Please read IRS Publication 17 pages 77 through 81 for the following questions.

1. Look at the Form 1040A you prepared for John Watson. What is the amount on Form 1040A, Line 14b?

a. $ 11,600.
b. $ 23,200.
c. $ -0-. 
d. None of the above.

2. Look at the Form 1040A you prepared for John Watson. What is the amount on Form 1040A, Line 46?

a. $ 135.00
b. $ 3,437.
c. $ 1,697. 
d. None of the above.

3.  To find out whether or not any of your social security benefits are taxable, compare the base amount for your filing status with the total of:

a. One-half of your benefits.
b. all your other income, including tax-exempt interest.
c. Interest from qualified U.S. savings bonds.
d. both a and b are correct.

a. partly taxable.
b. totally taxable
c. not be taxable at all.
d. both a and b are correct.

5. If your filing status is single, head of household, or qualifying widow (er), your base amount is:

a. $ 25,000
b. $ 32,000
c. $ 34,000
d. $ 44,000

6. If you are married filing separately and lived apart from your spouse for all of 2007, your base amount is

a. $ 25,000
b. $ 32,000.
c. $ 34,000.
d. $ 44,000.

7. If you are married filing jointly, your base amount is 

a. $ 25,000.
b. $ 32,000.
c. $ 34,000.
d. $ 44,000.

8. If you are married filing separately and lived with your spouse at any time during tax year 2007, your base amount is:

a. $ 25,000.
b. $ 32,000.
c. $ 34,000.
d. $ -0-.

9. You and your spouse (both over age 65) are filing a joint return for 2007, and you both receive social security benefits during the year. In January 2008, you received a Form SSA-1099 showing net benefits of $7,700 in box 5.  Your spouse received a Form SSA-1099 showing net benefits of $2,400 in box 5. You also received a taxable pension of $18,000 and interest income of $450.  You did not have any tax-exempt interest income. How much of your social security benefits are taxable for tax year 2007?

a. $ -0-.
b. $10,100.
c. $ 7,700.
d. $ 2,400.

10. You and your spouse (both over age 65) are filing a joint return for 2007, and you both receive social security benefits during the year. In January 2007, you received a Form SSA-1099 showing net benefits of $6,600 in box 5.  Your spouse received a Form SSA-1099 showing net benefits of $2,400 in box 5. You also received a taxable pension of $23,000 and interest income of $500.  You did not have any tax-exempt interest income. How much of your social security benefits are taxable for tax year 2007?

a. $ -0-.
b. $6,600.
c. $ 2,400.
d. $ 500.

11. If the total of one-half of your benefits and all of your other income is more than $ 34,000 ($44,000 if you are married filing jointly), up to what percentage of your benefits can be taxable?

a. 50 %
b. 85 %
c. 15 %
d.  0 %

12. If you are married filing separately and lived with your spouse at any time during 2007, up to what percentage of your benefits can be taxable?

a. 50 %
b. 85 %
c. 15 %
d.  0 %

13. Joe and Betty file a joint return on Form 1040 for tax year 2007. Joe is a retired railroad worker and in tax year 2007 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Joe's Form RRB-1099 shows $10,000 in box 5. Betty is a retired government worker and receives a fully taxable pension of $38,000.  They had $2,300 in interest income plus interest of $200 on a qualified U.S. savings bond. The savings bond interest qualified for the exclusion. What are their taxable social security benefits?

a. $ 13,500
b. $ 8,500
c. $ 5,000
d. None of the above

14.  In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) your received.  If this occurred, your net benefits in box 5 will be a negative figure and

a. all of your benefits will be taxable.
b. none of your benefits will be taxable.
c. some of your benefits will be taxable.
d. you have to amend your return.

15.  John and Mary file a joint return for 2007.  John received Form SSA-1099 showing $3,000 in box 5.  Mary also received Form SSA-1099 and the amount in box 5 was ($700). Please note that a number in () means a negative number. How much will John and Mary use as the amount of their net benefits when figuring if any of their combined benefits are taxable or not?

a. $ 700.
b. $ 2,500.
c. $ 2,300.
d. $ 3,000.

16. If the total amount shown in box 5 of all your Forms SSA-1099 and RRB-1099 is a negative figure,

a. you cannot take any deduction for it.
b. None of your benefits will be taxable.
c. you have to report the amount as income in this year because you cannot go back to a previous year to make adjustment.
d. none of the above are correct.

For the following questions use IRS Publication 524.

17. If you were under age 65, to be a qualified individual for the credit for the elderly and the disabled you must have

a. retired on permanent and total disability.
b. received taxable disability income for tax year 2007.
c. not have reached mandatory retirement age on January 1, 2007. 
d. all of the above.

