Question: The social security tax liability for a taxpayer who is a self-employed individual who also has employee compensation, will be determined first based on their net self-employment earnings, and second from their employee compensation.
Answer Choices: True False
Answer: False
Question: A single taxpayer who participates in an employer-sponsored retirement plan is not allowed to make a deductible IRA (individual retirement account) contribution.
Answer Choices: True False
Answer: False
Question: Which of the following expenses would not be allowed as an itemized medical expense deduction:
Answer Choices: a. The cost of contact lenses to correct near-sightedness. b. Ibuprofen purchased at CVS pharmacy. c. Out-of-pocket cost for health insurance premiums (if not deducted for AGI by self-employed taxpayer). d. Prescribed Insulin for a diabetic.
Answer: b. Ibuprofen purchased at CVS pharmacy.
Question: Each of the following is an indicator that an individual is an independent contractor except:
Answer Choices: a. The individual sets their own working hours. b. The individual works at a different location rather than on the employer’s premises. c. The individual may realize a loss from business activities. d. The individual works for one business entity.
Answer: d. The individual works for one business entity.
Question: Qualifying distributions from Roth IRAs are tax free to the extent of contributions, earnings are taxed at preferred tax rates.
Answer Choices: True False
Answer: False
Question: Which of the following charitable contributions related to property will result in a contribution equal to the taxpayer’s basis in the property?
Answer Choices: a. Tangible personal property contributed to a charity that does not intend to use it for their charitable purposes. b. Stocks held for 8 years. c. Ordinary income property where the taxpayer’s basis in the property is greater than the property’s fair market value. d. Appreciated land held for two years.
Answer: a. Tangible personal property contributed to a charity that does not intend to use it for their charitable purposes.
Question: The Lifetime Learning Credit is applied on a per student basis.
Answer Choices: True False
Answer: False
Question: An individual conducting a specified service business, such as accounting, with taxable income over the maximum threshold amounts ($241,950, $483,900 if married filing jointly), will not lose the QBI deduction on such income if:
Answer Choices: a. Taxable income exceeds the thresholds due to income of a spouse. b. Taxable income did not exceed the thresholds in the prior three years. c. Taxable income exceeds the thresholds because of net capital gain income. d. Regardless of why income exceeds the thresholds, the taxpayer will lose the QBI deduction.
Answer: c. Taxable income exceeds the thresholds because of net capital gain income.
Question: Each of the following taxes is eligible to be included as an itemized deduction, except:
Answer Choices: a. Foreign Income Taxes b. Real Estate Taxes on property held for investment purposes c. Personal Property Taxes based on age of the property d. Sales Taxes if elected
Answer: c. Personal Property Taxes based on age of the property
Question: Which of the following statements is incorrect regarding business deductions deductible for AGI?
Answer Choices: a. Business deductions are limited to those directly related to business activities. b. Business deductions are limited to expenses that are ordinary and necessary for the business activity. c. Business deductions include all investment activity expenses. d. Business deductions are reported on Schedule C of Form 1040.
Answer: c. Business deductions include all investment activity expenses.
Question: Which of the following statements regarding Roth IRAs is incorrect?
Answer Choices: a. Distributions are treated as first made from contributions (return of capital). b. Taxpayers can make tax-free withdrawals of contributions (return of capital) at any time. c. A taxpayer can make tax-free withdrawals of earnings once the 5-year holding period is met and they have attained age 59½. d. Roth IRAs are subject to required minimum distribution rules.
Answer: d. Roth IRAs are subject to required minimum distribution rules.
Question: Which of the following credits is fully refundable?
Answer Choices: a. Earned Income Credit b. American Opportunity Credit c. Child Tax Credit d. Child and Dependent Care Credit
Answer: a. Earned Income Credit
Question: Casualty losses on personal use assets are eligible for deduction if they are attributable to a federally declared disaster.
Answer Choices: True False
Answer: True