▪ Combat zone issues
▪ Military Leave Earning Statements (LES) reporting
▪ Moving expenses"
Final Exam
87%
1
All of the following types of income received by members of military are taxable except:
Training duty pay earned outside of a combat zone.
Active duty pay earned outside of a combat zone.
Combat pay earned in a combat zone.(X)
Imminent danger pay earned outside of a combat zone.
2
How does the military TSP differ from the uniformed service retirement plan?
Retirement benefits under the TSP are based on the service member’s rank at retirement, whereas retirement benefits under the uniformed service retirement plan are based on the service member’s contributions to the plan and earnings on the contributions.
The military TSP is a defined contribution plan, whereas the uniformed service retirement plan is a defined benefit plan.
Retirement benefits under the TSP are tax exempt, whereas retirement benefits under the uniformed service retirement plan are partially taxable.
The military TSP is a defined benefit plan, whereas the uniformed service retirement plan is a defined contribution plan. (X)
3
Francisco Garcia was deployed in a combat zone for all of 2012. He is married and has 2 children. Francisco's non-taxable combat pay in 2012 is $14,000. His wife worked part-time while Francisco was deployed and earned $7,000. What is the maximum amount of earned income the Garcias can report for EITC purposes in 2012?
$7,000
$14,000
$21,000 (X)
$28,000
4
Which of the following is not a characteristic of contributions to the military TSP?
Contributions to the military TSP are reported in box 12, Form W-2, with code “D”.
Contributions to the military TSP are qualified retirement savings contributions for purposes of the Saver’s Credit. (X)
Contributions to the military TSP are tax deferred.
Contributions to the military TSP are mandatory and are automatically deducted from military taxpayers' paychecks.
5
Which of the following moves is not a permanent change of station?
A move from one permanent post of duty to another.
A move from the last post of duty to the taxpayer's home within one year of the end of the taxpayer's active duty.
A move from the taxpayer's home to first post of active duty.
A move from the last post of duty to the taxpayer's home 18 months after the end of the taxpayer's active duty.(X)
6
Why may a military taxpayer want to consider making contributions to the military TSP while deployed to a combat zone?
Non-taxable combat pay is a good source of funds to help the taxpayer increase his or her tax basis in the military TSP account.
Non-taxable combat pay is subject to FICA taxes, and contributions to the military TSP can defer FICA tax on at least some of the combat pay.
Non-taxable combat pay is not included in AGI for purposes of determining taxability of current contributions to the military TSP. Therefore, the taxpayer can pay tax on his or her current contributions at a lower rate.
Non-taxable combat pay is not included in AGI for purposes of determining the Saver’s Credit. Therefore, the contributions to the military TSP may increase the tax benefits of saving for retirement. (X)
7
If a service member dies, all of the following allowances are available to surviving family members except:
Burial services for the deceased service member.
Internment and a burial marker at any cemetery. (X)
Death gratuity payments for eligible survivors.
Travel of dependents to the service member’s burial site.
8
Which of the following is an inaccurate statement regarding the filing of a joint tax return?
The surviving spouse of a member of the military who died during the year is allowed to file a joint return for the year as a surviving spouse.
The spouse of a member of the military who is in missing status may file a joint return with the taxpayer.
The spouse of a member of the military may never sign for the taxpayer on a joint return. (X)
The spouse of a member of the military who is in a combat zone may sign for the taxpayer on a joint return when they have a power of attorney (POA).
9
Which of the following types of income received by military taxpayers is subject to FICA?
Combat pay.
Bonus pay.
Active duty pay not earned in a combat zone. (X)
Student loan repayment.
10
With what code is excludible combat pay earned by a service member identified on Form W-2?
Code “P”.
Code “Q”.(X)
Code “C”.
Code “D”.
11
A taxpayer who serves in a combat zone has how long an extension of time to take actions with the IRS?
90 days.
120 days.
180 days. (X)
365 days.
12
If a military taxpayer incurs deductible moving expenses in excess of reimbursement, how should the additional expenses be claimed?
On Form 3903. (X)
On Form 1098.
On Form 2106.
On Form 1099-G.
13
Which of the following is an accurate statement regarding the filing of a joint tax return?
The spouse of a member of the military may never sign for the taxpayer on a joint return.
One spouse can prepare and sign the return and then send it to the other spouse to sign and file. (X)
The spouse of a member of the military must have a POA in order to file an MFJ tax return.
None of the above.
14
Which of the following may a member of the military NOT deduct as employee business expenses?
Expenses for reservist uniforms that can only be worn when serving as a reservist.
The cost of haircuts required by the military. (X)
Expenses for insignia of rank that do not replace regular clothing.