18. If you and your spouse did not live in the same household at any time during the tax year, you are still able to take the credit for the elderly and the disabled and

a. you do not need to file a return.
b. you can file either joint or separate return.
c. you must file a joint return.
d. you must each file as single.

19.  You can file as head of household and qualify to take the credit for the elderly and the disabled even if your spouse lived with you during the first 6 months of the year. Which of the following is not one of the tests that you need to meet?

a. you file a separate return
b. you paid more than half the cost of keeping up your home during the tax year.
c. Your home was the main home of your child, stepchild, or eligible foster child for more than half the year.
d. Your child must pass the gross income test.

20. If you are under the age of 65, you can qualify for the credit only if you are retired on permanent and total disability. You are retired on permanent and total disability if:

a. you were permanently and totally disabled when you retired.
b. you retired on disability before the close of the tax year.
c. you have stopped working because of your disability.
d. all of the above.

21.  You are permanently and totally disabled if you

a. cannot engage in any substantial and gainful activity because of your physical or mental condition.
b. cannot sit or stand for a long period of time.
c. cannot take care of your children because babysitting fatigues you.
d. none of the above.

22.  Alicia, a sales clerk, retired on disability. She is 67 years old and now works as a full-time babysitter for the minimum wage. Alicia

a. cannot take the credit because she is able to engage in substantial and gainful activity.
b. can take the credit because babysitting is not considered a real job and it is not a substantial and gainful activity.
c. can take the credit because the minimum wage is not a substantial wage.
d. can claim the credit because it does not matter that she works or not as long as she has retired on disability.

23. Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. If a person that retires on disability accepted sheltered employment, this employment

a. disqualifies him/her from any further disability benefits.
b. disqualifies him/her from getting the credit for the elderly and the disabled.
c. is proof of the person's ability to engage in substantial and gainful activity.
d. is not  proof of the persons ability to engage in substantial and gainful activity.

24. If you are under the age of 65, you must have a completed statement certifying that you were permanently and totally disabled on the date you retired. This statement must be completed and signed by

a. your neighbor who knows you very well.
b. your co-workers at the company you last worked for.
c. your physician
d. your leader from your congregation who would not lie.

25. Once you have a certification of your total disability on the date you retired, you must

a. mail it in with your return.
b. keep it for your records.
c. make sure your preparer has a copy in his files.
d. fax a copy to the IRS before you file your return.

26. If the Department of Veterans Affairs certifies that you are permanently and totally disabled, you can substitute the physician's statement you are required to keep with form

a. VA Form 21-0172
b. VA Form 27-0938
c. VA Form 59-6078
d. VA Form 01-0139

27. If you are under the age of 65, you can qualify for the credit only if you have taxable disability income. Disability income must meet which of the following requirement (s)?

a. If must be paid under your employer's accident or health plan or pension plan.
b. It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability.
c. both a and b are requirements to be met.
d. none of the above are requirements to be met.

28. For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive

a. before you reach mandatory retirement age.
b. after you reach mandatory retirement age.
c. before the age set by your employer at which you have to retire.
d. after you have become totally and permanently disabled.

29. To figure the credit for the elderly and the disabled use

a. Schedule R (Form 1040) or Schedule 3 (Form 1040A).
b. Schedule V (Form 1040) or Schedule 2 (Form 1040A).
c. Schedule A (Form 1040) or Schedule 1 (Form 1040A).
d. Schedule C (Form 1040) or Schedule B (Form 1040A).

30. If you want the IRS to figure your credit, attach Schedule R to your return and enter ___ on the dotted line next to line 48 of Form 1040 or attach Schedule 3 and enter ____ on line 30 of Form 1040A.

a. Please complete / Please complete
b. CFE / CFE
c. NAP / NAP
d. Prepare for me / Prepare for me

31. Look at the Form 540A you prepared for John Watson. What is the amount on Form 540A, Line 14c?

a. $ 11,600.
b. $ -0-.
c. $ 23,200. 
d. None of the above.

32. Look at the Form 540A you prepared for John Watson. What is the amount of refund or amount owed on Form 540A?

a. refund $ 70.
b. owe $ 28.
c. owe $ 823. 
d. owe $ 228.

33. For California, enter the amount of U.S. social security benefits or equivalent tier 1 railroad retirement benefits reported on federal Form 1040a, line 14b or Form 1040, line 20b.

True False

34. For California, Tier 1 (non-social security equivalent) and Tier 2 railroad retirement benefits included in the amount on federal Form 1040a, line 12b or Form 1040, line 16b.

True False