by the practitioner when the practitioner's signature is not required by the federal tax laws.
  • C. Contemptuous conduct in connection with the practice before the Internal Revenue Service, including the use of abusive language or making false accusations or statements, knowing them to be false. 
  • D. Giving false or misleading information to the Department of the Treasury or any officer or employee thereof, or to any tribunal authorized to pass upon federal tax matters, when not knowing the information to be false or misleading. 
  
70 of 100
If you received Social Security benefits and other income, your benefits will not be taxable
  • A. If your MAGI is more than the base amount for your filing status. 
  • B. If you MAGI is less than the base amount for your filing status. 
  • C. Unless your MAGI is more than the base amount for your filing status.
  • D. None of the above. 
  
71 of 100
To qualify for continuing tax education credit for an enrolled agent, a course of learning must
  • A. Be a qualifying program designed to enhance professional knowledge in federal taxation or federal taxation related matters. 
  • B. Be a qualifying program consistent with the Internal Revenue Code and effective tax administration. 
  • C. Be sponsored by a qualifying tax education sponsor. 
  • D. All of the above.
  
72 of 100
An Employer Identification Number (EIN) is also known as a federal tax identification number, and is used to
  • A. Report your tip income on your tax return.
  • B. Report estate and trust income on Form 1041. 
  • C. Identify a business entity. 
  • D. Both B and C above. 
  
73 of 100
If you receive pension or annuity payments before age 59 1/2, you may be subject to an additional 10% on early distributions unless the distribution was made
  • A. As part of a series of substantially equal periodic payments from a qualified plan that begins after your separation from service. 
  • B. Because you are totally and permanently disabled or made on or after the death of the plan participant or contract holder. 
  • C. From a qualified retirement plan after your separation from service and made in or after the year you reached age 55. 
  • D. All of the above. 
  
74 of 100
If the lump-sum distribution includes employer securities and an amount is reported in box 6 of your Form 1099-R for net unrealized appreciation (NUA), the NUA is generally
  • A. Subject to tax when you sell the securities. 
  • B. Subject to tax at the end of each year. 
  • C. Include the income in year of distribution. 
  • D. Both A and C above. 
  
75 of 100
For federal tax purposes, individuals of the same sex are married if
  • A. They were lawfully married in a state or foreign country whose laws authorize the marriage as long as the state or foreign country in which they now live recognizes the same-sex marriage. 
  • B. They were lawfully married in a state or foreign country whose laws authorize the marriage even if the state or foreign country in which they now live does not recognize same-sex marriage. 
  • C. They entered into a registered domestic partnership, civil union, or other similar relationship.
  • D. Any of the above.
76 of 100
If you and your child both received benefits, but the check for your child was made out in your name, you
  • A. Must file and report the child's benefits are a nominee.
  • B. Must use only your own portion of the benefits in figuring if any part is taxable to you. 
  • C. Half of the portion that belongs to your child is not used to determine if any of those benefits are taxable to your child. 
  • D. None of the above.
  
77 of 100
Distributions from a traditional IRA are fully or partially taxable in the year of distribution. If you made only deductible contributions,
  • A. Distributions are fully taxable. 
  • B. None of your distributions are taxable. 
  • C. Use Form 5329 to figure the part of the distributions that is taxable.
  • D. None of the above. 
  
78 of 100
The following un-enrolled individual can represent the specific taxpayers before the IRS, provided this individual presents satisfactory identification.
  • A. A family member. 
  • B. An officer of a corporation. 
  • C. An employee representing the employer.
  • D. Any of the above. 
  
79 of 100
A tax favored account or annuity set up in the United States solely for your benefit or the benefit of your beneficiaries.
  • A. IRA 
  • B. Roth IRA 
  • C. Contribution 
  • D. Deduction 
  
80 of 100
A practitioner must, on a proper and lawful request by a duly authorized officer or employee of the Internal Revenue Service, promptly submit records or information in any matter before the Internal Revenue Service
  • A. Always. 
  • B. Only after being authorized by the taxpayer to do so. 
  • C. Unless the practitioner believes in good faith and on reasonable grounds that the records or information are privileged. 
  • D. None of the above. 
  
81 of 100
You can choose this filing status if you are married and both you and your spouse agree to file together. You report your combined income and deduct your combined allowable expenses. You can file using this status even if you had no income or deductions.
  • A. Single 
  • B. Married filing separately.
  • C. Married filing jointly. 
  • D. Head of Household.
  
82 of 100
If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Additionally,
  • A. Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses is less than 2% of your adjusted gross income. 
  • B. An itemized deduction may increase the amount of your income subject to tax.
  • C. Your work-related education expenses may also qualify you for other tax benefits, such as the tuition and fees deduction and the lifetime learning credit.
  • D. All of the above. 
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Penalties and interest continue to accrue until your balance is paid in full. If you are in danger of defaulting on your payment agreement for any reason, contact the IRS immediately. The IRS will generally take enforced collection actions
  • A. Even when an installment agreement is being considered. 
  • B. While an agreement is in effect. 
  • C. For 30 days after a request is rejected or during the period the IRS evaluates an appeal of a rejected or terminated agreement. 
  • D. None of the above. 
  
