Need help with 50 MCQs on 1040 individual income tax returns. Need at least a 70% to pass.

Exam in Progress Exam DT1TG16 - 1040 Income Tax Preparation Questions 50 Passing Score 70% 1. Available filing statuses for individuals include: A Single, Married or Widowed. . B Single, Head of Household, Married Filing Jointly, Married Filing Separately or Qualifying . Widow/Widower. C Single, Head of Household, Married Filing Jointly, Married Filing Separately, Surviving Spouse or . Qualifying Widow/Widower. D Single, Head of Household, Married Filing Separately. . 2. Which of the following is not true in regards to the filing status as married? A Taxpayers who are divorced during the year may file as married filing joint if they have not . remarried prior to year-end. B Certain married taxpayers may qualify for head of household status. . C Married taxpayers usually benefit from filing joint but occasionally will save by filing separately. . D Filing a joint return can leave each spouse liable for the accuracy of the return and the payment . of tax. 3. Mark is single and provides more than half of the support for his elderly mother whose only income is nontaxable social security. His mother lives in her own apartment but Mark pays the rent, utilities, food and basic living costs. What is Mark's filing status and number of exemptions? A Single with two exemptions. . B Single with one exemption. . C Head of household with two exemptions. . D Head of household with one exemption. . 4. Dallas is divorced and his two children live with him. His son Mark earned $20,000, is 23 years old and is not a student. His daughter Lisa is age 14, with no income. How many exemptions may he claim including himself? A Two. . B Three. . C One. . D Unable to determine. . 5. What must a parent do to meet the support test for a qualifying child? A The parent must provide over half of the child's support. . B The parent must provide more than the other parent provided as support if divorced. . C The parent must have custody and provide over half the child's support. . D The child must not have provided over half of their own support. . Exam DT1TG16 - 1040 Income Tax Preparation Questions 50 Passing Score 70% 6. In which of the following situations can a noncustodial parent claim their child as a dependent? A The custodial parent releases the exemption. . B The noncustodial parent provides child support. . C The divorce decree is silent on who claims the child's exemption. . D The custodial parent has insufficient income to benefit from the exemption. . 7. Box 1 of Form W-2 represents: A Earnings subject to social security taxes. . B Earnings subject to Medicare tax. . C Earnings subject to federal income tax. . D Earnings before contributions to retirement accounts. . 8. Parch's W-2 has an amount in box 12 of $16,500. What is the most likely explanation for this amount? A Parch's employer has made a contribution to his retirement account in the amount of $16,500 . and has included this in his taxable wages. B Parch's employer has made a contribution to his cafeteria plan in the amount of $16,500 and has . excluded this from his taxable wages. C Parch has elected to contribute $16,500 into his tax deferred retirement account and the amount . is excluded from his taxable wages. D Parch has elected to contribute $16,500 into his cafeteria plan and the amount is included in his . taxable wages. 9. Dividends are taxed at the same rate as: A Interest income. . B All ordinary income. . C Capital gains. . D Capital losses. . 10. Which of the following is correct regarding qualified dividends? A They are distributions of current earnings and profits of an S corp. . B They are distributions of accumulated earnings and profits of an S corp. . C A corporation cannot issue a qualified dividend if it has always been an Scorporation. . D They are treated as short-term capital gains for regular and AMT purposes. . 11. How is the bond premium amortization treated for bonds acquired after December 31, 1987? A As a direct offset to interest income. . B As a miscellaneous itemized deduction not subject to the 2% AGI limitation. . C As investment interest expense. . D As a miscellaneous itemized deduction subject to the 2% AGI limitation. . 12. From which taxes are U.S. Government bonds exempt? A Federal income taxes. . B Both state and federal income taxes. . C State income taxes. . D Nonethey are not exempt from any taxing authority. . 13. Which of the following is true regarding the taxability of social security income? A 50% of social security benefits are includible in taxable income. . B Between 50% and 85% of social security benefits are taxable depending on provisional income. . C Social security benefits are exempt from tax. . D 85% of social security benefits are includable in taxable income. . 14. When calculating the taxable portion of a withdrawal from a nondeductible traditional (not Roth) IRA, the taxpayer: A Cannot use only the IRA from which the distribution was received. . B Must only consider the IRA account holding nondeductible contributions. . C Must include the basis and value of all retirement accounts. . D Can withdraw the nondeductible portion (basis) first. . 15. Which of the following components of a Roth IRA is considered to be distributed first? A Earnings. . B Contributions. . C Conversion contributions. . D All distributions are measured prorata and contain a portion of each of the above. . 