Final Exam Tax Preparer 2017

Test - Income Tax Course 2017 - Final Test

Final Test, Part 1 - Bill Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Bill (26) is unmarried. His unmarried brother, Zac (21), lived with him all year. Bill paid all of the household expenses and more than 50% of Zac’s support. Zac is not permanently and totally disabled. Bill’s wages were $12,350; Zac’s gross income was $3,100.

Question 1 of 65. What is the taxpayer’s correct and most favorable 2016 filing status?

Single Married filing jointly Married filing separately Head of Household Qualifying Widow(er)

Question 2 of 65. What is his or her greatest number of personal and dependent exemptions allowed for 2016? 1 2 3 4

Question 3 of 65. Is the taxpayer eligible to claim and receive the Earned Income Tax Credit? Yes No

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Single

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Final Test, Part 1 - Sarah Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Sarah (53) is unmarried, and her two daughters, Beth (22) and Carol (19), lived with her the entire year. Beth also has a daughter, Vicki (2), who lives with her mother and grandmother. Carol is a full-time student at Your Local Community College. Sarah’s wages were $37,250; Beth’s were $7,250; Carol and Vicki have no income.





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Final Test, Part 1 - Elizabeth Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Elizabeth (29) and her two children, Brian (3) and Mary (5), moved back in with Elizabeth’s parents on March 3, 2014. Elizabeth and her children live in the finished basement that her parents used to rent to local college students. Elizabeth is paying more than half the cost of maintaining the home, and provides more than 50% support for the children. Elizabeth’s wages were $36,450; Brian’s gross income was $0; Mary’s was $0.





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Final Test, Part 1 - Ron and Sue Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Ron (45) and Sue (45) are married. Their sons, Kyle (18) and Keith (14), lived with them all year, and the boys received more than 50% of their support from their parents. Ron’s wages were $52,000; Sue’s wages were $38,750; Kyle’s gross income was $7,200; Keith’s was $350.





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Final Test, Part 1 - Ben Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Ben (46) is unmarried. His mother, Susan (81), lives in a nursing home. Ben pays the entire cost of the nursing home and more than 50% of Susan’s total support. Ben’s wages were $75,000; Susan’s income consisted of $1,600 taxable interest and $9,600 social security benefits.





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Final Test, Part 1 - Will and Cheryl Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Will (55) and Cheryl (49) are married but have lived apart since March 15, 2016. They have no divorce decree or separate maintenance agreement. Cheryl will not file a joint return with Will. Lynn (15), their daughter, went with Cheryl when she moved out and has lived with her since. Cheryl did sign Form 8332, waiving her right to Lynn’s exemption for 2016. Together, Will and Cheryl provided more than 50% of Lynn’s support. Will' s wages were $26,000; Cheryl’s were $27,850; Lynn’s gross income was $1,325.





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Final Test, Part 1 - Steve Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Steve (31) is not married. He shared his home all year with his girlfriend, Didi (25), and Didi’s son, Cotter (3). Cotter is not related to Steve, and Steve is not in the process of adopting him. Cotter was not placed in the home by a placement agency. Steve provided more than half the cost of maintaining the home and more than 50% support for Didi and Cotter. No local law is being violated. Steve’s wages were $26,575; Didi’s gross income was $4,050; Cotter’s was $0.





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Final Test, Part 1 - Jim and Linda Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Jim (49) and Linda (50) are married. They have two children, Todd (20) and Traci (15), who both lived with their parents all year. Todd has a part-time job, and Traci is still in high school. Todd is not a student. Jim and Linda provide more than 50% support for both children. Jim’s wages were $26,500; Linda’s wages were $16,805; Todd’s gross income was $5,100; Traci’s was $0.





