TAX PREPARER FINAL LATEST
EXAM REVIEW
What are the six tests for a qualifying child? - ANSWERS-•
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? - ANSWERS-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? - ANSWERS-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)
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, TAX PREPARER FINAL LATEST
EXAM REVIEW
How much is the Child Tax Credit worth? - ANSWERS-Up to $1,000
for each qualifying child (4.13)
What additional requirements must be met by a qualifying child for
purposes of the Child Tax Credit? - ANSWERS-• Must be under age 17
• Must be claimed on taxpayer's return
• Must be a US citizen, US national or resident of the US. (4.15)
What is the purpose of the alternative minimum tax (AMT)? -
ANSWERS-The purpose of the alternative minimum tax is to make sure
that taxpayers with higher incomes cannot entirely avoid taxes through
the use of certain deductions and credits. (22.2)
In what way is a clergy member's compensation treated differently from
compensation of other employees? - ANSWERS-Compensation of
clergy members is subject to self-employment tax instead of social
security and medicare tax withholding. (22.5)
Under what circumstances are tips not subject to social security and
medicare taxes? - ANSWERS-Tips totaling less than $20 in a calendar
month are not subject to these taxes. Also, if the taxpayer has already
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, TAX PREPARER FINAL LATEST
EXAM REVIEW
paid the maximum social security tax for the year, further tips are not
subject to social security tax. (22.11)
Under what circumstances is Form 4137 prepared? - ANSWERS-Only if
the taxpayer did not report tips to his employer as required, or if he is
reporting allocated tips. (22.9)
What form is used to report household employment taxes? -
ANSWERS-Schedule H, Household Employment Taxes is filed to
report household employment taxes paid. The calculated amount is then
carried to Form 1040, line 59. (22.17)
Who may qualify for the Additional Child Tax Credit? - ANSWERS-•
Taxpayers with earned income in excess of $3,000 for 2009.
• Those with three or more qualifying children for child tax credit
purposes, whose child tax credit was limited by their tax liabilities.. (7.3)
Kris (26) has an earned income and AGI of $9,256. He has no other
income. He lived in the United States all year and is no one's dependent.
He has a valid SSN and is filing as single. He is a U.S. citizen. Does
Kris qualify for EIC? - ANSWERS-Yes. His Earned Income is under
$13,440 (7.5)
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, TAX PREPARER FINAL LATEST
EXAM REVIEW
What is the possible penalty for failing to comply with the EIC due
diligence rules? - ANSWERS-$100 fine for each occurrence (7.15)
What happens if an individual is a qualifying child for more than one
taxpayer? - ANSWERS-The taxpayers may decide among themselves
who will claim the credit. (7.9)
What happens when more than one taxpayer claims the same qualifying
child? - ANSWERS-The IRS will decide based on the tiebreaker rules.
(7.9)
How does one determine the taxable income of the taxpayers who
itemize deductions? - ANSWERS-Adjusted gross income (AGI) minus
total itemized deductions and total exemptions. (12.2)
What types of taxes are deductible? - ANSWERS-• State and local taxes
• Real property taxes
• Personal property taxes
• Foreign income taxes
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PAGE
4
EXAM REVIEW
What are the six tests for a qualifying child? - ANSWERS-•
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? - ANSWERS-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? - ANSWERS-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)
END OF
PAGE
1
, TAX PREPARER FINAL LATEST
EXAM REVIEW
How much is the Child Tax Credit worth? - ANSWERS-Up to $1,000
for each qualifying child (4.13)
What additional requirements must be met by a qualifying child for
purposes of the Child Tax Credit? - ANSWERS-• Must be under age 17
• Must be claimed on taxpayer's return
• Must be a US citizen, US national or resident of the US. (4.15)
What is the purpose of the alternative minimum tax (AMT)? -
ANSWERS-The purpose of the alternative minimum tax is to make sure
that taxpayers with higher incomes cannot entirely avoid taxes through
the use of certain deductions and credits. (22.2)
In what way is a clergy member's compensation treated differently from
compensation of other employees? - ANSWERS-Compensation of
clergy members is subject to self-employment tax instead of social
security and medicare tax withholding. (22.5)
Under what circumstances are tips not subject to social security and
medicare taxes? - ANSWERS-Tips totaling less than $20 in a calendar
month are not subject to these taxes. Also, if the taxpayer has already
END OF
PAGE
2
, TAX PREPARER FINAL LATEST
EXAM REVIEW
paid the maximum social security tax for the year, further tips are not
subject to social security tax. (22.11)
Under what circumstances is Form 4137 prepared? - ANSWERS-Only if
the taxpayer did not report tips to his employer as required, or if he is
reporting allocated tips. (22.9)
What form is used to report household employment taxes? -
ANSWERS-Schedule H, Household Employment Taxes is filed to
report household employment taxes paid. The calculated amount is then
carried to Form 1040, line 59. (22.17)
Who may qualify for the Additional Child Tax Credit? - ANSWERS-•
Taxpayers with earned income in excess of $3,000 for 2009.
• Those with three or more qualifying children for child tax credit
purposes, whose child tax credit was limited by their tax liabilities.. (7.3)
Kris (26) has an earned income and AGI of $9,256. He has no other
income. He lived in the United States all year and is no one's dependent.
He has a valid SSN and is filing as single. He is a U.S. citizen. Does
Kris qualify for EIC? - ANSWERS-Yes. His Earned Income is under
$13,440 (7.5)
END OF
PAGE
3
, TAX PREPARER FINAL LATEST
EXAM REVIEW
What is the possible penalty for failing to comply with the EIC due
diligence rules? - ANSWERS-$100 fine for each occurrence (7.15)
What happens if an individual is a qualifying child for more than one
taxpayer? - ANSWERS-The taxpayers may decide among themselves
who will claim the credit. (7.9)
What happens when more than one taxpayer claims the same qualifying
child? - ANSWERS-The IRS will decide based on the tiebreaker rules.
(7.9)
How does one determine the taxable income of the taxpayers who
itemize deductions? - ANSWERS-Adjusted gross income (AGI) minus
total itemized deductions and total exemptions. (12.2)
What types of taxes are deductible? - ANSWERS-• State and local taxes
• Real property taxes
• Personal property taxes
• Foreign income taxes
END OF
PAGE
4
