Senior Tax Specialist (2025 Tax Law) Questions
and Answers Verified 100% Correct
Ted, age 41, files single. He earned $52,875 in wages and had no other income in 2017.
On April 14 of 2018, he filed for an automatic six-month extension to file his tax return.
Three weeks later, on May 5, he timely filed his 2017 tax return. Which statement best
describes his eligibility to contribute to an IRA on May 5?
A)Because he did not make the contribution before the due date for the tax return, he is
not eligible to make an IRA contribution for 2017.
B) Because he did not file his tax return by the due date, he is only eligible to contribute
to a Roth IRA for 2017.
C) Because he did not file his tax return before the due date but did file it before the
extension due date, he is eligible to make half the maximum IRA contribution for 2017.
D) He is eligible to make the maximum IRA contribution because he filed his 2017 tax
return before the extension due date. - ANSWER A) Because he did not make the
contribution before the due date for the tax return, he is not eligible to make an IRA
contribution for 2017.
When Miles separated from service with his former employer, he had a $10,000
outstanding balance in an employer plan loan. He received a total distribution of
$30,000 without regard to the loan. The check he received was for $14,000. Mandatory
withholding was $6,000. How much of the distribution is taxable?
A) $10,000
B) $14,000
C) $20,000
D) $30,000 - ANSWER D) $30,000
At age 50, Charles began receiving payments under a distribution method that provides
for substantially equal payments over his life. He had no basis in the account. At age 58,
after he had received distributions totaling $14,000, he elected to receive the remaining
,benefits in a lump-sum of $155,000. What amount of the total distribution is subject to
the early distribution penalty?
A) $0
B) $14,000
C) $155,000
D) $169,000 - ANSWER NOT C) $155,000
Social security benefits are only taxable when gross income exceeds a certain base
amount for the taxpayer's filing status. Which of the following correctly states these
base amounts?
A) $25,000 for MFJ and $18,00 for S, HH, and QW.
B) $28,000 for MFJ and $25,000 for S, HH, and QW.
C) $32,000 for MFJ and $25,000 for S, HH, and QW.
D) $32,000 for MFJ and $28,000 for S, HH, and QW. - ANSWER C) $32,000 for MFJ and
$25,000 for S, HH, and QW.
If a taxpayer's pension or annuity includes contributions that were previously included
in gross income, the taxpayer may generally:
A) Exclude the distributions from income, but only up to the amount of cost.
B) Use the simplified method to compute the tax-free part of the payments if they
began receiving payments after November 18, 1996.
C) Assume that the tax-free part of the payment will remain the same each year, even if
the amount of the payment changes.
D) Make all the choices listed above. - ANSWER D) Make all the choices listed above
Which option correctly completes this sentence? The social security lump-sum election
means the taxpayer elects to treat the lump-sum social security benefit as if the
benefits:
A) For prior years had been received in those years by amending the prior-year returns.
,B) Had been evenly allocated among the reported years.
C) For prior years had been received in those years.
D) For prior years were received in the current year. - ANSWER C) For prior years had
been received in those years.
Which of the following distributions is eligible for rollover treatment?
A) The required minimum distribution from a 73-year-old taxpayer's former employer's
qualified plan. The taxpayer continues to work and is an active participant in his current
employer's qualified plan.
B) A hardship distribution. By the time the distribution was received, the taxpayer no
longer faced the hardship.
C) A distribution of excess deferrals made to a taxpayer because they were a highly-
compensated employee who unknowingly paid too much into their employer's qualified
plan.
D) A 55-year-old surviving spouse's distribution from a 60-year-old decedent's qualified
plan. The decedent was employed at the time of death. - ANSWER D) A 55-year-old
surviving spouse's distribution from a 60-year-old decedent's qualified plan. The
decedent was employed at the time of death.
Which of the following best completes this sentence? Jacqueline, age 51, takes an early
distribution from her traditional IRA. The 10% penalty tax will not apply to the extent
that qualified education expenses were paid to an eligible educational institution for
Jacqueline or her:
A) Spouse or dependent child.
B) Spouse, dependent child, or dependent grandchild.
C) Spouse, child, or grandchild.
D) Spouse, child, grandchild, or parent. - ANSWER C) Spouse, child, or grandchild.
, In 2011, Pamelia invested $5,000 in a Roth IRA. In 2017, at age 60, Pamelia withdrew the
entire balance, which then totaled $7,000 with the earnings that had accumulated over
the years. What is the tax treatment of this distribution?
A) The $7,000 is not included in income, but Pamelia must pay a 10% penalty on the
entire distribution.
B) The $2,000 in earnings is included in income, and Pamelia is required to pay a 10%
penalty on the entire distribution.
C) The $2,000 in earnings is included in income, but there is no penalty.
D) None of the distribution is included in income, and there is no penalty. - ANSWER D)
None of the distribution is included in income, and there is no penalty.
When Lisa lost her job, she had an account balance of $25,000 in her 401(k). She also
had an outstanding 401(k) plan loan of $9,000 secured by that balance. She made no
after-tax contributions. If Lisa is unable to repay the loan and elects to take it as a
distribution, what is the mandatory withholding?
A) $1,800
B) $3,200
C) $5,000
D) $6,800 - ANSWER A) $1,8000
Fred turned 70½ on October 1, 2016. He took the first required minimum distribution
from his traditional IRA on April 1, 2017. What is the deadline for his next required
minimum distribution?
A) December 31, 2017.
B) March 1, 2018.
C) April 1, 2018.
