Tax Preparer Guide to 1040 Chapter 14 Sale of Home

Question 1

Personal Residence

Answer 1

May include a house, houseboat, mobile home, coopertative apartment, or a condominium.

Question 2

Principal Residence

Answer 2

Is the personal residence that the taxpayer ordinarily lives in most of the time.

Question 3

Federal Mortgage Subsidy

Answer 3

Is either a mortgage with a lower interest rate than usually charged because it is financed with a qualified mortgage bond, or a mortgage credit certificate used to reduce the taxpayer’s income taxes.

Question 4

Simplified Employee Pension

Answer 4

A SEP plan allows employers to contribute to traditional IRAs (SEP-IRAs) set up for employees. A business of any size, even self-employed, can establish a SEP.

Question 5

Savings Incentive Match Plan for Employees (SIMPLE)

Answer 5

Is another retirement plan option that an employer can offer for his or her employees and that can be used by a self-employed individual. This plan can be used only by a business with no more than 100 employees. Employees can contribute to their accounts in much the same way as those who work for companies with 401(k) plans.

Under the SIMPLE plan, the employer must make a contribution for each eligible employee. The amount of the employer contribution depends on the employer’s choice of contribution formulas and other factors.

Question 6

High Deductible Health Plan

Answer 6

is an insurance plan that meets the minimum annual deductible and maximum annual deductible and out-of-pocket limits.