1. Interview Notes

Chloe is single, a U.S. citizen, and has a valid Social Security number. No one else lives in the household with her. She turned 50 in 2023.

Chloe worked full time. Her total income from wages is $53,000. She has no other income. She is covered by a retirement plan at work.

Chloe contributed $6,000 to her traditional IRA in 2023.

Chloe owns her home in the U.S. where she lived as her principal residence all year. She made the following energy efficient improvements to her home in 2023. These purchases meet the energy efficiency and other requirements to claim the energy efficient home improvement credit:

o $300 on a home energy audit

o $2,500 on new windows

o $6,000 on a new natural gas hot water boiler

4. Chloe visits your site in February 2024 and says she wants to make the maximum IRA contribution for 2023. How much more can she contribute?

a. $0 because it is after December 31 and too late to make a 2023 contribution

b. $0 because she has already contributed the maximum allowed

c. $1,000

d. $1,500

1. Interview Notes

Chloe is single, a U.S. citizen, and has a valid Social Security number. No one else lives in the household with her. She turned 50 in 2023.

Chloe worked full time. Her total income from wages is $53,000. She has no other income. She is covered by a retirement plan at work.

Chloe contributed $6,000 to her traditional IRA in 2023.

Chloe owns her home in the U.S. where she lived as her principal residence all year. She made the following energy efficient improvements to her home in 2023. These purchases meet the energy efficiency and other requirements to claim the energy efficient home improvement credit:

o $300 on a home energy audit

o $2,500 on new windows

o $6,000 on a new natural gas hot water boiler

5. What is the maximum amount of qualified expenses for the energy efficient home improvement credit that Chloe can claim for her home improvements?

a. $1,200

b. $1,290

c. $2,640

d. $8,500

Luther and Lexi Lincoln - Question 1 of 4.

1. Interview Notes

Luther, age 54, and Lexi, age 56, are married and file a joint return.

Lexi has family coverage through her High Deductible Health Plan (HDHP) at work. In 2023, Lexi

contributed $2,350 to her Health Savings Account (HSA). Luther made contributions totaling $3,000 to his HSA in 2023.

Luther's Form 1099-SA shows a distribution from his HSA of $3,000. They have receipts showing they paid:

o $300 for new eyeglasses for Lexi,

o $2,200 in copays for doctor visits and tests,

o $400 for over the counter medication, and

o $100 for Personal Protective Equipment (PPE) to prevent the spread of COVID-19 and home COVID-19 tests

In April 2023, Luther was diagnosed by his physician with a terminal illness. In May, Luther and Lexi decided to take a luxury vacation before his health deteriorated. They used a distribution from Luther's IRA to pay for it. They received a Form 1099-R showing $15,000 in Box 1, and code 1 in Box 7.

Lexi sold a used handbag on an online marketplace. She received a Form 1099-K reporting the $700 sale. She originally paid $1,000 for the bag.

Luther and Lexi are U.S. citizens with valid Social Security numbers.

6. Lexi and Luther want to maximize their HSA deduction. Combined, how much more can they contribute to their individual HSAs before the tax filing deadline?

a. $2,400

b. $3,400

c. $4,400

d. $4,700

1. Interview Notes

Luther, age 54, and Lexi, age 56, are married and file a joint return.

Lexi has family coverage through her High Deductible Health Plan (HDHP) at work. In 2023, Lexi

contributed $2,350 to her Health Savings Account (HSA). Luther made contributions totaling $3,000 to his HSA in 2023.

Luther's Form 1099-SA shows a distribution from his HSA of $3,000. They have receipts showing they paid:

o $300 for new eyeglasses for Lexi,

o $2,200 in copays for doctor visits and tests,

o $400 for over the counter medication, and

o $100 for Personal Protective Equipment (PPE) to prevent the spread of COVID-19 and home COVID-19 tests

In April 2023, Luther was diagnosed by his physician with a terminal illness. In May, Luther and Lexi decided to take a luxury vacation before his health deteriorated. They used a distribution from Luther's IRA to pay for it. They received a Form 1099-R showing $15,000 in Box 1, and code 1 in Box 7.

Lexi sold a used handbag on an online marketplace. She received a Form 1099-K reporting the $700 sale. She originally paid $1,000 for the bag.

Luther and Lexi are U.S. citizens with valid Social Security numbers.

7. How much of Luther's Form 1099-SA amount is taxable?

a. $0 because they had qualified medical expenses of $3,000

b. $100 because PPE is not a qualified expense for 2023

c. $300 because Luther can't use money from his HSA to pay for Lexi's medical expenses

d. $400 because over the counter medicine is not a qualified medical expense

1. Interview Notes

Luther, age 54, and Lexi, age 56, are married and file a joint return.

Lexi has family coverage through her High Deductible Health Plan (HDHP) at work. In 2023, Lexi

contributed $2,350 to her Health Savings Account (HSA). Luther made contributions totaling $3,000 to his HSA in 2023.

Luther's Form 1099-SA shows a distribution from his HSA of $3,000. They have receipts showing they paid:

o $300 for new eyeglasses for Lexi,

o $2,200 in copays for doctor visits and tests,

o $400 for over the counter medication, and

o $100 for Personal Protective Equipment (PPE) to prevent the spread of COVID-19 and home COVID-19 tests

In April 2023, Luther was diagnosed by his physician with a terminal illness. In May, Luther and Lexi decided to take a luxury vacation before his health deteriorated. They used a distribution from Luther's IRA to pay for it. They received a Form 1099-R showing $15,000 in Box 1, and code 1 in Box 7.

Lexi sold a used handbag on an online marketplace. She received a Form 1099-K reporting the $700 sale. She originally paid $1,000 for the bag.

Luther and Lexi are U.S. citizens with valid Social Security numbers.

8. How much additional tax on early distributions is Luther required to pay?

a. $0

b. $1,000

c. $1,500

d. $3,000

1. Interview Notes

Luther, age 54, and Lexi, age 56, are married and file a joint return.

Lexi has family coverage through her High Deductible Health Plan (HDHP) at work. In 2023, Lexi

contributed $2,350 to her Health Savings Account (HSA). Luther made contributions totaling $3,000 to his HSA in 2023.

Luther's Form 1099-SA shows a distribution from his HSA of $3,000. They have receipts showing they paid:

o $300 for new eyeglasses for Lexi,

o $2,200 in copays for doctor visits and tests,

o $400 for over the counter medication, and

o $100 for Personal Protective Equipment (PPE) to prevent the spread of COVID-19 and home COVID-19 tests

In April 2023, Luther was diagnosed by his physician with a terminal illness. In May, Luther and Lexi decided to take a luxury vacation before his health deteriorated. They used a distribution from Luther's IRA to pay for it. They received a Form 1099-R showing $15,000 in Box 1, and code 1 in Box 7.

Lexi sold a used handbag on an online marketplace. She received a Form 1099-K reporting the $700 sale. She originally paid $1,000 for the bag.

Luther and Lexi are U.S. citizens with valid Social Security numbers.

9. According to the Form 1099-K FAQs on IRS.gov, how should Lexi report the form she received?

a. She should not report the transaction because a personal loss is not deductible.

b. On Form 1040, Schedule 1, she should report $700 on the Other Income line and $700 on the Other Adjustments line, labeling both entries as "Form 1099-K Personal Item Sold at a Loss $700"

c. On Form 1040, Schedule 1, she should report $700 on the Other Income line and $1,000 on the Other Adjustments line, labeling both entries as "Form 1099-K Personal Item Sold at a Loss"