16. When assets are rolled over from an employer plan to an IRA: A Employers must withhold 25% of an eligible rollover distribution. . B The once-a-year limit on IRA to IRA rollovers doesn't apply. . C The 10% early withdrawal penalty doesn't apply. . D Employer must withhold 30% of an eligible rollover distribution. . 17. Jack retired on June 1, 2011. He reached age 70 on April 27, 2016. When is his Required Beginning Date (RBD) for distributions? A April 1, 2012. . B April 27, 2016. . C January 1, 2017. . D April 1, 2017. . 18. If alimony in year one is $50,000, Year 2 is $25,000 and Year 3 is $5,000, which of the following is true? A Alimony recapture will apply in the second year. . B Alimony recapture will apply in the third year. . C Alimony recapture will apply in the fourth year. . D Alimony recapture will not apply if the payments were due to a decree. . 19. The tax benefit rule is responsible for which of the following? A Tax equity doctrine. . B The transfer of income via the alimony deduction. . C The ability to deduct social security repayments. . D The inclusion of certain state tax refunds as income. . 20. Distributions from medical savings accounts and health savings accounts are: A Taxable when withdrawn from the account. . B Nontaxable if used for qualifying medical expenses. . C Nontaxable if used for qualifying medical expenses after age 59. . D Are not transferable in a divorce. . 21. Which of the following is correct regarding Coverdell Education Savings Accounts (CESAs)? A Excess contributions may be subject to a penalty tax. . B Qualified educational expenses include tuition and fees only. . C Contributions to CESAs are deductible. . D A child cannot contribute to his/her own CESA. . 22. If an employee elects to have his disability coverage paid by his employer (pre-tax) and he becomes disabled: A Payments received will be taxable. . B Payments received will be nontaxable. . C Payments may or may not be taxable depending on how many years the premiums were paid on . a pre-tax basis. D Do not select this answer choice. . 23. John earns $39,450 and his wife earns $3,050. They are both 30 years old with no dependents and they file a joint return. What is the maximum amount they are allowed to contribute to an IRA in 2016? A $5,500. . B $8,050. . C $10,000. . D $11,000. . 24. When must contributions to IRA accounts for the year 2016 be made? A Anytime during the calendar year 2016. . B Anytime during the calendar year 2016 or up to the due date of the return without extensions . (April 15, 2017). C Anytime during the calendar year 2016 or up to the due date of the return including the extended . due date (October 15, 2017). D Anytime before December 31, 2017. . 25. To contribute the maximum amount to a Roth IRA in 2016, a taxpayer must: A Have modified AGI of under $120,000 if single. . B Have modified AGI of under $184,000 if married. . C Have modified AGI of under $12,000 if married filing separately. . D Have modified AGI of under $116,000 if a qualifying widow(er). . 26. Which of the following tests must an individual meet for moving expenses to be deductible? A The time test and the distance test. . B The distance test and the job change test. . C The job change test and the time test. . D The time test, the job change test and the distance test. . 27. Megan moved from Dallas to Chicago in 2016 to take a new job. The move met the time test and the distance test. Her new employer did not reimburse her for any move-related expenses. How much can she deduct for driving her car 940 miles from her former residence to her new residence? A $0. . B $179. . C $508. . D $541. . 28. Which of the following is correct regarding Health Savings Accounts (HSA)? A Distributions from an HSA must be used for medical purposes. . B Distributions from an HSA may be taxable. . C Contributions to an HSA are after tax. . D Contributions to an HSA are itemized deductions on Schedule A. . 29. Which of the following individuals is qualified to contribute to a health savings account? A Bill, who is enrolled in a government-sponsored health insurance program. . B Tammy, who is single and has a high-deductible health insurance policy with a $1,500 deductible . in 2016. C Mark, who is married and is covered by his employer's health insurance plan. . D Tom, who has a high-deductible health insurance policy with no maximum out-of-pocket provision . in 2016. 30. Which of the following is correct regarding the standard deduction for 2016? A The standard deduction phases out at higher income levels. . B The standard deduction must be added back to taxable income when computing alternative . minimum taxable income. C Certain individuals can claim an additional standard deduction for being over age 65 or blind but . not both. D The reduced standard deduction for taxpayers claimed as dependents on other returns also . applies to the additional standard deduction for elderly and blind taxpayers. 31. Fred is a 16-year-old dependent child whose summer job paid him $2,500 in 2016. He also had $400 of interest income. What is Fred's standard deduction for the year? A $1,050. . B $2,500. . C $2,850. . D $3,550. . 32. Medical expenses are deductible to the extent they exceed what percentage (%) of Adjusted Gross Income (AGI) in 2016? A 2%. . B 7.5%. . C 10%. . D Medical expenses are deductible regardless of AGI. . 33. Which of the following is a deductible medical expense? A Surgery expenses paid by a parent for a child who is claimed by the custodial parent. . B Surgery expenses for parent who does not qualify as a dependent based on the support test. . C Surgery expenses for a neighbor resulting from your dog's bite. . D An exercise program to improve health. . 