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Final Test, Part 1 - Gary Using 2016 tax law, indicate: The taxpayer’s correct and most favorable filing status. Their greatest number of personal and dependent exemptions allowed for 2016. Whether the taxpayer is eligible to claim and receive the Earned Income Tax Credit. Remember, each dependent must be a qualifying child or qualifying relative. Numbers in parentheses indicate age. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed lived in the home. Each taxpayer has only the income stated. The taxpayer is the first person named unless you determine that married filing joint is the correct filing status. Gary (53) is unmarried. He maintains a home for himself and his daughter, Crystal (19), who lived with Gary all year. Gary’s wife, Joyce, died on June 26, 2014. For 2014, he filed a joint return. Gary provides more than 50% of Crystal’s support. Crystal is not a student. Gary’s income consisted of $21,000 wages and $3,000 in dividends; Crystal’s gross income was $5,350.





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Final Test, Part 2 The following questions are multiple-choice. Indicate the correct answer by selecting the letter corresponding to the correct answer. There is only one correct answer for each question.

Question 31 of 65. Sandra Williams is single. She itemized deductions in 2015. She plans to itemize for 20 16. In order for her plan to itemize deductions to be the most beneficial to her. Her itemized deductions should exceed: $4,050 $6,300 $9,300 $12,600

Question 32 of 65. Which of the following deductions may not be claimed on Form 1040A? Educator expenses. Moving expenses. Student loan interest deduction. Tuition and fees deduction.

Question 33 of 65. Dorothy Fonda is unmarried, filing head of household, with the following income for the year: Wages $34,500 Bank interest $275 Municipal bond interest $115 Lottery prize $325 Gift from her father $5,000 Dorothy contributed $1,250 to her traditional IRA, which she will deduct. What is her A GI? $33,250 $33,575 $33,850 $33,965

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Question 34 of 65. Linda Perkins (64) shared a home all year with her son, Dennis (41), and Dennis’s son, Chase (20). Linda and Dennis worked full time, and Chase was a part-time student. No one else lived in the home. Assuming that both Linda and Dennis have earned income and an AGI of at least $20,000, but less than $30,000, which of them may claim and receive the Earned Income Tax Credit?

No one. Linda only. Both Linda and Dennis. Either Linda or Dennis, but not both.

Question 35 of 65. For 2016, most U.S. citizens and residents are subject to the ACA individual shared responsibility provisions. Which of the following best describes the ACA individual mandate provisions? A taxpayer must have minimum essential coverage for at least one month in 2016. A taxpayer must have minimum essential coverage in every month of 2016 or be subject to th e ACA tax penalty. A taxpayer must have minimum essential coverage in every month of 2016 or qualify for an ACA exemption. A taxpayer must have minimum essential coverage in every month of 2016, qualify for an ACA exemption, or be subject to the ACA tax penalty.

Question 36 of 65. Which of the following is not a qualified contribution for an employee claiming the retirement savings contributions credit (Saver’s Credit)? Contribution to a Roth IRA. Nondeductible contribution to a traditional IRA. Voluntary contribution to a §403(b) tax-sheltered annuity. Employer’s matching contribution to the employee’s §401(k) plan.

Question 37 of 65.

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Sarah (33), a single taxpayer, spent $3,200 for tuition and required course fees to attend three college courses during 2016. Sarah is not a degree candidate, but the courses were job-related. Which of the following education tax breaks may she take advantage of? A. Lifetime learning credit. B. Tuition and fees deduction. C. American Opportunity Tax Credit. D. Either A or B.

Question 38 of 65. Beth Wilson (17) is a dependent of her parents. She earned $1,475 wages from babysitting and $180 interest from her savings account. How much is the maximum she may contribute to a traditional or Roth IRA for 2016? $0 $1,475 $1,655 $4,000

Question 39 of 65. Which of the following credits cannot be claimed on Form 1040A? Education credit. Retirement savings credit. Child tax credit. Foreign tax credit.

Question 40 of 65. Benjamin and Teresa Young, a married couple who will file jointly, are both teachers. In 2016, Benjamin had

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receipts totaling $356.44 in qualifying expenses for his classroom. Teresa had receipts totaling $254.89. What is the maximum amount of the e ducator expenses deduction that they will claim on their joint return? $245 $250 $356 $500

Question 41 of 65. What is a Tax Professional’s correct response to a taxpayer who omitted items on an income tax return that was submitted in a previous year? Advise the taxpayer promptly of the fa ct of such omission and:

Refuse to prepare the current-year return until the previous year is amended. Advise the taxpayer of the consequences of not amending the previous year’s return. Make an adjustment for the previous year’s omission on the current-year return. Refer the taxpayer to an office supervisor.

