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 2022 taxpayers.

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 is 70. Neither are blind.

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

Herb earned $15,000 in wages. They also received Social Security benefits of $44,000. They received no other income in 2022. Both Herb and Alice are U.S. citizens, lived in the United States all year, and have valid Social Security numbers. They do not have any qualifying children, and no one else lives with them.

Scenario 1: Test Questions:

1. What is Herb and Alices standard deduction?

a. $25,900

b. $27,300

c. $28,700

d. $29,400

2. How much of Herb and Alices Social Security is taxable?

a. $0

b. $2,500

c. $5,000

d. $22,000

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

a. True, because their daughter offered to let them claim their grandchild.

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

c. False, because their income is too high.

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