Question:Corey is a self-employed contractor. Last year, his net self-employment income was $32,740. How much would Corey’s adjustment for employer-equivalent portion of self-employment tax be on line 27 of Form 1040?
a. $ 0
Oliver is a retired accountant and prepares taxes from his home to supplement his income. He is an Authorized IRS e-file Provider. However, if his clients want to have their return filed electronically, he must do
this through a Transmitter. An Authorized IRS e-file Provider who submits returns to IRS via the services of a Transmitter is known as:
a. A direct filer
b. A service bureau
c. A software developer
d. An indirect filer
Nancy’s client Jim has always filed a paper return to the IRS. This year he is considering electronic filing since he wants to get a faster refund and does not want the paper return to get lost in the mail. Which of the following statements concerning electronic filing is correct?
a. Anyone can electronically file any return with the IRS.
b. All paid tax preparers must electronically file all tax returns.
c. Form 8879 must be completed by the preparer and signed by all taxpayers.
d. Taxpayers will get refunds about 1-2 weeks sooner than if they submit a paper return.
Brian and Linda have three children ages 7, 9, and 17. This year they have a tax liability of $1,198. Assuming they otherwise qualify for the credit and are not affected by the phase-out amounts, what is the amount of their child tax credit for tax year 2017?
Erin received the following dividend income:
• American, Inc. (ordinary) $ 70
• KIT (ordinary) $649
• Arco (ordinary) $941
• Arco (reinvested) $793
• NuVision Credit Union $790
What is the amount to be reported on line 6, Schedule B?
c. $793 (not required to use Schedule B)
Forms 8879 and/or Form 8453 may be required for an IRS e-file return. Which of the following statements most accurately describes the function of Form 8453?
a. It is an IRS e-file signature authorization form to be used when requested by IRS.
b. It is a transmittal form for an IRS e-file return which must be signed by the taxpayer and sent to IRS with the required documents attached.
c. It is a document which, when required by IRS, must be signed by the taxpayer and kept on file by the ERO for at least three years.
d. It is a transmittal document only which must be submitted to IRS along with any paper supporting documents required for an IRS e-file return.
All tax preparers have to exercise due diligence when preparing tax returns claiming EIC (Earned Income Credit) and Schedule C. To comply with the due diligence requirements, tax preparers must meet all the following prerequisites. Which statement is incorrect?
a. The preparer must not know or have reason to know that any information used is incorrect on determining the taxpayer’s eligibility for the EIC. The preparer may not ignore the implications of information received and must make reasonable inquiries if the information is incorrect, inconsistent, or incomplete.
b. The preparer must complete either (a) the Earned Income Credit Worksheet or (b) record in the preparer’s files the EIC computation, including the method and information used to make that computation. The information must be provided by the taxpayer or reasonably obtained by the preparer.
c. The preparer must retain, (a) the completed Form 8867, (b) a copy of the Worksheet, and (c) a record of how and when the information was obtained by the preparer, including the identity of the person furnishing the information.
d. The preparer must submit Form 8867 with the tax return (if it is being electronically filed) for any taxpayer claiming EIC if a preparer was paid to complete the return.
Woodrow and Elisabeth Martin have an AGI of $330,000. The couple is filing Married Filing Jointly and they have two dependent children. What is their exemption deduction?
Michelle has two children of her own, ages 15 and 12, and also cares for her two year old granddaughter. Michelle claims exemptions for all three children. Her AGI is $32,100 and her tax liability is $2,200. What is the amount, if any, of her child tax credit?
c. $ 0
Bernard (age 45) and Marie (age 44) are married and both contribute $3,000 to their traditional IRA’s. Marie is a stay at home mom and Bernard works full-time, their AGI is $56,500 for the year. Bernard doesn’t have a retirement plan at work. Neither received a distribution from a retirement plan or IRA during the year. What is the maximum amount of retirement savings contribution credit Bernard and Marie can claim?
d. $ 0
Bart is 67 years old and his wife, Anna, is 57 years old. Bart is retired and receives Social Security in the amount of $10,000 per year. Anna withdrew $12,000 from her IRA during 2017. Bart and Anna are filing a joint return; they have no other income to report. What is their 2016 tax liability?
a. $ 0
Jennifer purchased a house on June 1, 2015. She and the seller paid the annual real estate taxes on the house during closing. The taxes for the house are $1,648 per year. What amount of real estate tax is deductible to Jennifer? (Round to the nearest dollar.)
c. $ 0