Federal Taxes Test 3 Questions And All
Correct Answers.
Which of the following satisfies the copy/list retention requirement for tax preparers?
A. A card file with the AGI and tax due or refund for each return
prepared
B. A spreadsheet with the name and taxpayer identification number,
tax year of each taxpayer for whom a return was prepared, and the
type of return
C. An electronic copy of each Form 1040 prepared, without
additional schedules
D. A paper copy of each EIC checklist, EIC worksheet and record of
how EIC information was received and from whom - Answer B
Which of the following people is a tax preparer?
A. A person who is compensated for using a computer to copy
handwritten information into a fillable IRS tax form.
B. A person who is compensated for using a computer to complete
Schedules A, B, and D for a 1040 filer.
C. A person who is compensated for using a computer to complete a
tax return for his regular employer.
D. A person who is compensated for using a computer to
electronically file a tax return that someone else prepared. - Answer B.
Tax preparers must provide an identifying number on returns which they sign. Which number is the
generally accepted identifying number?
A. Social Security Number
B. EFIN
C. PTIN
,D. EIN - Answer C.
Pierre and Leo are very close friends, but Pierre is still paying Leo to prepare his tax return. Because
they're so close, Leo doesn't have to sign the tax return to claim primary responsibility for the
preparation.
True or False - Answer False
Which of the following people is a tax preparer?
A. A British citizen who is compensated for preparing U.S. tax returns
in England for Americans who live in England.
B. A volunteer for VITA who only prepares tax returns for VITA clients.
C. An IRS employee who assists taxpayers complete returns during
an IRS open house.
D. All of the above - Answer A
When must a tax preparer provide a taxpayer with a copy of the taxpayer's return?
A. Upon request
B. Within 30 days of the filing of the return
C. No later than the time the return is presented for the taxpayer's
signature
D. No later than the time the return is filed with the IRS - Answer C
Philip prepared his client's taxes 2 years ago. He is now going to throw away his copy of the tax return
and the list with the name and taxpayer identification number for whom the return was prepared. Since
it has been 2 years, Philip is complying with regulations.
True or False - Answer False, it is 3 years
Kevin, a paid tax preparer, has not received his PTIN. Can Kevin use his Social Security number instead?
A. Yes
B. Yes, but must amend the return with his PTIN when he receives it
,C. Yes, if the return is for a family member
D. No - Answer D
Shirley provided a copy of a tax return she prepared for her client but didn't have the resources for her
own copy. If she just has the name and taxpayer identification number of the taxpayer, this is good
enough to have on file for the 3-year period following the close of the return.
True or False - Answer False
Barry has prepared Susan's tax return. Throughout the process, Barry has proved to be very trustworthy.
Susan has signed the tax return and is ready for her copy, but unfortunately Barry's copier is being
serviced but will be fixed in a few days. Susan agrees to pick up her copy whenever it is ready. This
arrangement is in compliance with tax preparer regulations.
True or False - Answer False
An independent CPA serving as a tax return preparer for the Unicorn Company recklessly disclosed
information about the company that was discovered while preparing the tax return. Which of the
following is true?
A. Although considered a bad practice, no penalty can be assessed
for such behavior.
B. A monetary penalty can be assessed against the tax return
preparer.
C. A penalty can only be assessed if the disclosed information was
financial in nature.
D. A penalty can only be assessed if the disclosed information
specifically included the names of individuals who had not agreed
to be so named. - Answer B
Trent's Tax Service prepared George Dell's 2019 return for which Mr. Dell paid Trent's $100. The return
was audited and changes were made to both income and expenses on the return but no additional tax
was due. These changes were the direct result of negligent actions on the part of Trent's Tax Service. Is
the IRS going to penalize Trent's Tax Service for this understatement?
A. Yes, Trent's may be liable for a $250 penalty for understatement of
, taxpayers liability due to an unrealistic position under IRC Section
6694.
B. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to a negligence under IRC Section 6694.
C. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to willful or reckless conduct under IRC
Section 6694.
D. No. - Answer D
Which of the following are included in the requirement for due diligence in preparing a return or claim
for refund that claims Head of Household filing status?
A. Determining eligibility for HH status
B. Verifying accuracy of taxpayer information
C. Meeting record-keeping requirements
D. All of the above - Answer D
Dan, a paid tax preparer, had not been paid for his services by his client Jill. In retribution, Dan posted
Jill's confidential tax information on a public web site without her consent. Dan may be liable for:
A. Criminal penalties, including imprisonment
B. Criminal penalties, but not imprisonment
C. Monetary but not criminal penalties
D. None of the above - Answer A
To satisfy the earned income credit due diligence requirements, a preparer must retain all of the
following EXCEPT:
A. A copy of the completed Eligibility Checklist or Alternative
Eligibility Record.
B. A copy of the Computation Worksheet or Alternative Computation
Record.
