SOUTH WESTERN FEDERAL TAXATION
EXAMINATION TEST 2026 QUESTIONS WITH
ANSWERS GRADED A+
◉ American Opportunity Credit. Answer: This credit replaces the HOPE
scholarship credit for 2009, 2010, 2011, 2012, and 2013 and applies for
qualifying expenses for the first four years of postsecondary education.
Qualified expenses include tuition and related expenses and books and
other course materials. Room and board are ineligible for the credit. The
maximum credit available per student is $2,500 (100 percent of the first
$2,000 of qualified expenses and 25 percent of the next $2,000 of
qualified expenses). Eligible students include the taxpayer, taxpayer's
spouse, and taxpayer's dependents. To qualify for the credit, a student
must take at least one-half of the full-time course load for at least one
academic term at a qualifying educational institution. The credit is
phased out for higher-income taxpayers. § 25A.
◉ Child tax credit. Answer: A tax credit based solely on the number of
qualifying children under age 17. The maximum credit available is
$1,000 per child through 2013. A qualifying child must be claimed as a
dependent on a parent's tax return to qualify for the credit. Taxpayers
who qualify for the child tax credit may also qualify for a supplemental
credit. The supplemental credit is treated as a component of the earned
income credit and is therefore refundable. The credit is phased out for
higher-income taxpayers. § 24.
, ◉ Credit for certain retirement plan contributions. Answer: A
nonrefundable credit is available based on eligible contributions of up to
$2,000 to certain qualified retirement plans, such as traditional and Roth
IRAs and § 401(k) plans. The benefit provided by this credit is in
addition to any deduction or exclusion that otherwise is available
resulting from the qualifying contribution. The amount of the credit
depends on the taxpayer's AGI and filing status. § 25B.
◉ Credit for child and dependent care expenses. Answer: A tax credit
ranging from 20 percent to 35 percent of employment-related expenses
(child and dependent care expenses) for amounts of up to $6,000 is
available to individuals who are employed (or deemed to be employed)
and maintain a household for a dependent child under age 13, disabled
spouse, or disabled dependent. § 21.
◉ Credit for employer-provided child care. Answer: A nonrefundable
credit is available to employers who provide child care facilities to their
employees during normal working hours. The credit, limited to
$150,000, is comprised of two components. The portion of the credit for
qualified child care expenses is equal to 25 percent of these expenses,
while the portion of the credit for qualified child care resource and
referral services is equal to 10 percent of these expenses. Any qualifying
expenses otherwise deductible by the taxpayer must be reduced by the
amount of the credit. In addition, the taxpayer's basis for any property
used for qualifying purposes is reduced by the amount of the credit. §
45F.
EXAMINATION TEST 2026 QUESTIONS WITH
ANSWERS GRADED A+
◉ American Opportunity Credit. Answer: This credit replaces the HOPE
scholarship credit for 2009, 2010, 2011, 2012, and 2013 and applies for
qualifying expenses for the first four years of postsecondary education.
Qualified expenses include tuition and related expenses and books and
other course materials. Room and board are ineligible for the credit. The
maximum credit available per student is $2,500 (100 percent of the first
$2,000 of qualified expenses and 25 percent of the next $2,000 of
qualified expenses). Eligible students include the taxpayer, taxpayer's
spouse, and taxpayer's dependents. To qualify for the credit, a student
must take at least one-half of the full-time course load for at least one
academic term at a qualifying educational institution. The credit is
phased out for higher-income taxpayers. § 25A.
◉ Child tax credit. Answer: A tax credit based solely on the number of
qualifying children under age 17. The maximum credit available is
$1,000 per child through 2013. A qualifying child must be claimed as a
dependent on a parent's tax return to qualify for the credit. Taxpayers
who qualify for the child tax credit may also qualify for a supplemental
credit. The supplemental credit is treated as a component of the earned
income credit and is therefore refundable. The credit is phased out for
higher-income taxpayers. § 24.
, ◉ Credit for certain retirement plan contributions. Answer: A
nonrefundable credit is available based on eligible contributions of up to
$2,000 to certain qualified retirement plans, such as traditional and Roth
IRAs and § 401(k) plans. The benefit provided by this credit is in
addition to any deduction or exclusion that otherwise is available
resulting from the qualifying contribution. The amount of the credit
depends on the taxpayer's AGI and filing status. § 25B.
◉ Credit for child and dependent care expenses. Answer: A tax credit
ranging from 20 percent to 35 percent of employment-related expenses
(child and dependent care expenses) for amounts of up to $6,000 is
available to individuals who are employed (or deemed to be employed)
and maintain a household for a dependent child under age 13, disabled
spouse, or disabled dependent. § 21.
◉ Credit for employer-provided child care. Answer: A nonrefundable
credit is available to employers who provide child care facilities to their
employees during normal working hours. The credit, limited to
$150,000, is comprised of two components. The portion of the credit for
qualified child care expenses is equal to 25 percent of these expenses,
while the portion of the credit for qualified child care resource and
referral services is equal to 10 percent of these expenses. Any qualifying
expenses otherwise deductible by the taxpayer must be reduced by the
amount of the credit. In addition, the taxpayer's basis for any property
used for qualifying purposes is reduced by the amount of the credit. §
45F.