D) April 18, 2018. - ANSWER A) December 31, 2017
and Answers Verified 100% Correct
Ted, age 41, files single. He earned $52,875 in wages and had no other income in 2017.
On April 14 of 2018, he filed for an automatic six-month extension to file his tax return.
Three weeks later, on May 5, he timely filed his 2017 tax return. Which statement best
describes his eligibility to contribute to an IRA on May 5?
A)Because he did not make the contribution before the due date for the tax return, he is
not eligible to make an IRA contribution for 2017.
B) Because he did not file his tax return by the due date, he is only eligible to contribute
to a Roth IRA for 2017.
C) Because he did not file his tax return before the due date but did file it before the
extension due date, he is eligible to make half the maximum IRA contribution for 2017.
D) He is eligible to make the maximum IRA contribution because he filed his 2017 tax
return before the extension due date. - ANSWER A) Because he did not make the
contribution before the due date for the tax return, he is not eligible to make an IRA
contribution for 2017.
When Miles separated from service with his former employer, he had a $10,000
outstanding balance in an employer plan loan. He received a total distribution of
$30,000 without regard to the loan. The check he received was for $14,000. Mandatory
withholding was $6,000. How much of the distribution is taxable?
A) $10,000
B) $14,000
C) $20,000
D) $30,000 - ANSWER D) $30,000
At age 50, Charles began receiving payments under a distribution method that provides
for substantially equal payments over his life. He had no basis in the account. At age 58,
after he had received distributions totaling $14,000, he elected to receive the remaining
,benefits in a lump-sum of $155,000. What amount of the total distribution is subject to
the early distribution penalty?
A) $0
B) $14,000
C) $155,000
D) $169,000 - ANSWER NOT C) $155,000
Social security benefits are only taxable when gross income exceeds a certain base
amount for the taxpayer's filing status. Which of the following correctly states these
base amounts?
A) $25,000 for MFJ and $18,00 for S, HH, and QW.
B) $28,000 for MFJ and $25,000 for S, HH, and QW.
C) $32,000 for MFJ and $25,000 for S, HH, and QW.
D) $32,000 for MFJ and $28,000 for S, HH, and QW. - ANSWER C) $32,000 for MFJ and
$25,000 for S, HH, and QW.
If a taxpayer's pension or annuity includes contributions that were previously included
in gross income, the taxpayer may generally:
A) Exclude the distributions from income, but only up to the amount of cost.
B) Use the simplified method to compute the tax-free part of the payments if they
began receiving payments after November 18, 1996.
C) Assume that the tax-free part of the payment will remain the same each year, even if
the amount of the payment changes.
D) Make all the choices listed above. - ANSWER D) Make all the choices listed above
Which option correctly completes this sentence? The social security lump-sum election
means the taxpayer elects to treat the lump-sum social security benefit as if the
benefits:
A) For prior years had been received in those years by amending the prior-year returns.
,B) Had been evenly allocated among the reported years.
C) For prior years had been received in those years.
D) For prior years were received in the current year. - ANSWER C) For prior years had
been received in those years.
Which of the following distributions is eligible for rollover treatment?
A) The required minimum distribution from a 73-year-old taxpayer's former employer's
qualified plan. The taxpayer continues to work and is an active participant in his current
employer's qualified plan.
B) A hardship distribution. By the time the distribution was received, the taxpayer no
longer faced the hardship.
C) A distribution of excess deferrals made to a taxpayer because they were a highly-
compensated employee who unknowingly paid too much into their employer's qualified
plan.
D) A 55-year-old surviving spouse's distribution from a 60-year-old decedent's qualified
plan. The decedent was employed at the time of death. - ANSWER D) A 55-year-old
surviving spouse's distribution from a 60-year-old decedent's qualified plan. The
decedent was employed at the time of death.
Which of the following best completes this sentence? Jacqueline, age 51, takes an early
distribution from her traditional IRA. The 10% penalty tax will not apply to the extent
that qualified education expenses were paid to an eligible educational institution for
Jacqueline or her:
A) Spouse or dependent child.
B) Spouse, dependent child, or dependent grandchild.
C) Spouse, child, or grandchild.
D) Spouse, child, grandchild, or parent. - ANSWER C) Spouse, child, or grandchild.
, In 2011, Pamelia invested $5,000 in a Roth IRA. In 2017, at age 60, Pamelia withdrew the
entire balance, which then totaled $7,000 with the earnings that had accumulated over
the years. What is the tax treatment of this distribution?
A) The $7,000 is not included in income, but Pamelia must pay a 10% penalty on the
entire distribution.
B) The $2,000 in earnings is included in income, and Pamelia is required to pay a 10%
penalty on the entire distribution.
C) The $2,000 in earnings is included in income, but there is no penalty.
D) None of the distribution is included in income, and there is no penalty. - ANSWER D)
None of the distribution is included in income, and there is no penalty.
When Lisa lost her job, she had an account balance of $25,000 in her 401(k). She also
had an outstanding 401(k) plan loan of $9,000 secured by that balance. She made no
after-tax contributions. If Lisa is unable to repay the loan and elects to take it as a
distribution, what is the mandatory withholding?
A) $1,800
B) $3,200
C) $5,000
D) $6,800 - ANSWER A) $1,8000
Fred turned 70½ on October 1, 2016. He took the first required minimum distribution
from his traditional IRA on April 1, 2017. What is the deadline for his next required
minimum distribution?
A) December 31, 2017.
B) March 1, 2018.
C) April 1, 2018.
D) April 18, 2018. - ANSWER A) December 31, 2017
