Form 1040 Part 4 Adjustments Deductions and Tax Flashcards
Test
1. Alex moved after he was transferred by his employer to a new office on the other side of town. His commute to his old office from his old home had been just five miles, whereas it had been 60 miles to drive from the old house to the new office. The expenses related to this move of the family added up to $2,000. How much of these expenses could Alex deduct on his 2021 tax return?
(Search Chapter 1)
- a. $2,000
- b. $0
- c. $560
- d. $1,000
My Answer: b. $0
Test
2. In a year in which a 40-year-old taxpayer may make a $6,000 maximum IRA contribution, what is the maximum Roth IRA contribution an eligible taxpayer may make if he already made a $4,000 contribution to a traditional IRA for the same year?
(Search Chapter 1)
- a. $6,000
- b. $2,000
- c. $4,000
- d. $0
My answer: $2000
Test
3. Under a divorce agreement executed in 2017 Roberta receives $2,000 in monthly alimony from her former husband and $3,000 in child support payments. How much of her annual payments received in 2021 constitute taxable income to her?
(Search Chapter 1)
- a. $60,000
- b. $36,000
- c. $24,000
- d. $0
My answer: c. $24,000
Test
4. Ellen made a $6,000 Roth IRA contribution last year. Since Roth IRA contributions are not tax deductible, by what amount does her contribution reduce her gross income to determine her AGI?
(Search Chapter 1)
- a. $6,000
- b. $0
- c. $2,500
- d. $1,000
My Answer: b. $0
Test
5. Harlan deducted state and local income taxes he paid when preparing his federal income tax return. Because he has taken the deduction for state and local income taxes, which of the following deductions is he prohibited from taking?
(Search Chapter 2)
- a. state and local sales taxes
- b. local personal property taxes
- c. real estate taxes
- d. state personal property taxes
My Answer: a. state and local sales taxes
Test
6. David and Joan are married and file a joint return. They bought a home in 2021 and obtained a mortgage. What is the maximum mortgage amount on which all interest paid on the mortgage debt used for acquisition expenses is deductible?
(Search Chapter 2)
- a. $100,000
- b. $500,000
- c. $750,000
- d. No limits apply to the amount of mortgage on which interest is deductible.
My Answer: c. $750,000
Test
7. Robert made a $500,000 charitable contribution last year to an eligible organization but is unable to take a deduction for the entire contribution due to AGI limits. What is the maximum period he can carry over the deduction?
(Search Chapter 2)
- a. five years
- b. four years
- c. three years
- d. two years
My Answer: a. five years
Test
8. Brenda’s elderly neighbor is destitute and may be forced to leave her home. Moved by her neighbor’s plight, Brenda gave her $5,000. What AGI limit applies to the charitable deduction for her gift?
(Search Chapter 2)
- a. 30%
- b. 20%
- c. The gift is nondeductible.
- d. 60%
My Answer: c. The gift is nondeductible.
Test
9. Peter, 65, and Audrey, 62, had medical expenses in 2021 of $12,000, paid eligible long-term care insurance premiums of $4,000, and paid $20,000 for Audrey’s facelift. If they had an adjusted gross income of $100,000, how much is their medical expense deduction?
(Search Chapter 2)
- a. $36,000
- b. $28,500
- c. $16,000
- d. $8,500
My Answer: d. $8,500
Test
10. Last year, Brenda paid $4,000 in state income taxes, $6,000 in real estate taxes, $800 in state personal property taxes, and $2,500 in sales taxes. What is her maximum deduction for taxes on her federal income tax return for 2021 under the applicable state and local tax limitations?
(Search Chapter 2)
- a. $10,000
- b. $10,800
- c. $13,400
- d. $9,300
My Answer: a. $10,000
Test
11. Last year, Dan paid $1,200 of interest on credit card debt, $15,400 of interest on his home mortgage, $800 of interest on money borrowed to invest in common stock, and $4,000 of interest on a car loan. How much interest may he normally deduct on his federal income tax return?
(Search Chapter 2)
- a. $21,400
- b. $16,200
- c. $19,400
- d. $17,400
My Answer: b. $16,200
Test
12. Which of the following premiums are not included in an individual’s deductible medical insurance premiums?
(Search Chapter 2)
- a. dental insurance premiums
- b. premiums for prescription drug insurance
- c. disability insurance premiums
- d. hospital insurance
My Answer: c. disability insurance premiums
Test
13. Which one of the following tax credits is refundable?
(Search Chapter 3)
- a. adoption credit
- b. credit for elderly or disabled
- c. earned income tax credit
- d. retirement savings tax credit
My Answer: c. earned income tax credit
Test
14. If a child’s total income from interest, dividends, and capital gains distributions is less than _______, a parent can include the income in his or her federal income tax return rather than file a tax return for the child.
(Search Chapter 3)
- a. $25,500
- b. $15,500
- c. $11,000
- d. $6,000
My Answer: c. $11,000
Test
15. Helen is a married taxpayer filing separately. If she incurred $10,000 for child care expenses to pay for her child while she works, what is the maximum tax credit for child and dependent care expenses she can claim?
(Search Chapter 3)
- a. $2,500
- b. $5,000
- c. $10,000
- d. No tax credit can generally be claimed for child and dependent care expenses by a person whose filing status is married filing separately.
My Answer: d. No tax credit can generally be claimed for child and dependent care expenses by a person whose filing status is married filing separately.
