Question 6 Sophia and Kevin have three children, ages 14, 15, and 19. They all live with Sophias father (70 years old). Sophia and Kevin claim the exemptions for their three children and Sophias father. Their 2021 AGI totals $91,500, and their tax liability is $7,573. During the year, they received IRS letter 6419 showing $6,000 as the anticipated Child Tax Credit made in 2021 ($3,000 for Sophia and $3,000 for Kevin). They also report receiving $8,400 in form of the Recovery Rebate Credit for the entire family. In this scenario, which of the following amounts effectively reduces the couples tax on their return? a) $ 1,000 b) $7,000 c) $7,573 d) $6,000

Question 7 Due to the pandemic, millions of Americans received unemployment compensation in 2021, many of them for the first time. Your new client, Garret, had the following items of income during the year: Stock dividends - $49,000. Bank interest - $516. Unemployment benefits - $5,893 (the American Rescue Plan Act of 2021 applies). A gift inherited from his grandmother- $12,000.

Considering the variety of help and/or subsidies the government provided to the public during 2021. What is the current amount of taxable income Garrett received during 2021? a) $49,000 b) $61,516 c) $55,409 d) $67,409

Question 8 Paul is a business owner and his new tax preparer explains to him who is eligible to use the new Standard Mileage Rate. When it comes to a business operation, which of the following examples shows a scenario in which a taxpayer may use the Standard Mileage Rate in 2021? a) The taxpayer alternates use between any number of vehicles (under five vehicles). b) The taxpayer, after using any depreciation method, can claim the Standard Mileage Rate. c) The taxpayer, after claiming a Section 179 expense deduction, would claim the Standard Mileage Rate. d) The taxpayer has previously used the Modified Accelerated Cost Recovery System (MACRS).

Question 9 Jack and Julie are teachers. Jack teaches fifth grade at a public school while Julie teaches pre-kindergarten, which belongs to a private daycare facility. Jack paid $310 for ordinary and necessary classroom expenses. Julie paid $270 for ordinary and necessary classroom expenses. Neither were reimbursed for their expenses. What would be the correct adjustment for educator expenses on their joint return that provides them the highest benefit? a) $310 b) $250 c) $500 d) $580

Question 10 Romelia (age 45) is Single with no dependents. Her income includes wages from her job and interest income from the credit union. Romelia is trying to figure out how much Earned Income Credit (EIC) she is eligible to claim. Which of the following statements is correct? a) EIC is based on earned income. b) EIC is based on adjusted gross income. c) EIC is based on earned income or adjusted gross income. d) EIC is based on taxable income.