Tax

Question 1

Estimated tax payments need to be the lower of: _____ of the tax liability shown on the return for the current year, or, _____of the tax liability shown on the return for the prior year.

However, if a taxpayer’s AGI is greater than $150,000 they must pay _____of the prior year’s income tax liability

Answer 1

90% 100%

110%

Question 2

For a relative to qualify a taxpayer to be Head of Household, how long must the taxpayer’s home be the main home of the relative?

Answer 2

More than half the year.

Question 3

In the year a taxpayer’s spouse dies, if the taxpayer does not remarry, he or she can file under what status?

Answer 3

Can use either of the married filing statuses (MFJ or MFS).

Question 4

Form 8606

Answer 4

used when Traditional IRA contributions are made when the taxpayer’s MAGI is above the phaseout thresholds. In this case, the funds are considered ‘non-deductible.’

Question 5

Form 5498

Answer 5

Contributions made to the Roth IRA(s) for the tax year

Question 6

Roth IRA conversion amounts are listed as distributions on Form

Answer 6

1099-R

Question 7

Each of the following items is considered an exclusion from income and is not taxable

Answer 7

Tax Exclusions
MAFIAS PADDED MICS

Muni Bond Int
Accident & Health Plans: Employer Prems
Fringe Benefit
Inheritance & Gifts
Accident & Health Plans Amt Rec’d
Scholarships

Pers Residence Sale 250/500k
Adoption Asst
Death Bene
Dependent Care Asst
Educational Asst (up to $5,250)
Debt Discharged in a PSLF program

Meals and Lodging for ees
Interest in Education Svgs Bonds
Compensatory Damages Comp
Support Payments (child & post 2018 alimony)

Question 8

What is the Failure to Pay penalty?

Answer 8

0.5% per month the tax is unpaid up to a maximum of 25%.

Question 9

What is the Failure to File penalty?

Answer 9

5% of the unpaid taxes for each month or part of a month that a tax return is late up to a maximum of 25%.
A minimum penalty of $485 is imposed if the tax return is later than 60 days.

Question 10

If both a Failure to Pay Penalty and Failure to File Penalty are applied in the same month what happens?

Answer 10

the Failure to File Penalty is reduced by the amount of the Failure to Pay Penalty for that month, for a combined penalty of 5% for each month or part of a month that the return was late.

Question 11

Form used to report income or loss from a business that a taxpayer operated, or a profession they practiced as a sole proprietor.

Answer 11

Schedule C

An activity qualifies as a business if:

The primary purpose for engaging in the activity is for income or profit.
The owner is involved in the activity with continuity and regularity.

Question 12

When the taxpayer intends to defraud, a ____ penalty will apply to the amount of the deficiency.

Answer 12

75%

Question 13

Kiddie Tax applies to what age?

Answer 13

Children under age 19 or full-time students under age 24.

Question 14

How is Kiddie Tax calculated

Answer 14

Net unearned income more than the $2,500 (2023) threshold amount is subject to tax at the highest marginal tax rate of the child’s parents. Net unearned income below the threshold is not subject to the Kiddie Tax.

Question 15

Schedule D

Answer 15

capital gains and losses

Question 16

Schedule A

Answer 16

below-the-line deductions (i.e., deductions from AGI) (itemized deductions)

Question 17

Schedule 1

Answer 17

Additional Income and Adjustments to Income

Question 18

Schedule E

Answer 18

Rental and Royalty Income

Question 19

Schedule F

Answer 19

P&L Farming

Question 20

Schedule H

Answer 20

Household Employment

Question 21

Form 4868

Answer 21

Extension of time to file

Question 22

For 2023, a child’s standard deduction is

Answer 22

the greater of $1,250 or their earned income plus $400 (not to exceed $13,850 which is the single stand ded).

Question 23

When a taxpayer submits a frivolous return, a tax penalty in the amount of _________ is imposed.

Answer 23

$5,000

Question 24

Adjusted gross income reduced by deductions from AGI equals ________________.

Answer 24

Taxable Income

Question 25

Taxpayers may deduct up to a _________ loss provided they actively participate in the real estate property endeavor.

Answer 25

$25,000
Active participation requires:
Taxpayer owns at least 10% of the property, and,
Has substantial involvement in managing the property

Phase out range is $100,000-$150,000

Question 26

Interest paid from a mortgage on a primary and secondary residence up to ________________of debt acquired post 12/2017 is deductible if the taxpayer itemizes.

Answer 26

$750,000

Question 27

The law limits deductions for charitable contributions to private foundations to____ of the taxpayer’s adjusted gross income

Answer 27

30%

Question 28

Income from whatever source derived – exclusions = _______________

Answer 28

gross income.

Question 29

The above-the-line deduction available for educator expenses applies to which unreimbursed items?

Answer 29

eligible educator (i.e., teaches 900+ hours/year in K-12). Books, supplies, software, & services are all approved expenses.

Question 30

he form on which mortgage interest and state & local taxes are documented.

Answer 30

Schedule A

Question 31

The federal estate tax is calculated in five steps:

Answer 31

Determining the value of the gross estate.
Arriving at the adjusted gross estate.
Determining the taxable estate.
Calculating the federal estate tax payable before credits.
Applying the allowable credits to arrive at the net federal estate tax.

Question 32

Federal estate tax is due within ______ months of the decedent’s death.

Answer 32

nine

Question 33

What is the Kiddie Tax calculation?

Answer 33

When a child under 18 has unearned income over $2500
First $1250 $0 tax
Next $1250 child’s tax rate
Remaining at parent’s marginal rate