Advanced Scenario 1: Test Questions
1.How should you advise Tracy and Chris?
a. Chris can claim 1 exemption, because he had earned income.
b. Chris can claim 1 exemption, because Tracy has decided not to claim him.
c. Chris cannot claim his own exemption because his income was less than $10,000.
XXX d. Chris cannot claim his own exemption because Tracy can claim him as a dependent on her tax return.
2.Using Publication 4012, Who Must File tab, Chart B, is Chris required to file a tax return?
XXX a. Yes
b. No
3.Who can claim Hayden as a dependent?
a. No one can claim Hayden because he was not a member of the household for more than six months.
b. Mike cannot claim Hayden because Hayden is not Mike’s child.
c. Brittany can claim Hayden because she is his parent.
XXX d. Mike can claim Hayden; Brittany cannot claim Hayden because Brittany qualifies as Mike’s dependent.
4.Who can Mike claim as a qualifying child(ren) for the earned income credit?
a. Mike has no qualifying children.
b. Mike can claim Brittany, but not Hayden.
c. Mike can claim Hayden, but not Brittany.
XXX d. Mike can claim both Brittany and Hayden.
5.Brittany did not have health insurance at all in 2016.How does this affect Mike’s return?
a. There is no effect because Mike cannot claim Brittany as a dependent.
XXX b. Mike must claim a coverage exemption for Brittany or make a shared responsibility payment.
c. It does not affect Mike’s return.Brittany will have to claim a coverage exemption or make the shared responsibility payment on her own return.
d. It doesn’t affect Mike’s return because Brittany is 18 years old
Advanced Scenario 3: Test Questions
6.Are Henry and Claudia eligible to claim the earned income credit?
a. No, because Henry and Claudia’s income is too high.
XXX b. No, because Claudia has an ITIN.
c. Yes, because Alyssa is their qualifying child for EIC.
d. Yes, if they file Married Filing Separate returns.
7.Claudia qualifies for a health coverage exemption.
XXX a. True
b. False
Advanced Scenario 4: Test Questions
8.What is Martin’s most advantageous allowable filing status?
XXX a. Married Filing Separately
b. Head of Household
c. Single
d. Qualifying Widower
9.Which education benefit is Martin eligible to claim?
a. American opportunity credit
XXX b. Lifetime learning credit
c. Tuition and fees deduction
d. He does not qualify for any education benefit
Advanced Scenario 5: Test Questions
10.Lamar received Form 1095-A from the Marketplace.How is this information used on his tax return?
a. The information is not needed to prepare his return.
b. Enter $1,440 directly on Form 1040, page 2 on the premium tax credit line.
c. The information is used on Form 8965.
XXX d. The information is used to determine the amount of premium tax credit.
11.Lamar must repay a portion of the advance premium tax credit that he received.
a. True
XXX b. False
12.What is the total amount of qualified educational expenses used in the calculation of Lamar’s American opportunity credit? $_3800__.
13. Where is the cancelled debt on Form 1099-C reported on Lamar’s tax return?
a. It is not reported on the return
b. On Form 1040, line 7 as wages
XXXc. On Form 1040, line 21 as other income
d. On Schedule A as a miscellaneous deduction
14.Lamar qualifies for an exception to the 10% additional tax on the early distribution from his IRA.
XXX a. True
b. False
Advanced Scenario 6: Test Questions
15. Which allowable filing status is most advantageous to Samantha?
a. Qualifying Widow with Dependent Child
b. Single
c. Married Filing Separately
XXX d. Head of Household
16.Howard is Samantha’s qualifying child for which of the following benefits?
a. Exemption for a dependent
b. Child tax credit
XXX c. Earned income credit
d. All of the above
17. The basis of Samantha’s home is reduced by $45,000.
XXX a. True
b. False
18. What is the credit for child and dependent care expenses shown in the tax and credits section of Samantha’s tax return?
XXX a. $836
b. $798
c. $760
d. $572
19.Samantha and her children did not have minimum essential coverage (MEC) for two months of the tax year.How does this affect her tax return?
XXX a. She can claim the short coverage gap exemption.
b. She must make a shared responsibility payment for herself.
c. She must make a shared responsibility payment for Meredith and Oliver.
d. None of the above.
20.What is the amount of self-employment tax in the Other Taxes section of Samantha’s Form 1040, page 2? $____134___.
Advanced Scenario 7: Test Questions
21.What is the total taxable interest income shown on Line 8a of Form 1040?
a. $70
XXX b. $95
c. $150
d. $245
22.How does the code Q on Quincy’s Form 1099-R from Essex Bank affect the return?
XXX a. The entire distribution is not taxable.
b. Half of the distribution is taxable.
c. The entire distribution is taxable.
d. There is no such code.The taxpayer must get a corrected Form 1099-R from the bank.
23. What is the amount shown on Form 1040, Line 13 – Capital gain or loss?
a. A gain of $2,215
b. A gain of $2,141
XXX c. A gain of $1,766
d. A gain of $1,691
24.How much of the $17,500 gross distribution reported on Form 1099-R is taxable in 2016? $ _16719_______.
25. Is Quincy’s Social Security income taxable?
XXX a. Yes, a portion of the Social Security income is taxable.
b. Yes, all of the Social Security income is taxable.
c. No, because their total income is less than $32,000.
d. No, Social Security benefits are never taxable.
26.What is the amount of the shared responsibility payment on the Pikes’ Form 1040, page 2? $__500_______ 695 ?
27. Are the Pikes entitled to claim an earned income credit for 2016?
a. No, because their investment income exceeds the amount allowed to claim the credit.
XXX b. No, Quincy is over the age of 65.
c. No, Lucas is not a qualifying child for purposes of the EIC.
d. Yes, they are eligible for the credit.
Advanced Scenario 8: Test Questions
28.Where should Austin’s cash income from his business be reported on the tax return?
a. Cash income does not have to be reported
b. Form 1040, Line 7
c. Form 1040, Line 21
AAA d. Schedule C-EZ or C
29.What is Austin’s mileage expense deduction (at the standard mileage rate) for his business as a personal trainer?
XXX a. $1,485
b. $2,025
c. $2,133
d. $4,158
30.Which item cannot be deducted by Austin as a business expense?
a. Business license V
b. Business liability insurance V
c. Advertising V
XXX d. Nutritional supplements
31.How does Austin’s self-employment tax affect his tax return?
a. Austin’s self-employment tax is not reported anywhere on Form 1040.
b. A portion of the self-employment tax is deducted as a business expense on Schedule C-EZ or C.
c. The self-employment tax is shown on Form 1040, Other Taxes section, and the full amount is deducted on Schedule A, Taxes You Paid section.
XXX d. The self-employment tax is shown on Form 1040, Other Taxes section, and the deductible part is an adjustment on Form 1040, page 1.
32.What is the amount Austin can take as a student loan interest deduction?
a. $0
b. $1,373
XXX c. $2,500
d. $2,745
33.What are Austin’s total itemized deductions on Schedule A, line 29?
a. $6,952
b. $7,086
c. $7,906
XXX d. $8,286
34.The amount of Austin’s retirement savings contributions credit in the Tax and Credits section of Form 1040 is $100.
a. True
AAA b. False
35.Austin is not able to pay the entire balance due by the due date of the return (without extensions).What are his options?
a. He can submit a Form 9465, Installment Agreement Request.
b. He can contact the IRS for a full pay 120-day agreement.
c. He can pay using his credit card.
XXX d. Any of the above.