HRB 27 ACTUAL EXAMS SCRIPT QUESTIONS AND
ANSWERS SURE A+
✔✔Is interest received on U.S. Treasury Obligations taxable on state and /or local
returns? - ✔✔No. Interest on U.S. Treasury Obligations is exempt from state and local
tax by federal law. (6.8)
✔✔What types of taxpayers will require the Qualified Dividends and Capital Gain Tax
Worksheet - Line 44? - ✔✔• Taxpayers who receive Form 1099-DIV showing that they
received qualified dividends must use the Qualified Dividend and Capital Gain Tax
Worksheet—Line 44.
• Also, those taxpayers who have capital gain distributions shown in box 2a of Form
1099-DIV will use the worksheet. (6.14)
✔✔What form is used to request a six-month extension to file? - ✔✔Form 4868
Application for Automatic Extension of Time to File US Individual Income Tax Return
(25.2)
✔✔If a taxpayer is anxious to e-file their return in January, can they do so without Form
W-2, as long as they have their last paystub? - ✔✔• No, they must wait until February
15.
• The IRS will not accept returns with substitute W-2s prior to February 15. (2.23)
✔✔What qualifies as long term? - ✔✔More than one year. (20.5)
✔✔Define basis. - ✔✔A measure of the taxpayer's investment in property for tax
purposes. (20.4)
✔✔What is the basis of purchased property? - ✔✔Cash paid plus the fair market value
of services rendered plus the fair market value of property traded. Certain closing costs
are added to the basis. (20.4)
, ✔✔What is the maximum net capital loss that a taxpayer may deduct in one year? -
✔✔$3,000 ($1,500 MFS) (20.11)
✔✔The top marginal tax rate for 2009 is 35%. For most capital assets sold during 2009,
what is the maximum tax rate for long-term capital gains? - ✔✔15% or 0% for taxpayers
in the 10% and 15% brackets.
Some long-term capital gains are taxed at other rates. (20.9)
✔✔When is the American Opportunity Credit (AOC) available? - ✔✔Under current law,
the AOC is available only for tax years 2009 and 2010. (9.8)
✔✔What effect do tax-free funds (such as grants) have on qualifying expenses for the
AOC? - ✔✔Expenses must be reduced by those amounts. (9.6)
✔✔What is the maximum lifetime learning credit? - ✔✔$2,000, annually per return.
(9.17)
✔✔How is the lifetime learning credit calculated? - ✔✔20% of the first $10,000 of
qualifying expenses per return, per year. (9.17)
✔✔What is the maximum tuition and fees deduction? - ✔✔$4,000 for taxpayers with
modified AGIs up to $65,000 ($130,000 MFJ), or $2,000 for taxpayers with modified
AGIs between $65,001 and $80,000 ($130,001 and $160,000 MFJ). (9.18)
✔✔What are the six tests for a qualifying child? - ✔✔• Relationship
• Age
• Residency
• Support
• Joint Return
• Special Test
(4.2)
✔✔How can a married individual meet the joint return test to remain a qualifying child? -
✔✔They can meet this test by not filing a joint return with their spouse, or they can file a
joint return with their spouse if they are filing only to claim a refund of any taxes
withheld. (4.4)
✔✔How can you determine who paid more than half of the person's support? - ✔✔Total
support is determined and reduced by the funds received by and for the person from all
sources other than the taxpayer. The remaining support is considered to be provided by
the taxpayer. (4.9)
✔✔How much is the Child Tax Credit worth? - ✔✔Up to $1,000 for each qualifying child
(4.13)
ANSWERS SURE A+
✔✔Is interest received on U.S. Treasury Obligations taxable on state and /or local
returns? - ✔✔No. Interest on U.S. Treasury Obligations is exempt from state and local
tax by federal law. (6.8)
✔✔What types of taxpayers will require the Qualified Dividends and Capital Gain Tax
Worksheet - Line 44? - ✔✔• Taxpayers who receive Form 1099-DIV showing that they
received qualified dividends must use the Qualified Dividend and Capital Gain Tax
Worksheet—Line 44.
• Also, those taxpayers who have capital gain distributions shown in box 2a of Form
1099-DIV will use the worksheet. (6.14)
✔✔What form is used to request a six-month extension to file? - ✔✔Form 4868
Application for Automatic Extension of Time to File US Individual Income Tax Return
(25.2)
✔✔If a taxpayer is anxious to e-file their return in January, can they do so without Form
W-2, as long as they have their last paystub? - ✔✔• No, they must wait until February
15.
• The IRS will not accept returns with substitute W-2s prior to February 15. (2.23)
✔✔What qualifies as long term? - ✔✔More than one year. (20.5)
✔✔Define basis. - ✔✔A measure of the taxpayer's investment in property for tax
purposes. (20.4)
✔✔What is the basis of purchased property? - ✔✔Cash paid plus the fair market value
of services rendered plus the fair market value of property traded. Certain closing costs
are added to the basis. (20.4)
, ✔✔What is the maximum net capital loss that a taxpayer may deduct in one year? -
✔✔$3,000 ($1,500 MFS) (20.11)
✔✔The top marginal tax rate for 2009 is 35%. For most capital assets sold during 2009,
what is the maximum tax rate for long-term capital gains? - ✔✔15% or 0% for taxpayers
in the 10% and 15% brackets.
Some long-term capital gains are taxed at other rates. (20.9)
✔✔When is the American Opportunity Credit (AOC) available? - ✔✔Under current law,
the AOC is available only for tax years 2009 and 2010. (9.8)
✔✔What effect do tax-free funds (such as grants) have on qualifying expenses for the
AOC? - ✔✔Expenses must be reduced by those amounts. (9.6)
✔✔What is the maximum lifetime learning credit? - ✔✔$2,000, annually per return.
(9.17)
✔✔How is the lifetime learning credit calculated? - ✔✔20% of the first $10,000 of
qualifying expenses per return, per year. (9.17)
✔✔What is the maximum tuition and fees deduction? - ✔✔$4,000 for taxpayers with
modified AGIs up to $65,000 ($130,000 MFJ), or $2,000 for taxpayers with modified
AGIs between $65,001 and $80,000 ($130,001 and $160,000 MFJ). (9.18)
✔✔What are the six tests for a qualifying child? - ✔✔• Relationship
• Age
• Residency
• Support
• Joint Return
• Special Test
(4.2)
✔✔How can a married individual meet the joint return test to remain a qualifying child? -
✔✔They can meet this test by not filing a joint return with their spouse, or they can file a
joint return with their spouse if they are filing only to claim a refund of any taxes
withheld. (4.4)
✔✔How can you determine who paid more than half of the person's support? - ✔✔Total
support is determined and reduced by the funds received by and for the person from all
sources other than the taxpayer. The remaining support is considered to be provided by
the taxpayer. (4.9)
✔✔How much is the Child Tax Credit worth? - ✔✔Up to $1,000 for each qualifying child
(4.13)
