Question 31 of 70.

Health insurance purchased through the Marketplace would be reported to the taxpayer on which form(s)?

Form 1095-A.

Form 1095-B.

Form 1095-C.

Forms 1095-B and 1095-C.

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Question 32 of 70.

What is the age requirement (if any) to contribute to a Roth IRA?

The taxpayer must be at least age 18 and less than age 70.

The taxpayer must be at least age 18, but there is no maximum age.

The taxpayer must be at least 19 if not a full-time student, or age 24 if they are a full-time student, but there is no maximum age.

There is no age requirement if the taxpayer meets the compensation requirements.

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Question 33 of 70.

Which of these is NOT among the most common reasons an e-filed tax return is rejected?

Use of an incorrect TIN on a tax return.

The preparer relied on nonstandard tax documents.

Mismatches between name and TIN.

The same TIN on more than one return.

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Question 34 of 70.

John and Lois are filing a joint return. Their 26-year-old daughter, June, and her 3-year-old daughter, Jessica, lived with them the entire year. John and Lois explain that June plans to claim Jessica, but they think they should be the ones to claim Jessica since she lives in their home. They would like you to prepare the tax return. What do you do?

Prepare and file the tax return. Explain to John and Lois that once their return is accepted, the IRS will reject their daughter's return if she claims Jessica.

Go through the tiebreaker rules with John and Lois. Explain to them that June has the higher claim. Explain that the only way you can file the return with them claiming Jessica is if June decides that she will not claim her.

File the return with a preparer's note that you don't believe they should be claiming Jessica.

Encourage them to go to a different preparer and to not let them know that Jessica's mother plans to claim her.

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Question 35 of 70.

Which statement is incorrect concerning alimony on the federal tax return?

Alimony payments executed under orders after December 31, 2018, will no longer be taxable income for the recipient or deductible by the payer.

Taxpayers who make taxable alimony payments may be eligible to deduct these payments as an adjustment to income.

Alimony payments may not include child support.

To claim an adjustment for alimony paid, all that is necessary is the recipient's name and the amount of alimony paid.

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Question 36 of 70.

Amari is a 26-year-old single taxpayer with a MAGI of $66,500. In 2020, he paid $2,250 of interest on a qualified student loan. What is the maximum amount of student loan interest he could deduct?

$0

$2,250

$2,500

$4,000

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Question 37 of 70.

Which of these is a risk for a taxpayer when they are not compliant with the tax laws?

The IRS will interview both them and their employer.

An examination to check their compliance with all four EITC due diligence requirements.

An examination to check their returns for the next 2-10 years.

Civil penalties with the possibility of incarceration for criminal penalties.

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Question 38 of 70.

Which of the following is a FALSE statement about the retirement savings contributions credit (Saver's Credit)?

The Saver's Credit is not available for anyone who was a full-time student for any part of five (or more) calendar months in 2020.

For the 2020 Saver's Credit, the taxpayer must be born after January 1, 2003.

Contributions to traditional and Roth IRAs and employer-sponsored qualified retirement plans may qualify the taxpayer for the credit.

Contributions to an ABLE account, made by the taxpayer and has the taxpayer as the designated beneficiary, may qualify the taxpayer for the credit.

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Question 39 of 70.

All of the following are types of retirement plans self-employed taxpayers may establish for themselves and their employees EXCEPT:

Qualified defined contribution plans, such as 401(k) plans.

Simplified employee pensions (SEPs).

SIMPLE IRAs.

Spousal IRAs.

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Question 40 of 70.

Employer-provided dependent care assistance:

May be used for the child and dependent care credit.

Is subtracted from the total expenses for child or dependent care on Form 2441.

Is included in wages on Form W-2.

Is not reported to the IRS.

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Question 41 of 70.

Which of these is NOT required to receive a waiver of the penalty for not taking a required minimum distribution from a retirement account?

File Form 5329.

Prove it was due to a reasonable error.

Withdraw double the required minimum distribution (RMD) the following year.

Establish they are taking steps to remedy the failure.

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Question 42 of 70.

Which of these statements is FALSE concerning credits and deductions?

Refundable credits may reduce the taxpayer's tax liability below zero, and the difference is refunded to the taxpayer.

Nonrefundable means that the combined amount of credits cannot reduce the taxpayer's tax liability below zero.

Credits may be used to reduce taxable income.

Deductions, lower the tax by reducing taxable income.

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Question 43 of 70.

Jayden comes to you to file his tax return. He tells you that he has received all his compensation in cash for several years, but this year he received a Form W-2, so he will be filing his taxes. What do you do?

File his current-year return with a note to the IRS explaining that you believe he has not filed previous years because he received his wages in cash.

Refuse to file the current-year return until you have filed all his previous returns.

File the current-year return, but explain to Jayden the law regarding filing requirements and encourage him to file previous returns.

Refuse to file the current-year return, explaining that you don't want to be put in jeopardy because of his failure to file in the past.

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Question 44 of 70.

When a tax preparer has knowledge that a client has not complied with any tax law, they must:

Advise the client that the IRS may contact them about their tax return.

Notify their manager of the noncompliance and let them handle it.

Advise the client promptly of the fact and the consequences of the noncompliance, error, or omission.

Notify the IRS of the noncompliance.

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Question 45 of 70.

Which of these is TRUE? A U.S. national _____.

Is the same as a resident of the United States.

Is a resident who owes their allegiance to American Samoa.

Is a U.S. citizen residing in Mexico or Canada.

Meets the citizenship or residence test for a dependent.

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Question 46 of 70.

Zina Balaskas (57) is single and earned $3,250 in wages. Because she has a large amount of investment income, she would like to contribute and deduct the largest allowable IRA amount to help reduce her tax liability. She has not yet made a contribution, but will do so before the due date of her return. Zina's maximum traditional IRA deduction is $_____________.

$0

$3,250

$6,000

$7,000

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Question 47 of 70.

Juliet's 2020 MAGI is $79,375. She files as head of household and claims her dependent daughter, Ella. Juliet paid $5,500 for Ella's college tuition. If Juliet chooses to claim the tuition and fees deduction, what is her maximum deduction?

$0

$2,000

$4,000

$5,500

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Question 48 of 70.

Which of these are ordinary dividends?

Dividends paid on a credit union savings account and reported on a Form 1099-INT.

Exempt-interest dividends paid by a mutual fund.

Capital gain distributions reported in box 3a of a Form 1099-DIV.

Dividends from stock reported in box 1a of a Form 1099-DIV.

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Question 49 of 70.

For 2020, the minimum distribution was waived as a provision of the CARES Act. Prior to 2020 and after 2020, which of these statements is FALSE concerning required minimum distributions?

The taxpayer may request relief from the penalty by filing Form 5329 and attaching a letter of explanation to the form.

The penalty may be waived if the account owner can prove that the distribution did not take place due to reasonable error, and if they can establish that they are taking reasonable steps to remedy the situation.

If a taxpayer does not make the required withdrawal by the deadline, they are subject to a 50% tax penalty based on the amount they should have withdrawn, but did not.

The required minimum distribution rules apply only to Roth IRAs.

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Question 50 of 70.

Anastasia, a 42-year-old taxpayer, earned $80,000 in wages. What is the maximum contribution she can make to her 401(k) plan in 2020?

$6,000

$7,000

$19,500

$26,000

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