Enrolled Agent Part 1
A widow(er) with one or extra qualifying kids can be able to use which beneficial submitting
reputation? - ANS-A widow(er) with one or more qualifying kids may be capable of use the
Qualifying Widow(er) filing status, which is to be had for 2 years following the 12 months of the
partner's demise.
An insolvent taxpayer with cancelled debt need to use which IRS Form to exclude the debt from
their taxable earnings? - ANS-Form 982, Reducation of Tax Attributes Due to Dischage of
Indebtedness.
Are leisure prices deductible? - ANS-Entertainment this is immediately associated with
engaging in business is generally not deductible below the Tax Cuts and Jobs Act, (with a few
slender exceptions).
Are funeral prices deductible? - ANS-An character taxpayer won't deduct funeral or burial
prices.
Are gambling losses deductible? - ANS-Yes. Gambling losses are deductible as an itemized
deduction, however best up to the quantity of gambling winnings. Losses in extra of winnings
are not deductible.
Are existence insurance proceeds taxed? - ANS-Life coverage proceeds are usually not taxable
to a beneficiary. However, if the lifestyles coverage payout is paid in an annuity or installments,
the interest component is taxable.
Are punitive damages covered in a taxpayer's gross profits? - ANS-Punitive damages are
commonly taxable, although the punitive damages have been related to a settlement for
non-public bodily accidents or bodily illness.
Are kingdom sales taxes deductible? - ANS-Yes. Taxpayers may deduct either (1) income tax or
(2) kingdom and nearby profits tax as an itemized deduction on Schedule A, (but not each).
Are recommendations taxable, or are they taken into consideration presents? - ANS-All
suggestions are taxable. Tips are received as a gratuity for offerings accomplished. Tips go
beyond the stated quantity of the invoice and are given voluntarily.
Can a taxpayer with an quantity due efile their return and still pay a stability due through
non-public take a look at or money order? - ANS-Yes, a taxpayer can efile their return and put
up a take a look at payable to the USA Treasury with a form 1040-V and mail it to the IRS. As
long as the payment is postmarked with the aid of the orginal due date of the return, the fee will
be considered well timed.
,Can an individual taxpayer deduct overseas profits taxes? - ANS-Yes. Foreign income taxes
may be claimed either as an itemized deduction or as a non-refundable tax credit. Taxpayers
may also pick out whichever approach offers them the best tax result.
Can the Child Tax Credit be claimed by means of a non-custodial discern? - ANS-Yes, the Child
Tax Credit can be claimed through a non-custodial figure. Form 8332 ought to be used any time
a custodial discern releasing a dependency exemption with the non-custodial determine.
Define "Adjusted Gross Income" or AGI. - ANS-AGI is a taxpayer's gross earnings reduced
through certain quantities, such as a deductible IRA contribution or pupil loan interest.
Define "Joint and Several Liability", because it applies to joint tax returns. - ANS-Joint and
Several Liability manner that each partner on a joint tax go back is in my opinion answerable for
the complete tax shown at the go back.
Define a non-refundable credit score. - ANS-A non-refundable credit is a credit that can't exceed
the taxpayer's tax liability. The Adoption Credit, Saver's Credit, the Credit for Other Dependents,
and Foreign Tax Credit are all examples of non-refundable credits.
Define a refundable credit score. - ANS-A refundable credit score is a credit for which the IRS
will ship the taxpayer money back for any amount in excess of the taxpayer's tax legal
responsibility. Two common refundable tax credit are the Earned Income Tax Credit (EITC) and
the Premium Tax Credit (PTC).
Define acquisition indebtedness, as it pertains to deductible loan interest. - ANS-Acquisition
indebtedness is indebtedness incurred to buy, construct, or appreciably enhance an man or
woman's qualified residence. If you itemize your tax deductions, you can deduct the loan
interest on as much as $750,000 of acquisition indebtedness.
Define Alimony. - ANS-Alimony is a payment to or for a spouse or former partner below a
separation or divorce instrument. The Tax Cuts and Jobs Act (TCJA) removed tax-deductible
alimony for new divorces starting in 2019, however earlier divorce decrees are grandfathered.
