CPA reg exam UPDATED ACTUAL Exam
Questions and CORRECT Answers
Individual income tax formula - CORRECT ANSWER - Gross income
- adjustments
=adj gross income
- Standard or itemized deductions
- exemptions
=taxable income
*tax rate
=federal income tax (reg or amt)
- tax credits
Other taxes
- payments
= tax due or refund
Gross income - CORRECT ANSWER - Wages
Interest
Dividends
State tax refunds
Alimony received
Business income (schedule C)
Capital gain/loss (schedule D)
IRA income
Pension annuity
Rental income/loss
K-1 income/loss
Unemployment compensation
,Social security benefits
Other income
Social security tax base is - CORRECT ANSWER - a self-employed person's net profit
from self-employment
for employees, it is based on gross wages, employers also pay the tax
Adjustments - CORRECT ANSWER - "deductions to arrive at adjusted gross income"
Educator expenses
IRA
Student loan interest expenses
Tuition and fee deduction
Health savings account
Moving expenses
One half self employment taxes
Self employed insurance
Self employed retirement
Interest withdrawal penalty
Alimony paid
Attorney fees in rare cases
Domestic production activities deduction
Filing Status - CORRECT ANSWER - Determined by end of year status
Exceptions:
Divorced must not be joint.
Death of spouse can still be filed jointly
,Qualifying widower - CORRECT ANSWER - Must have had dependent with you the
whole year to qualify
Birth or death during the year - CORRECT ANSWER - Still get the full exemption.
head of household - CORRECT ANSWER - Must have a dependent for more than half the
year.
Dependent can be:
Qualifying child
Mother or father(nursing home is fine)
Dependent relatives (must live with you)
Personal exemption - CORRECT ANSWER - Parents use your exemption then you lose it
Phase out of personal exemptions - CORRECT ANSWER - Exemptions reduced by 2%
for every 2,500 over a certain limit
Can a pet be a dependent - CORRECT ANSWER - NEVER
Qualifying child (CARES) - CORRECT ANSWER - Close relative
Age limit (19 or 24+ college)
Residency and filing requirement (1/2 year)
Eliminate gross income test
Support test changes (not more than one half of their own support)
Qualifying relative (SUPORT) - CORRECT ANSWER - Support (tax payer supplied over
50%) test
Under exemption amount of taxable (gross) income test
, Precludes dependent filing a joint tax return test
Only citizens (resident of US/Canada or Mexico) test
Relative test or Taxpayer lives with individual for the whole year test
Multiple support agreement - CORRECT ANSWER - 1 supporter gets full exemption but
contribute more than 10% of persons support
-all must be qualifying relatives that contribute cumulative more than 50% of the support of the
defendant
Increased standard deduction - CORRECT ANSWER - Age 65 or older
Blind
Does not get an extra exemption
Computation of income - CORRECT ANSWER - Taxable =fmv income and fmv basis
Non taxable = no income and nbv basis
2 taxes on net business income - CORRECT ANSWER - 1.Income Tax
2. Federal self-employment (SE) tax
as employee and employer you pay both
No deductible expenses on Schedule C - CORRECT ANSWER - Salary to sole proprietor
Federal income tax
Personal portion of any expenses
Bad debt expense of cash basis
Charitable contributions
Questions and CORRECT Answers
Individual income tax formula - CORRECT ANSWER - Gross income
- adjustments
=adj gross income
- Standard or itemized deductions
- exemptions
=taxable income
*tax rate
=federal income tax (reg or amt)
- tax credits
Other taxes
- payments
= tax due or refund
Gross income - CORRECT ANSWER - Wages
Interest
Dividends
State tax refunds
Alimony received
Business income (schedule C)
Capital gain/loss (schedule D)
IRA income
Pension annuity
Rental income/loss
K-1 income/loss
Unemployment compensation
,Social security benefits
Other income
Social security tax base is - CORRECT ANSWER - a self-employed person's net profit
from self-employment
for employees, it is based on gross wages, employers also pay the tax
Adjustments - CORRECT ANSWER - "deductions to arrive at adjusted gross income"
Educator expenses
IRA
Student loan interest expenses
Tuition and fee deduction
Health savings account
Moving expenses
One half self employment taxes
Self employed insurance
Self employed retirement
Interest withdrawal penalty
Alimony paid
Attorney fees in rare cases
Domestic production activities deduction
Filing Status - CORRECT ANSWER - Determined by end of year status
Exceptions:
Divorced must not be joint.
Death of spouse can still be filed jointly
,Qualifying widower - CORRECT ANSWER - Must have had dependent with you the
whole year to qualify
Birth or death during the year - CORRECT ANSWER - Still get the full exemption.
head of household - CORRECT ANSWER - Must have a dependent for more than half the
year.
Dependent can be:
Qualifying child
Mother or father(nursing home is fine)
Dependent relatives (must live with you)
Personal exemption - CORRECT ANSWER - Parents use your exemption then you lose it
Phase out of personal exemptions - CORRECT ANSWER - Exemptions reduced by 2%
for every 2,500 over a certain limit
Can a pet be a dependent - CORRECT ANSWER - NEVER
Qualifying child (CARES) - CORRECT ANSWER - Close relative
Age limit (19 or 24+ college)
Residency and filing requirement (1/2 year)
Eliminate gross income test
Support test changes (not more than one half of their own support)
Qualifying relative (SUPORT) - CORRECT ANSWER - Support (tax payer supplied over
50%) test
Under exemption amount of taxable (gross) income test
, Precludes dependent filing a joint tax return test
Only citizens (resident of US/Canada or Mexico) test
Relative test or Taxpayer lives with individual for the whole year test
Multiple support agreement - CORRECT ANSWER - 1 supporter gets full exemption but
contribute more than 10% of persons support
-all must be qualifying relatives that contribute cumulative more than 50% of the support of the
defendant
Increased standard deduction - CORRECT ANSWER - Age 65 or older
Blind
Does not get an extra exemption
Computation of income - CORRECT ANSWER - Taxable =fmv income and fmv basis
Non taxable = no income and nbv basis
2 taxes on net business income - CORRECT ANSWER - 1.Income Tax
2. Federal self-employment (SE) tax
as employee and employer you pay both
No deductible expenses on Schedule C - CORRECT ANSWER - Salary to sole proprietor
Federal income tax
Personal portion of any expenses
Bad debt expense of cash basis
Charitable contributions