Question 42 of 65. A Tax Professional is required to complete Form 8867, Paid Preparer's Due Diligence Checklist, to ensure they: Compute the amounts of all credits correctly. Reviewed the taxpayer's records completely. Considered all the due diligence requirements for each credit claimed on the return. All of the above.

Question 43 of 65. Which of the following is the most common EITC and CTC/ACTC error identified by the IRS?

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The taxpayer files a bogus Schedule C to maximize the EITC credit. The taxpayer claims an individual as a qualifying child who does not meet the relationship test and/or residency test. The taxpayer claims the head of household filing status when their correct filing status is either single, married filing jointly, or married filing separate. The taxpayer claims an individual as a qualifying child who does not have a valid social security number.

Question 44 of 65. Documents used to substantiate eligibility to claim either EITC, AOTC, and/or CTC/ACTC must be: Photocopied and retained in the H&R Block client file (attached to Form 8879). Shredded when the taxpayer receives their refund. Submitted with the tax return. This means paper documents attached to the paper filed return or digital copies submitted with the e-filed return. Verified for accuracy and authenticity prior to filing the return.

Question 45 of 65. Lisa is a full-time undergraduate student who wants to claim AOTC. She brings in her school billing statement, as well as receipts for books she purchased for her college courses. Lisa informs her Tax Professional that she did not receive a Form 1098-T. The Tax Professional should do which of the following to meet the due diligence record keeping requirement? Require Lisa to obtain a Form 1098-T before she can claim AOTC. Then make a photocopy of the Form 1098-T to include in the H&R Block client file. Determine if Lisa's college is an eligible educational institution and document the conversation about verifying Lisa's college attendance during the year. Take a photocopy of Lisa's billing statement and book receipts to keep in the H&R Block client file, as well as document the questions asked and answers provided to determine Lisa's AOTC eligibility. Both B and C are correct.

Final Test, Part 3 - Katherine Using a copy of the tax return you prepared for Katherine, answer the following questions.

Question 46 of 65.

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What is Katherine’s most beneficial filing status for 2016?

Single. Married filing jointly. Married filing separately. Head of household. Qualifying widow(er).

Question 47 of 65. How many exemptions may Katherine claim in 2016? One. Two. Three. Four. Five.

Question 48 of 65. What amount does Katherine report as total income from wages?

Question 49 of 65. What amount does Katherine report as taxable interest?

Question 50 of 65. What amount does Katherine report as unemployment compensation?

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Question 51 of 65. What amount is Katherine’s adjusted gross income?

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Question 52 of 65. What amount is Katherine’s taxable income?

Question 53 of 65. What amount is Katherine’s tax on her taxable income?

Question 54 of 65. What is the sum of Katherine’s standard deduction and her personal exemption?

Question 55 of 65. What amount (if any) must Katherine pay for her individual responsibility for not having health care for January through March?

Final Test, Part 3 - Ericsons Using a copy of the tax return you prepared for the Ericsons, answer the following questions.

Question 56 of 65. What is the Ericsons' most beneficial filing status for 2016? Single. Married filing jointly. Married filing separately. Head of household. Qualifying widow(er).

Question 57 of 65. How many exemptions may the Ericsons claim in 2016? One. Two. Three. Four. Five.

Question 58 of 65. What amount do the Ericsons report as income from wages?

Question 59 of 65. What is the sum of the adjustments that the Ericsons can subtract from their gross income to calculate their adjusted gross income?

Question 60 of 65. What is the amount of the Ericsons' taxable income?

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Question 61 of 65. What is the total amount of the tax on the Ericsons' taxable income?

Question 62 of 65. What is the amount of the Ericsons' refundable child tax credit?

Question 63 of 65. What is the amount of the Ericsons' earned income credit?

Question 64 of 65. What is the amount of child dependent care credit the Ericsons received?

Question 65 of 65. How many children are reported on the Ericsons' Schedule EIC?

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Final Exam Tax Preparer 2017

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