34. Which of the following charitable contributions requires substantiation? A A $200 cash donation. . B A $250 noncash donation. . C A $500 cash donation. . D All contributions require substantiation. . 35. Which of the following qualifies as a charitable contribution? A A gift of food and clothing directly to a family in need. . B A $20 cash contribution dropped anonymously into the offering plate. . C 20 hours of volunteer work with the local animal shelter. . D A next-to-new dresser with a FMV of $75 with a receipt from Goodwill Industries. . 36. Jane donated a painting worth $50,000 to the Museum of Modern Art, a public charity, to display in the museum. She paid $10,000 for the painting 20 years ago. What amount can she claim as a charitable contribution in 2016? A $10,000. . B $50,000. . C Only the amount which does not exceed 50% of her adjusted gross income. . D None, as the painting is a noncash contribution. . 37. Which of the following is correct regarding special assessments? A Interest on a special assessment is not deductible as real estate tax. . B Special assessment principal is only deductible if it increases the value of the property. . C Special assessment principal is not deductible if it is for maintenance or repairs. . D Mitigation fees charged for schools, parks, etc. are not deductible. . 38. Alan's 2016 state income taxes were estimated to be $4,000. The state requires the taxes to be paid in four equal installments of $1,000 on April 15, 2016; June 15, 2016; October15, 2016; and January 15, 2017. Alan made all the payments when due, except the last one, which was made early, on December 28, 2016. He made no other state income tax payments in 2016. What is Alan's 2016 deduction for state income taxes? A $4,000. . B $3,000. . C Depends on the state tax liability for 2016. . D Depends on the state tax liability for 2017. . 39. Nondeductible personal interest includes all of the following except: A Interest paid on credit cards used for personal expenditures. . B Interest paid on a pontoon acquired to use at a lake house. . C Interest paid on $25,000 home equity loan used to purchase personal auto. . D Interest paid on individual income tax liabilities. . 40. Which of the following is not a factor in determining if interest on a debt is \"Qualified Residence Interest Expense\"? A It must be for property that qualifies as a dwelling. . B It must not exceed $100,000. . C It must be secured by the residence. . D The interest must be paid by the property's legal owner. . 41. Which of the following qualifies as mortgage interest? A Prepayment penalties. . B Collection fees. . C Interest attributable to employee business expenses. . D Interest paid on a tax deficiency. . 42. Interest expense on qualified retirement plan loans is treated as: A Nondeductible personal interest if used to pay credit card debt. . B Nondeductible. . C Deductible if used to remodel a residence with or without the home used as security. . D Follows the general interest tracing rules for key employees. . 43. An itemized deduction which is subject to both a $100 floor and a 10%-of-AGI floor is a: A Job-related expense. . B Medical expense. . C Casualty loss. . D Gambling loss. . 44. Employees may deduct expenses incurred for: A Education to enter a new trade or business. . B Most job-related expenses if they do not exceed 2% of AGI. . C Any reimbursed job-related expenses. . D Unreimbursed use of their personal vehicle to make sales calls. . 45. Professional gamblers differ from nonprofessional gamblers in which way? A Professional gamblers losses are not limited. . B Nonprofessional gamblers are required to net winnings and losses. . C Professional gamblers report their winnings and losses on Schedule C as a trade or business. . D They do not differ in their tax treatment of gambling activity. . 46. The earned income credit is available for taxpayers: A With qualifying children. . B Without qualifying children. . C With or without qualifying children. . D Do not select this answer choice. . 47. Which of the following is correct concerning the adoption credit? A It is a nonrefundable credit for 2016. . B It does not carry forward unused amounts. . C The credit has an annual limit for qualifying expenses. . D The credit is only available in the year the adoption becomes final. . 48. Regarding the child tax credit, which of the following is correct for 2016? A It is $1,000 per qualifying child up through age 16. . B It is a nonrefundable credit. . C The credit is allowed for all dependents meeting the definition of a qualifying child. . D The credit is allowed only for the custodial parent. . 49. Lucy owns a small bakery for dogs, and it is her sole source of income. Lucy's AGI for 2016 was $125,000. Her required estimated tax payments for 2017 are ______ of her prior year's tax. A 75%. . B 90%. . C 100%. . D 110%. . 50. A client is in Brazil on April 15, 2017. Which statement below is accurate? A The client has an additional two months to file his/her tax return and make any payments for tax . due without penalty if their tax home is not in the U.S. B The client has an additional two months to file his/her tax return and make any payments for tax . due without penalty if they are out of the country on this date as a civilian. C Any U.S. citizen may be granted a two-month extension for filing a return if physically out of the . country on April 15. D Only individuals serving in a combat zone are entitled to an extension of time to file and time to . pay any tax due without penalty