This course provides an overview of the tax benefits available to those pursuing higher education, including changes brought about by the 2010 Job Creation Act. Some of the breaks covered encourage saving for college and others help defray the cost of paying for it. Some breaks can be used in combination; others are mutually exclusive. Education Tax Incentives explains all of the 11 major tax incentives for higher education.
Final Exam > Results Page
Final Exam > Results Page
final exam score:
80%
Question 1
Correct
In 2011, Rachel Lindsey contributes $40,000 to a qualified tuition program for her grandson, Walter. As a result of her contribution:
(You Answered) (Correct Answer) A gift tax return must be filed, although Rachel will owe no gift tax
A gift tax return must be filed and Rachel will owe gift tax
No gift tax return needs to be filed
No gift tax return is filed. Rachel reports the $40,000 on her income tax return.
Question 2
Correct
The American Opportunity tax credit modifies the provisions of:
(You Answered) (Correct Answer) The Hope scholarship credit
The Lifetime Learning credit
Coverdell ESAs
Qualified tuition plans
Question 3
Correct
A qualified tuition program is one in which:
(You Answered) (Correct Answer) Contributions are used to guarantee payment of state tuition.
Contributions are limited to $2,000 per student per year.
The contributions are deductible for federal income tax purposes.
The withdrawals from the plan are 100% taxable.
Question 4
Correct
Which of the following expenses may not be used to claim the American Opportunity tax credit?
Tuition
(You Answered) (Correct Answer) Room and board
Textbooks
A school computer technology fee
Question 5
Correct
In 2011, Milton Megabucks makes a cash gift to his grandson Milton III of $13,000. Milton has long since utilized his unified credit against gift tax and is not interested in making taxable gifts. Milton may make an additional tax-free gift to Milton III by paying which of Milton III's expenses?
(You Answered) (Correct Answer) Only college tuition, provided it is paid directly to the colleges
Only reasonable living expenses while Milton III is enrolled in college
Both of the above, plus necessary travel expenses from Milton III's home to the college
A travel trip to Europe for Milton III’s education
Question 6
Incorrect
Betty Bookkeeper is pursuing her MBA. Betty received in 2011 a partial tax free scholarship, which lowered the amount of her out-of-pocket tuition to $300. In 2011, Betty paid the following expenses:\r\rTuition: $1,500 \rStudent Health Insurance: 150 \rStudent Activity Fees: 15 \rRoom and Board: 3,000 \rBooks: 450\r\rWhat is the total amount of expenses that qualify for the above-the-line deduction?
$5,115
$2,115
(You Answered) $1,950
(Correct Answer) $1,500
Question 7
Incorrect
Tom and Cynthia Smith are married and have two children, Christopher and Brittany. In 2011, Tom and Cynthia's MAGI on their joint income tax return is $150,000. What is the maximum contribution amount that Tom and Cynthia can make to each child’s Coverdell ESA?
$0
(Correct Answer) $2,000
$1,000
(You Answered) $ 4,000
Question 8
Correct
Howard Harrison graduated from college in May 2005. He started paying his student loans six months later. Howard earns $50,000 per year. He made student loan payments of $4,014 per year in 2008 and 2009. The following is the principal and interest Howard has paid on his student loan: \r\r 2008 2009 \rPrincipal $1,259 $1,364 \rInterest $2,755 $2,650 \rTotal $4,014 $4,014 \r\rHow much can Howard deduct for student loan interest in 2008 and 2009?
$1,500 in 2008; $2,000 in 2009
(You Answered) (Correct Answer) $2,500 in 2008; $2,500 in 2009
$2,500 in 2008; $2,000 in 2009
$2,000 in 2008; $1,500 in 2009
Question 9
Correct
Unless it is extended, which of the following programs expires on December 31, 2011?
(You Answered) (Correct Answer) Above-the-line deduction for higher education
Coverdell education savings accounts
American Opportunity tax credit
Deductibility of student loan interest
Question 10
Correct
Tom Taxpayer takes an above-the-line deduction for his $5,000 contribution to his daughter Tammy’s college tuition. Tammy’s college tuition for the year is $50,000. As a result of the deduction, which of the following is Tammy ineligible for?
A $10,000 tax-free withdrawal from a qualified tuition plan
A $10,000 tax-free scholarship from the college
(You Answered) (Correct Answer) A $2,500 American Opportunity credit
A $15,000 gift tax-free payment of tuition by Tammy’s grandmother, Tillie