CP BUSINESS SERVICES TAX EXAM

IRS Form _____, Amended Individual Income Tax Return is filed to correct a tax return that has already been filed. The corrected tax return may require the payment of additional taxes or may entitle the taxpayer to an additional refund.

1040X

940

1040

8453-OL

An individual can choose to file as Married Filing Separately if:

They are divorced as evidenced by a final divorce decree dated no later than September 30 of the tax year

They are considered married on the last day of the tax year because they meet one of the tests for being considered married

Their spouse died during the previous tax year

They lived apart from their boyfriend for at least the last 6 months of the tax year

An individual cannot claim a person as a dependent unless that person is their ______ ______ or ______ ________ and meets the tests established for each.

Qualifying Child / Qualifying Parent

Qualifying Relative / Qualifying Dependent

Qualifying Dependent / Qualifying Relative

Qualifying Child / Qualifying Relative

Joe LaFoe is a single parent who provides a home for his 5 year old dependent child. What filing status should Joe use?

Married Filing Separate

Head of Household

Single

Qualifying Widow(er)

Mr. Sam Jones's wife passed away on March 6 of the current tax year and Mr. Jones has not remarried. He maintains a home for himself and his 14-year-old daughter. Mr. Jones provided over half of his daughter's support and she lived with him all year. What filing status is most beneficial for Mr. Jone to use when filing his tax return?

Qualifying Widow(er)

Head of Household

Married Filing Joint

Single

Two taxpayers married on November 30. That same year, the husband enrolled in an accredited college to further his career and subsequently received a Form 1098-T, Tuition Statement. The wife was employed with an income of $45,000 and paid for the husband's education expenses. The taxpayers did not receive any other income for the year. Based on their circumstances, what is the correct method to report the education credit?

Taxpayers must file a joint return to claim an education credit

Based on the wife's AGI, they do not qualify to claim an education credit

Husband is ineligible to claim an education credit because the wife paid his education expenses

Wife should report nonqualified education expenses on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)

If you have a dependent that you cannot claim for the child tax credit, the dependent may still qualify you for which $500 credit

The Alternative Minimum Tax Credit

The State and Local Income Tax Credit

The Credit for Other Dependents

The Credit for Foreign Dependents

Tax preparation fees for individuals are generally deductible for the current year as:

They are not deductible

A tax credit on Schedule 1

An investment expense on Schedule A

A miscellaneous itemized deduction subject to the 2% limit

What do you need in order to be able to deduct an expense on your taxes?

A receipt from the expense

Any verifiable proof of the expense

Both a receipt and a written record of when and where the expense occurred

What is the best way to ensure that you don't miss any large tax deductions for which you may be eligible?

Keeping organized records

Hiring a professional tax preparer

Having a professional look over your tax return after you prepare it yourself

Even taxpayers that would not normally need to file a tax return, should file on when the following is true?

If the taxpayer is owed a refund from taxes paid

If a taxpayer needs to only make a tax payment

Self-employment income exceeds $200.00

Which of the following can reduce your tax bill?

Opening bank accounts overseas

Contributing to a Roth IRA

Paying cash for medical bills

Giving money to your brother, sister, niece or nephew

I worked over the summer and got a 1099-MISC form from my employer. Now what?

Call the employer and tell them they sent the wrong form.

Report the income on IRS Schedules C and SE.

Call the IRS tip hotline to report fraud.

Deduct you student health insurance premiums on your taxes.

I received a Form 1098-T. What do I do with it?

Forward it on to your parents so they can reduce their taxes.

Fill in IRS Form 8863 to reduce your own taxes.

Put it aside as it is not a legal tax document.

I worked this summer in New York City and my home is in Texas. With which states and municipalities will I need to file my taxes?

New York City

New York State

Texas

A & B

You are not paying federal taxes up to $9,525, 12% for income from $9,526 up to $38,700, 22% for income from $38,701 up to $82,500. If your income is $57,890, how much taxes do you need to pay in the end?

$9,201

$12,736

$6,855

$7,723

You earned $96,000 last year. Your effective tax rate is; Federal: 16.3, FICA: 7.65, state: 4.5. If you have added them all and subtracted them from your gross income, what would be left of your income from last year?

$27,198

$68,688

$15,369

$48,245

You earn an amount of $22,000. The tax table says you owe $3,456 in taxes. During the year, your tax withholdings were $5,333. What is the refund amount?

$22,000

$1,877

$5,333

$3,456

Which of the following is NOT a reason to file an amendment?

You want to choose a different preparer

You chose the wrong filing status

You forgot to add a dependent

You did not include a taxable source of income (W2, interest,etc)

Taxable income is any income that is subject to federal income tax. All taxable income must be reported on a tax return unless the amount is so small that the individual is not required to file a return. Most employment compensation is taxable, including

Tips and compensation for personal services

Wages and Salaries

Bonuses and Commissions

ALL OF ABOVE

Self Employment income or losses are reported on which form?

Schedule C-EZ , Net Profit or Loss from Business

Schedule C, Net Profit or Loss from business

Either A or B

None of the above

To qualify for the American Opportunity or Lifetime Learning Credit, a taxpayer must have paid higher education expenses that qualify as tuition and related expenses. Tuition expense are tuition and fees required for enrollment or attendance at an eligible educational institution. Related expensed can include fee for

Course related books

Course related supplies and equipment

Student activity fees

ALL OF ABOVE

Taxpayers who bought their own health care policy under the Affordable Care Act requirements may be eligible for a tax credit. It's known as:

Medical Insurance Credit

Obamacare Assistance Credit

Premium Tax Credit

Marketplace subsidy

CP BUSINESS SERVICES TAX EXAM

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