Tax Preparer Practice Exam

These questions are part of the practice quiz. Start practicing

• Which asset is considered listed property unless used exclusively at a business?
• Which of the following types of taxes are commonly deductible?
• What is the adjustment to income for eligible educators based on classroom expenses meant to support?
• Which kinds of scholarships might not be taxable?
• What implication does being "at risk" have for a proprietor?
• Which type of property cannot be depreciated under MACRS?
• Which of the following best describes the Modified AGI limits for tuition and fees deduction?
• Who qualifies for additional deductions for medical expenses?
• What is the maximum contribution limit to 401(k) plans for the year 2009?
• What should a Tax Professional do if they discover a client is noncompliant with tax law?
• For how long after a spouse's death can a taxpayer potentially qualify for widow(er) status?
• Who cannot claim a student loan interest deduction?
• How is the compensation of clergy members treated differently for tax purposes?
• What is the purpose of self-employment tax?
• If a property is depreciated using the mid-quarter convention, how is the MACRS deduction for the year of disposition computed?
• What is it called when a taxpayer transfers funds from one IRA to another?
• What document will a taxpayer receive regarding their disability pension?
• What term is used when a taxpayer adds money to an IRA?
• If a taxpayer wants to e-file in January, what must they have to do so?
• Which of the following statements is correct concerning contributions to a traditional IRA?
• Why is it critical to differentiate qualified home mortgage interest from personal interest?
• What is the maximum lifetime learning credit per return?
• Which of the following is an example of listed property?
• What happens if one spouse refuses to file a joint return?
• When would a pension be partly taxable?
• How should a Tax Professional handle a situation where they discover a conflict of interest?
• What does it mean to depreciate an asset?
• What is the result of calculating Adjusted Gross Income (AGI) for taxpayers?
• Under what condition can a noncustodial parent claim the child's dependency exemption?
• How can a disability pension qualify as earned income for the Earned Income Credit (EIC)?
• If an employee believes their Form W-2 is incorrect, what initial step should they take?
• When is a person's marital status assessed for tax purposes?
• What federal legislation relates to qualified retirement plans?
• What must a Tax Professional obtain before leaving a message about a client's tax return?
• What form is used to report social security benefits to the recipient?
• Who qualifies for the Additional Child Tax Credit?
• What is the threshold at which interest income must be reported on Form 1040, Schedule B?
• Under what condition are tips not subject to social security and medicare taxes?
• What is the required form for reporting child care tax credits?
• In determining a taxpayer's filing status, which option is relevant?
• Which form must be filed for separation of tax benefits if a divorce occurs after December 31, 2008?
• What qualifies someone as an eligible educator?
• Does Kris qualify for the Earned Income Credit (EIC) given his specific financial situation?
• Which group of taxpayers may have different standard deduction amounts?
• Which form is used to report household employment taxes?
• What type of personal property is considered non-depreciable?
• What is the main factor determining a tax return filing status?
• What is a qualified retirement plan?
• When do you need to report any repayments of income exceeding $3,000 for tax purposes?
• What is the maximum tuition and fees deduction for taxpayers with modified AGIs up to $65,000?
• When is the last date a contribution may be made to qualify for a given year?
• How is basis defined in tax terms?
• What should an independent contractor expect to receive if they earned over $600?
• Which of the following includes all associated costs in product preparation for sale?
• When would a traditional IRA distribution be partly taxable?
• What income reporting form should an independent contractor sometimes receive from the person who paid for his services?
• If a client has contract labor, what should they provide to independent contractors?
• Which taxpayers must use the Qualified Dividend and Capital Gain Tax Worksheet - Line 44?
• What type of loss may only be deducted against passive income?
• What are the two categories used to divide real property for MACRS purposes?
• What is the term for withdrawing money from an IRA?
• What does it mean if a proprietor "materially participates" in the business?
• What is the primary purpose of the Lifetime Learning Credit?
• Which of the following is a difference between traditional IRAs and Roth IRAs?
• How is a pension treated if the taxpayer has not made any contributions?