Define investment profits and give several examples. - ANS-Investment income consists of:
taxable and tax-exempt hobby, dividends, capital profits internet earnings, sure hire and royalty
profits, and internet passive pastime profits.
Define the Federal Gift Tax. - ANS-The gift tax is a tax on the switch of property by using one
individual to every other. The gift tax isn't an income tax. Gift tax is stated on Form 709.
Define the Head Of Household submitting status. - ANS-Head of household is a submitting
repute for single taxpayers who've maintained a home for a qualifying character, which include a
infant or a parent.
, Define the same old deduction. - ANS-The wellknown deduction is a flat tax deduction that
varies relying on filing popularity, age, blindness, and dependency. The popular deduction is
improved each 12 months for inflation.
Describe backup withholding. - ANS-Backup withholding applies when the taxpayer does not
supply a taxpayer identification range. The present day backup withholding price for U.S.
Citizens and U.S. Citizens is 24%.
For dependency test functions, what's the definition of "support"? - ANS-"Support" consists of
meals, garb, refuge, education, scientific and dental care, recreation, and transportation
supplied to a structured.
For IRS purposes, what's a nonresident alien? - ANS-A nonresident alien is an alien who isn't a
citizen of the USA and has no longer met either the (1) inexperienced card test or the (2)
residency take a look at.
For the purposes of the additional Standard Deduction amount, while does a taxpayer attain the
age of sixty five? - ANS-A taxpayer attains the age of 65 at the day earlier than his or her 65th
birthday.
Give some examples of a "transient absence" for a qualifying baby who is a established. -
ANS-Examples of temporary absences consist of hospitalization, university attendance,
enterprise, vacation, military service, kidnapping, and detention in a juvenile facility.
Give a few examples of qualifying costs for a Section 529 qualified lessons plan. -
ANS-Distributions from a Section 529 plan may be used to pay training, required charges,
books, components and device in addition to qualifying fees in an apprenticeship software.
How are court damages recovered for non-public bodily harm or illness handled, for tax
functions? - ANS-Damages received as compensation for a physical private injury or infection
are not taxable to the recipient.
How are property settlements "incident to divorce" treated, for IRS purposes? - ANS-Generally,
there's no recognized benefit or loss at the switch of belongings between spouses, (or former
spouses) if the switch is because of a divorce.
How are scholarships treated for purposes of calculating gross earnings? - ANS-A scholarship
or fellowship is tax-loose if used by a student at a qualifying better training institution to pay
certified education fees, which includes tuition and required charges.
How can an person taxpayer deduct jury responsibility pay that has to be remitted to an
organisation? - ANS-Jury fees grew to become over to an employer are deductible as an
adjustment to income.
A widow(er) with one or extra qualifying kids can be able to use which beneficial submitting
reputation? - ANS-A widow(er) with one or more qualifying kids may be capable of use the
Qualifying Widow(er) filing status, which is to be had for 2 years following the 12 months of the
partner's demise.
An insolvent taxpayer with cancelled debt need to use which IRS Form to exclude the debt from
their taxable earnings? - ANS-Form 982, Reducation of Tax Attributes Due to Dischage of
Indebtedness.
Are leisure prices deductible? - ANS-Entertainment this is immediately associated with
engaging in business is generally not deductible below the Tax Cuts and Jobs Act, (with a few
slender exceptions).
Are funeral prices deductible? - ANS-An character taxpayer won't deduct funeral or burial
prices.
Are gambling losses deductible? - ANS-Yes. Gambling losses are deductible as an itemized
deduction, however best up to the quantity of gambling winnings. Losses in extra of winnings
are not deductible.
Are existence insurance proceeds taxed? - ANS-Life coverage proceeds are usually not taxable
to a beneficiary. However, if the lifestyles coverage payout is paid in an annuity or installments,
the interest component is taxable.
Are punitive damages covered in a taxpayer's gross profits? - ANS-Punitive damages are
commonly taxable, although the punitive damages have been related to a settlement for
non-public bodily accidents or bodily illness.
