EA SEE Exam 1

Question 1

What is the adoption credit amount for 2023?

Answer 1

$14,900

Question 2

A qualifying child claimed for the EITC can be any age if they:

Answer 2

(1) Have a permanent and total disability and
(2) Have a valid Social Security number

Question 3

Mortgage interest can be deductible on?

Answer 3

A maximum of two homes

Question 4

Who is not subject to the NIIT?

Answer 4

Nonresident aliens

Question 5

What documentation is required for a cash donation of less than $250 to a qualified charity?

Answer 5

A canceled check, bank or credit union statement, credit card statement, or a receipt that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution.

Question 6

Medical expenses are deductible to the extent that they exceed what % of adjusted gross income (AGI).

Answer 6

7.5%

Question 7

Medical expenses are deductible on?

Answer 7

Schedule A

Question 8

What is the Additional Medicare Tax Rate?

Answer 8

0.9%

Question 9

What are the Additional Medicare Tax thresholds?

Answer 9

Married filing jointly: $250,000.
Married filing separately: $125,000.
Single, HOH, QSS: $200,000.

Question 10

What is the additional standard deduction for those who are blind or over 65 years old?

Answer 10

$1,500 ($1,850 if using the single or HOH filing status).

Question 11

What are the standard deduction amounts for 2023?

Answer 11

Single; MFS - $13,850
MFJ; QSS - $27,700
Head of Household - $20,800

Question 12

Businesses that employ more than _____ full-time equivalent employees are required to report to the IRS about the health insurance offered to their employees.

Answer 12

50

Question 13

Basic Qualifying Rules to qualify for the EITC in 2023, the taxpayer must have:

Answer 13

(1) Have worked and earned income
(2) Have investment income below $11,000 in the tax year 2023
(3) Have a valid Social Security number by the due date of the return (including extensions)
(4) Be a U.S. citizen or a U.S. resident alien all year
(5) Not file Form 2555 (related to foreign earned income)

Question 14

Education credits cannot be claimed by who?

Answer 14

Married taxpayers who file as Married Filing Separately or by an individual who is a dependent of another taxpayer

Question 15

The Net Investment Income Tax (NIIT) is what rate?

Answer 15

3.8%

Question 16

What are the four tests for the Earned Income Tax Credit qualifying child?

Answer 16

JARR

1) Joint return test
2) Age (18 or under, 23 full time student, disabled)
3) Residency (more than half year)
4) Relationship (child, descendant, sibling)

Question 17

Who is a qualifying person for the Child and Dependent Care Credit?

Answer 17

1) Care for a child under age 13
2) Care for a disabled dependent or a disabled spouse of any age

Question 18

What is the age requirement for a child to be eligible for the Child Tax Credit (CTC) or Additional Child Tax Credit (ACTC)?

Answer 18

The child must be under the age of 17 at the end of the tax year.

Question 19

Taxpayers can deduct certain taxes if they itemize deductions. In order to be deductible, a tax must have been imposed on the taxpayer and paid by the taxpayer during the tax year. Deductible taxes include:

Answer 19

State, local, and foreign income taxes,
State and local sales taxes,
Real estate taxes (but not for foreign real estate),
Personal property taxes (such as the portion of DMV fees based on the value of the car).

Question 20

The Tax Cuts and Jobs Act instituted a temporary cap on state and local taxes (also called the SALT cap). This deduction is capped at ____ until 2025.

Answer 20

$10,000 ($5,000 for MFS filers)

Question 21

Taxpayers may be eligible for The Retirement Savings Contributions Credit (Saver’s Credit) if they are:

Answer 21

1) Age 18 or older,
2) Not claimed as a dependent on another person’s return, and
3) Not a full-time student.

Question 22

The retirement savings contribution credit is worth?

Answer 22

up to $1,000 ($2,000 if married filing jointly).

Question 23

What form must be submitted by a paid tax return preparer with every claim for EITC filed electronically or attached to every paper return that has an EITC claim?

Answer 23

Form 8867, Paid Preparer’s Earned Income Credit Checklist

Question 24

For 2023, an eligible educator can deduct up to ____ of qualifying expenses

Answer 24

$300

Question 25

What are the estimated payment tax dates?

Answer 25

4/15, 6/15, 9/15, 1/15

Question 26

A taxpayer can deduct up to _____ per year of losses for rental real estate activities in which he actively participates. MAGI limits?

Answer 26

$25,000 $50,000 (MFS); $100,000 (MFJ) - 50% after until phaseout $75,000 (MFS); $100,000 (MFJ)

Question 27

How should the IP PIN be used?

Answer 27

The preparer should enter Penny's IP PIN on the tax return next to her signature block.

Question 28

How is a non-dividend distribution treated?

Answer 28

The non-dividend distribution is non-taxable, and lowers his basis in his stock.

Question 29

In order for a taxpayer to claim the Child Tax Credit, the child must have an SSN that’s valid for employment and issued before: _____________________.

Answer 29

The due date of the return (including extensions).

Question 30

What is the base amount for calculating the taxability of Social Security benefits for a taxpayer filing as single, head of household, qualifying surviving spouse, or married filing separately (and lived apart from their spouse all year)? For married couples, it is?

Answer 30

$25,000; $32,000

Question 31

If a taxpayer defaults on a credit card debt or some other loan, what form will the taxpayer typically receive when the debt is canceled by the lender?

Answer 31

Any creditors and lenders must send a Form 1099-C to borrowers and the IRS if $600 or above in debt was forgiven or canceled.

