California Tax Education Council (CTEC) Exam 2026 | 200+ Questions & Verified Answers with Detailed Rationales – CRTP Certification Prep | Graded A+

, California Tax Education Council (CTEC) Exam 2026
Questions & Verified Answers | Latest Update | Graded A+
1. Describe the importance of accurately splitting wages and taxes for an
employer.

Accurate splitting is primarily for the employer's financial records.

Accurate splitting ensures compliance with tax regulations and
proper employee compensation.

Accurate splitting has no impact on tax filings.

Accurate splitting is only important for employee satisfaction.

2. What is the primary distinction between regular wages and FICA wages?

Regular wages are reported on a W-2 form, while FICA wages are not.

Regular wages are taxed at a higher rate than FICA wages.

FICA wages include bonuses, while regular wages do not.

FICA wages are subject to Social Security and Medicare taxes, while
regular wages may not be.

3. If a taxpayer sells stocks and needs to report capital gains, which forms must
they complete and how do they relate to each other?

The taxpayer only needs to complete Schedule D without Form 8949.

The taxpayer should complete Form 1040 and ignore Schedule D.

The taxpayer must complete Form 8949 to detail each transaction,
which is then summarized on Schedule D.

The taxpayer must complete Form W-2 for reporting capital gains.

,4. What is the primary form attached to Schedule D for reporting capital gains
income?

Form 1099

Form 1040

Form W-2

Form 8949

5. What filing status is typically recommended for a surviving spouse with a
dependent child to reduce tax liability?

Married Filing Jointly

Qualifying Widow(er)

Head of Household

Single

6. Describe the responsibilities of a tax preparer when faced with a missing
information notice from the IRS.

The tax preparer must determine the correct information and submit
it to the IRS to ensure compliance.

The tax preparer should advise the taxpayer to contact the IRS
directly.

The tax preparer can choose to ignore the notice if they believe the
return is accurate.

The tax preparer must file a new return without further investigation.

7. If you withdraw funds from most pension plans before age 59½, you will have
to pay a federal income tax penalty.

, k 10 percent k




k 20 percent k




k 25 percent k




k 15 percent k




k 5 percent k




8. If a taxpayer has an AGI of $50,000 and incurred $4,000 in medical expenses, will
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theybeabletodeductanyoftheseexpenses?
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k Yes, they can deduct the amount that exceeds $3,750.
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k No, because the medical expenses do not exceed 7.5% of AGI.
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k Yes, they can deduct the full $4,000.
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k Yes, they can deduct 7.5% of their AGI.
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9. Which of the following would preclude a taxpayer from deducting student
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loan interest expense?
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k The taxpayer is married filing jointly with AGI of $80,000
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k The taxpayer is single with AGI of $40,000
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k The total amount paid is $1,000
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k The taxpayer is a dependent of another taxpayer
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10. Interpret the significance of making reasonable changes to a business model in
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relationtothe3outof5rule.
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k Making changes to a business model guarantees profitability.
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k Making reasonable changes to a business model can demonstrate an
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k effort to achieve profitability, which may help in meeting the IRS
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k criteria for being classified as a business. k k k k k k