Ch 1 - Questions (Wages, Income, and Taxes)

Question 1

Items included in Gross Income

Answer 1

Compensation for services, including fees, & certain fringe benefits

Net income derived from business

Gains derived from dealings in property

Interest

Rents

Royalties

Dividends

Alimony/Maintenance payments

Income from life insurance contracts

Pensions

Certain income from discharge of indebtedness

Distributive share of partnership gross income

Income in respect of a decedent

Income from interest in a state or trust

Question 2

Items excluded in Gross Income

Answer 2

Life insurance payouts from death of insured

Gifts and inheritances

Interest on state or local bonds

Compensation for personal injuries

Qualified clergy housing allowances

Federal Income tax refunds

Qualified scholarships and fellowships

Meals or lodging provided for convenience of employer

Certain foster care payments

Disaster Relief payments

Certain income from discharge of indebtedness

Usually, the cost of up to $50,000 of group-term life insurance provided by the employer

Question 3

What do you do if W2 has been modifed

Answer 3

If a taxpayer submits a Form W-2 in which the taxpayer’s social security number, name, or address have been altered in any way, the Tax Professional is responsible for questioning the taxpayer to be sure the SSN, name, and address reported on the tax return are all correct, and documenting how this determination was made.

Check the box next to the description, “Non-standard indicator,” in the “Other W-2 Information” section on the Wage W2 input screen in BlockWorks

Question 4

Tax tables (2017) used for taxpayers with incomes of

Answer 4

Less than $100,000

Question 5

What method is used for taxpayers with incomes of $100,000 or more.

Answer 5

Tax computation worksheet

Question 6

What method is used for taxpayers with incomes under $100,000

Answer 6

Tax Tables

Question 7

Joint returns must be signed by

Answer 7

Both taxpayer and spouse

Question 8

If spouse deceased and filing jointly, who can sign for spouse

Answer 8

Executor or administrator. If non, surviving spouse

Question 9

What is PTIN

Answer 9

Preparer Tax Identification Number

Question 10

What are the three main forms used for tax preparation (2017)

Answer 10

1040EZ, 1040A, 1040

Question 11

Earned or Unearned?

Royalties

Answer 11

Unearned

Question 12

Earned or Unearned?

Alimony

Answer 12

Unearned

Question 13

Earned or Unearned?

Pensions

Answer 13

Unearned

Question 14

Earned or Unearned?

Unemployment compensation

Answer 14

Unearned

Question 15

Earned or Unearned?

Birthday gift

Answer 15

Unearned

Question 16

Earned or Unearned?

Job wages

Answer 16

Earned

Question 17

Earned or Unearned?

Tips

Answer 17

Earned

Question 18

Earned or Unearned?

Commissions

Answer 18

Earned

Question 19

Earned or Unearned?

Farming income?

Answer 19

Earned

Question 20

Gross Income: Included or Excluded:

Interest

Answer 20

Included

Question 21

Gross Income: Included or Excluded:

Rents

Answer 21

Included

Question 22

Gross Income: Included or Excluded:

Royalties

Answer 22

Included

Question 23

Gross Income: Included or Excluded:

Dividends

Answer 23

Included

Question 24

Gross Income: Included or Excluded:

Alimony

Answer 24

Included

Question 25

Gross Income: Included or Excluded:

Income from life insurance

Answer 25

Included

Question 26

Gross Income: Included or Excluded:

Pensions

Answer 26

Included

Question 27

Gross Income: Included or Excluded:

Partnership share

Answer 27

Included

Question 28

Gross Income: Included or Excluded:

Income from interest in an estate or trust

Answer 28

Included

Question 29

Gross Income: Included or Excluded:

Paychecks

Answer 29

Included

Question 30

Gross Income: Included or Excluded:

Life insurance payout for reason of death of insurec

Answer 30

Excluded

Question 31

Gross Income: Included or Excluded:

Gifts and Inheritances

Answer 31

Excluded

Question 32

Gross Income: Included or Excluded:

Interest on state bonds

Answer 32

Excluded

Question 33

Gross Income: Included or Excluded:

Personal injury compensation

Answer 33

Excluded

Question 34

Gross Income: Included or Excluded:

Federal income tax refund

Answer 34

Excluded

Question 35

Gross Income: Included or Excluded:

Meals or lodging for convenience of employer

Answer 35

Excluded

Question 36

Gross Income: Included or Excluded:

Disaster relief payments

Answer 36

Excluded

Question 37

Gross Income: Included or Excluded:

Cost of group term life insurance provided by employer

Answer 37

Excluded (up to $50k of insurance)