Question 32

A foreign student on a temporary student visa is exempt from the “substantial presence” test for how many years?

Answer 32

5

Question 33

What is the allowable capital loss amount for MFS and MFJ?

Answer 33

$1,500 & $3,000

Question 34

The Other Dependent Credit (ODC) can be claimed for:

Answer 34

1) Dependents of any age, including those who are age 18 or older. 2) Dependents who have Social Security numbers or individual taxpayer identification numbers (ITINs). 3) Dependent parents or other qualifying relatives supported by the taxpayer. 4) Dependents living with the taxpayer who aren't related to the taxpayer.

Question 35

With regards to the QBI deduction, what does the unadjusted basis immediately after acquisition (UBIA) of qualified property mean?

Answer 35

UBIA is tangible property subject to depreciation that is held and used in the production of QBI by a business.

Question 36

Larry is not liable for the AMT this year, but he paid AMT in the previous year. How can he get a credit for the prior year's minimum that he paid?

Answer 36

He should complete and attach Form 8801 to his individual return.

Question 37

What is the process for deducting foreign taxes?

Answer 37

Under $300 (single) $600 (married) can be done directly on 1040; Over use form 1116

Question 38

At which income threshold does the Kiddie Tax come into effect in 2023?

Answer 38

The Kiddie Tax comes into effect when a child has unearned income above $2,500 in 2023. For 2023, the first $1,250 of a child's unearned income qualifies for the standard deduction, the next $1,250 is taxed at the child's income tax rate, and unearned income above $2,500 is taxed at the parent's marginal income tax rate.

Question 39

The QBI deduction has two components. What are these two components?

Answer 39

The QBI Component and the REIT (Real Estate Investment Trust) / PTP (Publicly Traded Partnership) Component.

Question 40

How much is the Qualified Business Income deduction?

Answer 40

20%

Question 41

F and J visa student visa holders are considered resident aliens after ____ calendar years in the U.S.

Answer 41

Five

Question 42

J visa researchers and professors are considered U.S. resident aliens after ____ calendar years in the U.S.

Answer 42

Two

Question 43

What is the backup withholding rate for U.S. citizens and U.S. residents in 2023?

Answer 43

24%

Question 44

Taxpayers with more than $500 in total noncash contributions must:

Answer 44

File Form 8283 and retain a written acknowledgment (receipt) from the organization.

Question 45

Can a taxpayer deduct both sales taxes and state and local income taxes?

Answer 45

No, only one of these taxes can be deducted.

Question 46

What are the IRA limits for 2023?

Answer 46

If an individual contributes to both a traditional IRA and a Roth IRA, the combined contributions are limited to $6,500 a year ($7,500 if the taxpayer is age 50 or older).

Question 47

How much can you contribute to an IRA in 2023?

Answer 47

$6,500 under 50; $7,500 over 50

Question 48

When a taxpayer distributes funds from their retirement plan (regardless of the reason), the funds are typically subject to?

Answer 48

federal income tax withholding.

Question 49

How can an IRA distribution avoid taxes?

Answer 49

A taxpayer can avoid withholding taxes by doing a trustee-to-trustee transfer to another IRA.

Question 50

Form 8606 is used to report:

Answer 50

Nondeductible contributions to traditional IRAs, and Conversions from traditional IRA, SEP-IRA, or SIMPLE IRAs to a Roth IRA.

Question 51

At what age are you required to take minimum distributions from a traditional IRA?

Answer 51

73

Question 52

Does a taxpayer have to materially participate in a business in order to qualify for the QBI deduction? (Choose the best answer)

Answer 52

No. Material participation is not required for the QBI deduction

Question 53

What form is required to be filed when a U.S. person receives a foreign gift or inheritance?

Answer 53

Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts

Question 54

Who may be required to file an FBAR?

Answer 54

Any U.S. person with a financial interest in or signature authority over foreign financial accounts exceeding $10,000 at any time during the calendar year.

Question 55

What income tax form is required to report the taxable income of an individual bankruptcy estate?

Answer 55

Form 1041

Question 56

The unlimited estate tax marital deduction is only available if the surviving spouse is a _____________.

Answer 56

U.S. citizen only.

Question 57

When does a decedent's estate come into existence?

Answer 57

At the time of death of an individual.

Question 58

Which form is used to notify the IRS of the creation or termination of a fiduciary relationship?

Answer 58

Form 56, Notice Concerning Fiduciary Relationship

Question 59

If you own or have authority over a foreign financial account, then you may be required to: ________________.

Answer 59

File an FBAR with the FinCEN.

Question 60

U.S. citizens and U.S. residents who are officers or shareholders in certain foreign corporations must file _____ , as part of their annual tax return. In general, any US person who has at least 10% direct ownership of a foreign corporation is generally required to file.

Answer 60

Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations

Question 61

Under FATCA (the Foreign Account Tax Compliance Act), certain U.S. taxpayers holding financial assets OUTSIDE the United States must report those assets to the IRS using which form?

Answer 61

Form 8938

Question 62

When is the Form 706 due for the estate?

Answer 62

The due date of the estate tax return is nine months after the decedent's date of death, however, the estate's representative may request an extension of time to file the return for up to six months

Question 63

What is the primary purpose of the FBAR (Report of Foreign Bank and Financial Accounts)?

Answer 63

To inform the Financial Crimes Enforcement Network (FinCEN) about foreign financial accounts.

Question 64

How does the personal representative of a decedent's estate choose the estate's accounting period?

Answer 64

The personal representative chooses the estate's accounting period upon filing the first Form 1041.