2022 CE Filing Status, Exemptions and Income Test

Question 1

1. Shirley, a single person, receives Social Security retirement benefits and has other forms of income. Her Social Security benefits are included in her gross income for the year only if the total of one-half the Social Security benefits plus her other gross income and any tax-exempt interest exceeds:
   (Search Chapter 1)
   a. $20,000
   b. $25,000
   c. $32,000
   d. $45,000

Answer 1

My Answer: $25,000

Question 2

2. Ellen sells cosmetics as a self-employed person. If her net earnings from self-employment are at least $____, she must file an income tax return.
   (Search Chapter 1)
   a. $400
   b. $9,350
   c. $3,650
   d. $12,050

Answer 2

My Answer: $400

Question 3

3. George is a U.S. citizen who received $50,000 in wages, $10,000 in taxable interest, and a vehicle valued at $12,000 for his services. He also sold his secondary home in Spain for a $20,000 gain. What was his gross income for the year?
   (Search Chapter 1)
   a. $50,000
   b. $72,000
   c. $60,000
   d. $92,000

Answer 3

My Answer: d. $92,000

Question 4

4. What is the maximum age a non-disabled, full-time student may be to meet the qualifying child age test to be considered a taxpayer’s dependent?
   (Search Chapter 1)
   a. 18
   b. 26
   c. 23
   d. No maximum age test applies.

Answer 4

My Answer: 23

Question 5

5. Arthur wants to claim one of his relatives as a dependent. In order for him to do that, the relative must be a “qualifying” relative by meeting several tests and also have a gross income for 2021 that is less than:
   (Search Chapter 1)
   a. $10,000
   b. $9,600
   c. $1,900
   d. $4,300

Answer 5

My Answer: d. $4,300

Question 6

6. Harriet does not have all the information she needs to file her federal income tax return by April 15th. If she obtains an automatic extension, by what date must she file her return?
   (Search Chapter 1)
   a. October 15th
   b. August 15th
   c. December 15th
   d. June 15th

Answer 6

My Answer: a. October 15th

Question 7

7. Filing a federal income tax return as married filing jointly may offer the taxpayer all of the following benefits EXCEPT:
   (Search Chapter 2)
   a. lower income tax liability
   b. extended tax return filing date beyond the automatic extension
   c. higher standard deduction
   d. ability to qualify for tax benefits not available to other filing statuses

Answer 7

My Answer: b. extended tax return filing date beyond the automatic extension

Question 8

8. Helen is filing her federal income tax return as head of household. In order to qualify for head of household status, a “qualifying person” must have lived with her for more than half the year unless the qualifying person is which of the following?
   (Search Chapter 2)
   a. a full-time student
   b. younger than age 18
   c. a dependent parent
   d. a sibling

Answer 8

My Answer: c. a dependent parent

Question 9

9. What is the capital loss deduction limit for a taxpayer whose filing status is married filing separately?
   (Search Chapter 2)
   a. $1,500
   b. $3,000
   c. $4,500
   d. $0

Answer 9

My Answer: a. $1,500

Question 10

10. Which of the following is correct as to the reporting of payments made to an employee under a nonaccountable expense reimbursement arrangement since no accounting of expenses is made?
    (Search Chapter 3)
    a. No amounts are reportable on the employee’s W-2 form.
    b. Only amounts paid in excess of actual expenses are reportable on the employee’s W-2 form.
    c. All amounts paid under a nonaccountable expense reimbursement arrangement are reportable on the employee’s W-2 form.
    d. Amounts reportable under a nonaccountable expense reimbursement arrangement are reportable on a Form 1099.

Answer 10

My Answer: c. All amounts paid under a nonaccountable expense reimbursement arrangement are reportable on the employee’s W-2 form.

Question 11

11. Nick was eligible to contribute and actually contributed $5,000 to his Archer Medical Savings Account. How much of his MSA contribution is deductible if he does not itemize deductions on his federal income tax return?
    (Search Chapter 3)
    a. $3,500
    b. $5,000
    c. $1,500
    d. $0

Answer 11

My Answer: $5,000

Question 12

12. Audrey won a lawsuit against her employer under which she received $50,000 in back pay, $3,000 for unpaid life insurance premiums, and $10,000 for unpaid health insurance premiums. How much of the $63,000 award, if any, is reportable on her W-2 form?
    (Search Chapter 3)
    a. $0
    b. $63,000
    c. $50,000
    d. $60,000

Answer 12

My Answer: b. $63,000

Question 13

13. The maximum amount of a qualified plan achievement award an employee can exclude from income is:
    (Search Chapter 3)
    a. $0
    b. $3,400
    c. $1,600
    d. $5,000

Answer 13

My Answer: c. $1,600

Question 14

14. Peggy was offered a $25,000 severance package from her employer. She chose an alternative severance package under which the employer would provide $22,000 in cash and agree to pay for certain outplacement services valued at $3,000. How much of the severance package must Peggy include in her income?
    (Search Chapter 3)
    a. $25,000
    b. $22,000
    c. $3,000
    d. $0

Answer 14

My Answer: a. $25,000

Question 15

15. If an employee fails to report tips to his or her employer as required, the taxpayer may be subject to a penalty equal to what percentage of the Social Security and Medicare taxes or railroad retirement tax owed on the unreported tips?
    (Search Chapter 4)
    a. 10 percent
    b. 25 percent
    c. 50 percent
    d. 100 percent

Answer 15

My Answer: c. 50 percent

Question 16

16. In accordance with IRS requirements, an employee, such as a food server, who receives tips must report the tips received to his or her employer no less frequently than how often?
    (Search Chapter 4)
    a. daily
    b. weekly
    c. monthly
    d. quarterly

Answer 16

My Answer: c. monthly

Question 17

17. Only if total tips for a month are less than what amount in any month is a taxpayer who receives tips not required to report the tips to his or her employer?
    (Search Chapter 4)
    a. $20
    b. $50
    c. $100
    d. $250

Answer 17

My Answer: a. $20

Question 18

18. An employer may allocate tips to an employee for tax purposes if the tips reported by the employee are less than what percentage of the cost of the food and drink sales handled by the employee?
    (Search Chapter 4)
    a. 8 percent
    b. 12 percent
    c. 15 percent
    d. 20 percent

Answer 18

My Answer: a. 8 percent

Question 19

19. Bill received $12,000 of public assistance benefits last year paid under a public welfare fund based on need. How much income must he recognize because of receiving those benefits?
    (Search Chapter 5)
    a. $12,000
    b. $9,600
    c. $0
    d. $2,400

Answer 19

My Answer: c. $0

Question 20

20. Bob paid $20,000 in aggregate premiums for his participating life insurance policy. Over the years he received $8,500 in cash dividends. Last year he surrendered the policy for its $27,000 in cash value. What income, if any, must he recognize as a result of the surrender because his cost basis was reduced to $11,500?
    (Search Chapter 5)
    a. $0
    b. $15,500
    c. $7,000
    d. $8,500

Answer 20

My Answer: b. $15,500