Expenses for military battle dress uniforms that cannot be worn off duty.
15
The “Soc Wage YTD” box on a LES corresponds to which box on Form W-2?
Box 1. (X)
Box 3.
Box 5.
Box 12.
16
Which of the following does not qualify for combat pay exclusion?
Active duty pay in a combat zone.
Reenlistment bonus while in a combat zone.
Student loan repayment while in a combat zone.
Retirement pay and pensions. (X)
17
Which of the following is true regarding home mortgage interest a member of the military pays using his or her BAH?
The home mortgage interest is deductible, even though paid with BAH, which is excludible military pay. (X)
The taxpayer must apportion some of his or her mortgage interest expense to the tax-free BAH income; the apportioned amount is not deductible.
BAH is excludible military pay; therefore, any mortgage interest paid with these funds is a nondeductible expense.
If the taxpayer elects to deduct the mortgage interest, they must report the BAH income as taxable.
18
Taxpayers who are members of a reserve component of the Armed Forces and travel more than 100 miles away from home in connection with their performances of services as a member of the reserves can deduct their travel expenses as an adjustment to income on:
Line 24 of Form 1040.(X)
Line 21 of Form 1040.
Line 23 of Form 1040.
None of the above.
19
If a military member is designated as “missing in action” in a combat zone or hazardous duty area, the service member’s spouse may sign for the return, but should attach:
A signed Form 3903.
A signed Form 2848.
A signed statement to the return explaining that their spouse is missing in action in a combat zone. (X)
All of the above.
20
If a taxpayer does not elect to include nontaxable combat pay in earned income for purposes of the EITC, what amount of earned income should be used for purposes of the Additional Child Tax Credit (ACTC)?
The taxpayer may elect to include a portion of the nontaxable combat pay in earned income for the ACTC.
The taxpayer may elect to include the nontaxable combat pay in earned income for the ACTC.
Nontaxable combat pay should be included in earned income for the ACTC. (X)
Since the election is made not to include the nontaxable combat pay in earned income for EITC, the nontaxable combat pay may not be included in earned income for the ACTC.
21
Jacob was on active duty in a combat zone from January 1, 2011, until June 30, 2012. Jacob filed his 2011 federal income tax return on August 17, 2012. He was unable to file Form 4868 for the 2011 return. Jacob owed a balance due of $640 on his 2011 return. Which of the following is true?
Jacob may be assessed a penalty because he filed the balance-due 2011 tax return late.
Jacob was required by law to file Form 4868 on or before the original due date of the 2011 return. (X)
Jacob will be assessed no penalty for filing a balance-due 2011 tax return after its due date because he was in a combat zone.
Jacob has to include all money he earned in 2011 on the 2011 tax return.
22
Which of the following is true regarding state requirements for military taxpayers?
State income tax for a member of the military is based on where wages are earned.
State income tax for a member of the military is a non-issue. Members of the military are employed by the federal government and are not subject to state income tax.
State income tax for a member of the military is based on home of record.(X)
State income tax for a member of the military is automatically based on where he or she is assigned the last day of the tax year.
23
The date of deployment and the mission supported is required to determine extensions and deadlines for:
Filing.
Paying tax.
Claiming refunds.
All of the above. (X)
24
Income tax withholding on bonus pay is generally at what rate?
15%
20%
28% (X)
31%
25
The following is an example of incentive pay:
Combat pay.
Active duty pay.
High altitude/low opening (HALO). (X)
None of the above.
26
The “Wage YTD” box in the “Fed Taxes” section on a LES corresponds to which box on Form W-2?
Box 1. (X)
Box 3.
Box 5.
Box 12.
27
What part of this Form W-2 is the challenge?
More information is needed for combat pay.
The code for contributions to a Thrift Savings Plan is L, not D.
Combat pay is not subject to Social Security withholding.
The address of the taxpayer is inappropriate for filing income taxes.
28
Fred Jackson, an active-duty service member, receives student loan repayment benefits of $2,700 annually. In November 2012, Fred was deployed to Afghanistan. How much of Fred’s student loan repayment benefits are excludible, due to his service in a combat zone for 2012?
$450 (X)
$1,700
$2,250
$2,700
29
Which of the following is true regarding IRS Form 2848?
Form 2848 allows the taxpayer’s designated representative to sign loan documents on behalf of the taxpayer.
Form 2848 may not be used by members of the military. Members of the military must use a special designation form.
Form 2848 allows the taxpayer’s designated representative to apply for a RAC on behalf of the taxpayer.
Form 2848 generally only allows the taxpayer’s designated representative to handle tax matters. (X)
30
Correct Answer is "No Such Code for Bonus"
|