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Generally, if you are a nonresident alien (other than a resident of Canada or Mexico, or certain residents of India or Korea), you can
  • A. Qualify for only one personal exemption for yourself. 
  • B. Claim exemptions for a spouse. 
  • C. Claim exemption for dependents. 
  • D. All of the above. 
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The annual exclusion for gifts
  • A. Increased to $14,500 for tax year 2014. 
  • B. Decreased to $13,000 for tax year 2014.
  • C. Remains the same at $14,000 for tax year 2014. 
  • D. None of the above.
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Your spouse's uncle who receives more than half of his support from you may be your qualifying relative, even though he does not live with you. If you and your spouse file separate tax returns, your spouse's uncle can be your qualifying relative
  • A. Because the relationship is one that was established by marriage that are not ended by death or divorce. 
  • B. Because he is a brother of your spouse's father or mother. 
  • C. Only if he lives with you all year as a member of your household.
  • D. As long as you and your spouse have not divorced. 
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The exemptions you may be able to take are
  • A. Personal exemptions for yourself and your spouse.
  • B. Exemptions for dependents.
  • C. Both A and B above.
  • D. Personal or business exemptions.
  
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In cases where any part of the understatement of the tax liability is due to a willful attempt by the return preparer to understate the liability, or if the understatement is due to reckless or intentional disregard of the rules or regulations by the tax preparer, the preparer is subject to a
  • A. $5,000 penalty. 
  • B. Penalty of 50% of income derived or to be derived.
  • C. $1,000 penalty. 
  • D. Greater of A or B above. 
  
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A person related to you in any of the following way does not have to live with you all year as a member of you household to meet the member of household or relationship test, except
  • A. Your step-parent.
  • B. A legally adopted child.
  • C. A foster child.
  • D. A foster parent. 
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Capital items, such as furniture, appliances, and cars, that are bought for a person during the year can be included in total support. The following can be considered support you provided.
  • A. You buy a $200 power lawn mower for your 13-year-old child. The child is given the duty of keeping the lawn trimmed. 
  • B. You buy a $150 TV set as a birthday present for your 12-year-old child. The TV set is placed in your child's bedroom.
  • C. You pay $5,000 for a car and register it in your name. You and your 17-year-old daughter use the care equally. 
  • D. All of the above.
  
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The penalty for reckless or intentional disregard of a regulation may be avoided by disclosure only if the position represents a good faith challenge to the validity of the regulation and has a reasonable basis. Generally, the accurate-related penalty of any position of a tax underpayment attributable to negligence or disregard of the rules or regulations is
  • A. 10%
  • B. 20%
  • C. 40% 
  • D. 50% 
  
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Subject to certain limitations, an individual who is not a practitioner may represent a taxpayer before the Internal Revenue Service, even if the taxpayer is not present, provided the individual presents satisfactory identification and proof of his or her authority to represent the taxpayer. Such as in the following situation.
  • A. An individual may represent a member of his or her immediate family. 
  • B. A regular full-time employee of an individual employer may represent the employer. 
  • C. A general partner or a regular full-time employee of a partnership may represent the partnership. 
  • D. All of the above. 
  
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The tax return preparer must
  • A. Keep a copy of the Form 8867 and the EIC calculation worksheet. 
  • B. Verify the identity of the person giving you the return information and keep a record of who provided the information and when information was provided. 
  • C. Keep copies of any documents your client provided that you relied on to determine eligibility for the amount of the EITC. 
  • D. All of the above.
  
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For returns submitted electronically, make sure the setting for including the Form 8867 is not disabled and
  • A. For paper returns, make sure you let your clients know the importance of submitting all the forms you include.
  • B. Make sure to keep a record of the forms you included in the package your give your clients.
  • C. Both A and B above.
  • D. None of the above. 
  
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An Electronic Return Originator (ERO) originates the electronic submission of returns it either prepares or collects from taxpayers who want to e-file their returns. Furthermore,
  • A. The ERO must always identify the paid preparer (if any) in the appropriate field of the electronic record of returns it originates.
  • B. The ERO must enter the paid preparer’s identifying information if it is available.
  • C. EROs may not transmit returns directly to the IRS. 
  • D. All of the above. 
  
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This occurs when you withdraw cash or other assets from one eligible retirement plan and contribute all or part of it, within 60 days, to another eligible retirement plan.
  • A. A distribution.
  • B. A rollover. 
  • C. A contribution 
  • D. None of the above. 
  
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Under Section 2042 of the Small Business Jobs Act, a deduction, for income tax purposes, is allowed to self-employed individuals for
  • A. Net earnings from self-employment.
  • B. Church employee income of $108.28 
  • C. $400 or more.
  • D. The cost of health insurance. 
  
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In order to take the American Opportunity Credit or the Lifelong Learning Credit,
  • A. You, your dependent or a third party pays qualified education expenses for higher education. 
  • B. An eligible student must be enrolled at an eligible educational institution.
  • C. The eligible student is yourself, your spouse or a dependent you list on your tax return.
  • D. All of the above.
  
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The cost of room and board qualifies for the student loan interest deduction.
  • A. The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. 
  • B. The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 
  • C. Only to the extent that it is not more than the greater of A or B above. 
  • D. None of the above.
  
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Deductible personal property taxes are those based only on the value of personal property such as a boat or car. In addition,
  • A. The tax must be charged to you on a yearly basis, even if it is collected more than once a year or less than once a year. 
  • B. The tax must be charged to you on a yearly basis and collected only once a year.
  • C. The tax must be charged by a federal agency to be deductible. 
  • D. None of the above.
  
  Please Note:  If you filled out the answers directly on this page, please print this page or write down the answers before you proceed to submit them by clicking on "Review Questions" link.
   
 

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  Revised: 12/15/14
 

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