Federal Tax Law Update Test for Circular $230$ Professionals

Directions

The first three scenarios do not require you to prepare a tax return. Read the interview notes for each

scenario carefully and use the Important Changes lesson in Publication $4491,$ VITA$/$TCE Training

Guide, or in Link & Learn Taxes to answer the questions after the scenarios. All questions are based on

calendar year $2023$ tax law.

Scenario $1$: Herb and Alice Freeman

Interview Notes

Herb and Alice are married and file a joint return. Herb is $74$ years old and Alice turns $72$ in February $2023.$

Neither are blind.

Both Herb and Alice are retired. Herb works part time as a greeter.

Alice is confused about the Required Minimum Distribution rules, and wants to know when she should take her

first distribution from her IRA.

Herb earned $$12,000$ in wages and has fully taxable pension income of $$4,800.$ The couple also received Social

Security benefits of $$46,000.$ They received no other income in $2023.$

Herb and Alice's grandson, Stuart, lives with them while he attends the local university. Stuart is $20,$ a full$-$time

student, and is claimed as a dependent by his parents.

Herb, Alice and Stuart are U$.$S$.$ citizens, lived in the United States all year, and have valid Social Security

numbers.

Scenario $1$: Test Questions

What is Herb and Alice's standard deduction?

a$.$ $$27,700$

b$.$ $$29,200$

c$.$ $$29,550$

d$.$ $$30,700$

When does Alice need to take her first Required Minimum Distribution $($RMD$)?$

a$.$ Alice is late. She was required to take her first RMD by April $1$ of the year after the year she

turned $\frac{701}{2}.$

b$.$ By April $1,2023.$

c$.$ By April $1,2024.$

d$.$ By April $1,2025.$

Herb and Alice qualify for the earned income credit $($EIC$).$

a$.$ True, because Stuart is their qualifying child.

b$.$ True, because they have earned income and adjusted gross income under the EIC threshold for a

married couple without a qualifying child.

c$.$ False, because they are over the age limit for taxpayers who do not have a qualifying child.

d$.$ False, because their income is too high.Federal Tax Law Update Retest for Circular $230$ Professionals

Directions

The first three scenarios do not require you to prepare a tax return. Read the interview notes for each

scenario carefully and use the Important Changes lesson in Publication $4491,$ VITA$/$TCE Training Guide, or

in Link & Learn Taxes to answer the questions after the scenarios. All questions are based on calendar year

$2023$ tax law.

Scenario $1$: Herb and Alice Freeman

Interview Notes

Herb and Alice are married and file a joint return. Herb is $74$ years old and Alice turns $72$ in February $2023.$

Neither are blind.

Both Herb and Alice are retired. Herb works part time as a greeter.

Alice is confused about the Required Minimum Distribution rules, and wants to know when she should take

her first distribution from her IRA.

Herb earned $$12,000$ in wages and has fully taxable pension income of $$4,800.$ The couple also received

Social Security benefits of $$46,000.$ They received no other income in $2023.$

Herb and Alice's grandson, Stuart, lives with them while he attends the local university. Stuart is $20,$ a full$-$

time student, and is claimed as a dependent by his parents.

Herb, Alice and Stuart are U$.$S$.$ citizens, lived in the United States all year, and have valid Social Security

numbers.

Scenario $1$: Retest Questions

Herb and Alice's standard deduction is $$27,700.$

a$.$ True

b$.$ False

When does Alice need to take her first Required Minimum Distribution $($RMD$)?$

a$.$ By April $1$ of the year after the year she turned $701/2.$

b$.$ By April $1$ of the year she turns $72.$

c$.$ By April $1$ of the year after the year she turns $72.$

d$.$ By April $1$ of the year after the year she turns $73.$

Stuart is Herb and Alice's qualifying child for claiming the earned income credit $($EIC$)$ in $2023$

a$.$ True

b$.$ False