• What is essential for a child to be claimed under the Child Tax Credit?
• Which of the following is not a requirement for the Qualified Dividend and Capital Gain Tax Worksheet - Line 44?
• What type of client information must Tax Professionals keep confidential?
• What does a conflict of interest entail for a Tax Professional?
• Which form indicates that a taxpayer has received a pension distribution?
• Which parent typically claims the qualifying child in a divorce?
• To qualify for the Child Tax Credit, the child must meet which of the following criteria?
• How do you determine who paid more than half of a person's support?
• Which form is required to report the sale of a business asset?
• What is the maximum net capital loss a taxpayer can deduct in one year?
• What type of taxes does the IRS allow taxpayers to deduct?
• How much additional deduction is allowed for a taxpayer who is age 65 or older?
• What defines a qualified student loan?
• Where is income tax withheld from a pension or IRA distribution reported on the tax return?
• Why is it important to know if taxpayers are active participants in an employer-maintained retirement plan?
• Which of the following is NOT classified as depreciable property?
• How does employer assistance for child care expenses affect the child-care credit?
• What type of expenses does a qualified student loan cover?
• What are the rates for the Saver's Credit based on filing status and modified AGI?
• What types of property can be expensed using the Section 179 deduction?
• What is the maximum tax rate for long-term capital gains for most capital assets sold during 2009?
• What was the exemption amount for taxpayers in 2009?
• Can a taxpayer who installs a solar water heater in 2009 claim the residential energy credit if the home is occupied in 2010?
• When must Form 4137 be prepared?
• What is the classification of ordinary and necessary expenses?
• Which of the following expenditures is considered a home maintenance cost?
• What is the time limit for filing amended returns?
• Where does an employer report the amount of child care expense assistance provided to the taxpayer?
• Where on Form 1040 are moving expenses reported?
• Under which conditions are scholarships and fellowships considered taxable income?
• What form is used to report HSA contributions?
• How many allowances can a taxpayer claim on their W-4?
• What happens to Roth IRA contributions once they are made?
• Can married couples change their filing status from MFJ to MFS after the due date of the return?
• Which recovery category applies to nonresidential property under MACRS?
• What activities are classified as farming activities?
• What knowledge can aid a Tax Professional when assessing a client’s tax situation regarding distributions?
• What is the maximum tips amount that can go unreported without tax obligation?
• Can Carol deduct home-office expenses if her home office is used for personal activities when not in use for business?
• What effect do tax-free funds have on qualifying expenses for the American Opportunity Credit?
• On which line of Form 1040 is the educator expense deduction reported?
• Is interest received on U.S. Treasury Obligations taxable on state or local returns?
• What special treatment do self-employed taxpayers have regarding health insurance premiums?
• An employee works from home regularly and exclusively. Can he deduct home-office expenses if his employer provides an office?
• What does the IRS require regarding the acceptance of e-filed returns mainly based on W-2 forms?
• Is a canceled check sufficient documentation for a donation of $250 or more?
• Are early distributions from qualified retirement plans always subject to penalties?
• What form is required to request a six-month extension to file individual income tax returns?
• Which of the following must be known to determine if a tax return is required?
• If a taxpayer wants to amend a return filed on April 16, 2007, what is the latest date on which an amended return may be filed?
• What distributions from a traditional IRA are fully taxable?
• What is the purpose of claiming a withholding allowance?
• How can a married individual meet the joint return test to remain a qualifying child?
• What is the standard deduction for Married Filing Jointly in 2010?
• How do we determine the MACRS recovery period of a piece of personal property?
• Which of the following would typically be categorized under listed property?
• How do Tax Professionals fulfill their due diligence requirements?
• Which accounting method can show total sales even if payment is not received in the same year?
• What is the primary reason for documenting business expenses?
• What penalty may be incurred for failing to comply with the EIC due diligence rules?
• What does MACRS stand for?
• Which tax scenario requires the use of tiebreaker rules?
• Can a taxpayer deduct the cost of items purchased to benefit a charitable organization?