C. A copy of the social security cards for the taxpayer and each
Correct Answers.
Which of the following satisfies the copy/list retention requirement for tax preparers?
A. A card file with the AGI and tax due or refund for each return
prepared
B. A spreadsheet with the name and taxpayer identification number,
tax year of each taxpayer for whom a return was prepared, and the
type of return
C. An electronic copy of each Form 1040 prepared, without
additional schedules
D. A paper copy of each EIC checklist, EIC worksheet and record of
how EIC information was received and from whom - Answer B
Which of the following people is a tax preparer?
A. A person who is compensated for using a computer to copy
handwritten information into a fillable IRS tax form.
B. A person who is compensated for using a computer to complete
Schedules A, B, and D for a 1040 filer.
C. A person who is compensated for using a computer to complete a
tax return for his regular employer.
D. A person who is compensated for using a computer to
electronically file a tax return that someone else prepared. - Answer B.
Tax preparers must provide an identifying number on returns which they sign. Which number is the
generally accepted identifying number?
A. Social Security Number
B. EFIN
C. PTIN
,D. EIN - Answer C.
Pierre and Leo are very close friends, but Pierre is still paying Leo to prepare his tax return. Because
they're so close, Leo doesn't have to sign the tax return to claim primary responsibility for the
preparation.
True or False - Answer False
Which of the following people is a tax preparer?
A. A British citizen who is compensated for preparing U.S. tax returns
in England for Americans who live in England.
B. A volunteer for VITA who only prepares tax returns for VITA clients.
C. An IRS employee who assists taxpayers complete returns during
an IRS open house.
D. All of the above - Answer A
When must a tax preparer provide a taxpayer with a copy of the taxpayer's return?
A. Upon request
B. Within 30 days of the filing of the return
C. No later than the time the return is presented for the taxpayer's
signature
D. No later than the time the return is filed with the IRS - Answer C
Philip prepared his client's taxes 2 years ago. He is now going to throw away his copy of the tax return
and the list with the name and taxpayer identification number for whom the return was prepared. Since
it has been 2 years, Philip is complying with regulations.
True or False - Answer False, it is 3 years
Kevin, a paid tax preparer, has not received his PTIN. Can Kevin use his Social Security number instead?
A. Yes
B. Yes, but must amend the return with his PTIN when he receives it
,C. Yes, if the return is for a family member
D. No - Answer D
Shirley provided a copy of a tax return she prepared for her client but didn't have the resources for her
own copy. If she just has the name and taxpayer identification number of the taxpayer, this is good
enough to have on file for the 3-year period following the close of the return.
True or False - Answer False
Barry has prepared Susan's tax return. Throughout the process, Barry has proved to be very trustworthy.
Susan has signed the tax return and is ready for her copy, but unfortunately Barry's copier is being
serviced but will be fixed in a few days. Susan agrees to pick up her copy whenever it is ready. This
arrangement is in compliance with tax preparer regulations.
True or False - Answer False
An independent CPA serving as a tax return preparer for the Unicorn Company recklessly disclosed
information about the company that was discovered while preparing the tax return. Which of the
following is true?
A. Although considered a bad practice, no penalty can be assessed
for such behavior.
B. A monetary penalty can be assessed against the tax return
preparer.
C. A penalty can only be assessed if the disclosed information was
financial in nature.
D. A penalty can only be assessed if the disclosed information
specifically included the names of individuals who had not agreed
to be so named. - Answer B
Trent's Tax Service prepared George Dell's 2019 return for which Mr. Dell paid Trent's $100. The return
was audited and changes were made to both income and expenses on the return but no additional tax
was due. These changes were the direct result of negligent actions on the part of Trent's Tax Service. Is
the IRS going to penalize Trent's Tax Service for this understatement?
A. Yes, Trent's may be liable for a $250 penalty for understatement of
, taxpayers liability due to an unrealistic position under IRC Section
6694.
B. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to a negligence under IRC Section 6694.
C. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to willful or reckless conduct under IRC
Section 6694.
D. No. - Answer D
Which of the following are included in the requirement for due diligence in preparing a return or claim
for refund that claims Head of Household filing status?
A. Determining eligibility for HH status
B. Verifying accuracy of taxpayer information
C. Meeting record-keeping requirements
D. All of the above - Answer D
Dan, a paid tax preparer, had not been paid for his services by his client Jill. In retribution, Dan posted
Jill's confidential tax information on a public web site without her consent. Dan may be liable for:
A. Criminal penalties, including imprisonment
B. Criminal penalties, but not imprisonment
C. Monetary but not criminal penalties
D. None of the above - Answer A
To satisfy the earned income credit due diligence requirements, a preparer must retain all of the
following EXCEPT:
A. A copy of the completed Eligibility Checklist or Alternative
Eligibility Record.
B. A copy of the Computation Worksheet or Alternative Computation
Record.
C. A copy of the social security cards for the taxpayer and each