• Which form is used to report pension income to the recipient?
• What must be done to resolve a conflict of interest?
• Is it acceptable for a Tax Professional to leave a detailed message about a client's tax return?
• Which of the following is NOT one of the six tests for a qualifying child?
• What is the maximum amount that an eligible educator can deduct for qualified classroom expenses?
• What types of itemized deductions are subject to the 2%-of-AGI floor?
• What are the tax implications of after-tax contributions in pensions?
• Where are HSA contributions reported on Form 1040?
• Which of the following is a limitation regarding the American Opportunity Credit?
• Why is it important to know whether or not the proprietor materially participates in the business?
• What is the significance of Form 8606 in IRA distributions?
• What type of assets are generally excluded from depreciation calculations?
• What must be provided for charitable donations of $250 or more?
• What is the preferred method of depreciation for residential rental property?
• Where can standard deduction amounts be typically found for Forms 1040 and 1040A?
• Over how many years is residential real property depreciated under MACRS?
• When do you need to assess if a taxpayer paid over half of the cost of maintaining their home?
• What kind of property is considered depreciable?
• How is the MACRS deduction determined in the year of disposition for property using the half-year convention?
• What kind of information is considered confidential when handling taxes?
• What determines the outcome when multiple taxpayers claim the same qualifying child?
• What is included in the basis of purchased property?
• What is the deduction allowed for home-office use?
• What is the value of the Child Tax Credit for each qualifying child?
• Which of the following is an example of a non-depreciable asset?
• How can a Tax Professional determine if a distribution exception applies?
• What criteria must be met for a taxpayer to use the qualifying widow(er) filing status?
• What characterizes a thorough client interview conducted by a Tax Professional?
• Which of the following is NOT a reason to claim exemption from withholding?
• What does AGI stand for in tax terms?
• What is the primary purpose of the alternative minimum tax (AMT)?
• If a taxpayer wants to recover costs rolled over from a qualified plan, how is it treated in terms of penalties?
• How is the cost of goods sold calculated?
• What age defines a qualified participant for early retirement plan distributions?
• Which of the following is NOT a cost associated with maintaining a home?
• What amounts make up the gross income filing requirement for most taxpayers?
• What is the maximum amount of contributions on which the Saver's Credit may be based?
• Under what condition is a pension fully taxable?
• When are gross gambling winnings taxable?
• A taxpayer makes his final estimated tax payment for 2008 in January 2009. Where does he report this payment?
• What amounts does a proprietor have "at risk"?
• What type of income does a traditional IRA primarily consist of?
• How is the taxable income calculated for taxpayers who itemize their deductions?
• What is the age limit for a child to qualify under the Relationship test?
• Which of the following losses can be deducted as a miscellaneous itemized deduction?
• Which of the following is considered a miscellaneous itemized deduction not subject to the 2%-of-AGI limitation?
• What is the minimum amount that a self-employed taxpayer must prepay to avoid underpayment penalties?
• What is the filing requirement for compensation of clergy members?
• To what level of earned income is the Additional Child Tax Credit available?
• Which of the following expenses qualifies as an impairment-related work expense?
• What are considered qualified medical expenses for an HSA?
• What happens to one’s AGI if it exceeds certain thresholds related to the exemption amount?
• What item must be reported on Schedule H?
• What time period qualifies as long-term for capital gains?
• How is the lifetime learning credit calculated?
• For which tax years is the American Opportunity Credit (AOC) available under current law?
• When does the standard deduction increase for a taxpayer?
• Which method records income only when it is actually received?
• Matthew breeds Cocker Spaniels for sale. Which schedule will he use to report his profit or loss?
• What is the primary distinction between the cash method and the accrual method of accounting?
• When can an employee claim exemption from withholding?
• How long must an individual work to be considered an eligible educator?
• How is residential real property typically depreciated according to MACRS?
• What should a Tax Professional do if a client insists on reporting inaccurate information?
• If an individual is a qualifying child for more than one taxpayer, what happens?
• What are returns and allowances in accounting?