Are kingdom sales taxes deductible? - ANS-Yes. Taxpayers may deduct either (1) income tax or
(2) kingdom and nearby profits tax as an itemized deduction on Schedule A, (but not each).
Are recommendations taxable, or are they taken into consideration presents? - ANS-All
suggestions are taxable. Tips are received as a gratuity for offerings accomplished. Tips go
beyond the stated quantity of the invoice and are given voluntarily.
Can a taxpayer with an quantity due efile their return and still pay a stability due through
non-public take a look at or money order? - ANS-Yes, a taxpayer can efile their return and put
up a take a look at payable to the USA Treasury with a form 1040-V and mail it to the IRS. As
long as the payment is postmarked with the aid of the orginal due date of the return, the fee will
be considered well timed.
,Can an individual taxpayer deduct overseas profits taxes? - ANS-Yes. Foreign income taxes
may be claimed either as an itemized deduction or as a non-refundable tax credit. Taxpayers
may also pick out whichever approach offers them the best tax result.
Can the Child Tax Credit be claimed by means of a non-custodial discern? - ANS-Yes, the Child
Tax Credit can be claimed through a non-custodial figure. Form 8332 ought to be used any time
a custodial discern releasing a dependency exemption with the non-custodial determine.
Define "Adjusted Gross Income" or AGI. - ANS-AGI is a taxpayer's gross earnings reduced
through certain quantities, such as a deductible IRA contribution or pupil loan interest.
Define "Joint and Several Liability", because it applies to joint tax returns. - ANS-Joint and
Several Liability manner that each partner on a joint tax go back is in my opinion answerable for
the complete tax shown at the go back.
Define a non-refundable credit score. - ANS-A non-refundable credit is a credit that can't exceed
the taxpayer's tax liability. The Adoption Credit, Saver's Credit, the Credit for Other Dependents,
and Foreign Tax Credit are all examples of non-refundable credits.
Define a refundable credit score. - ANS-A refundable credit score is a credit for which the IRS
will ship the taxpayer money back for any amount in excess of the taxpayer's tax legal
responsibility. Two common refundable tax credit are the Earned Income Tax Credit (EITC) and
the Premium Tax Credit (PTC).
Define acquisition indebtedness, as it pertains to deductible loan interest. - ANS-Acquisition
indebtedness is indebtedness incurred to buy, construct, or appreciably enhance an man or
woman's qualified residence. If you itemize your tax deductions, you can deduct the loan
interest on as much as $750,000 of acquisition indebtedness.
Define Alimony. - ANS-Alimony is a payment to or for a spouse or former partner below a
separation or divorce instrument. The Tax Cuts and Jobs Act (TCJA) removed tax-deductible
alimony for new divorces starting in 2019, however earlier divorce decrees are grandfathered.
Define investment profits and give several examples. - ANS-Investment income consists of:
taxable and tax-exempt hobby, dividends, capital profits internet earnings, sure hire and royalty
profits, and internet passive pastime profits.
Define the Federal Gift Tax. - ANS-The gift tax is a tax on the switch of property by using one
individual to every other. The gift tax isn't an income tax. Gift tax is stated on Form 709.
Define the Head Of Household submitting status. - ANS-Head of household is a submitting
repute for single taxpayers who've maintained a home for a qualifying character, which include a
infant or a parent.
, Define the same old deduction. - ANS-The wellknown deduction is a flat tax deduction that
varies relying on filing popularity, age, blindness, and dependency. The popular deduction is
improved each 12 months for inflation.
Describe backup withholding. - ANS-Backup withholding applies when the taxpayer does not
supply a taxpayer identification range. The present day backup withholding price for U.S.
Citizens and U.S. Citizens is 24%.
For dependency test functions, what's the definition of "support"? - ANS-"Support" consists of
meals, garb, refuge, education, scientific and dental care, recreation, and transportation
supplied to a structured.
For IRS purposes, what's a nonresident alien? - ANS-A nonresident alien is an alien who isn't a
citizen of the USA and has no longer met either the (1) inexperienced card test or the (2)
residency take a look at.
For the purposes of the additional Standard Deduction amount, while does a taxpayer attain the
age of sixty five? - ANS-A taxpayer attains the age of 65 at the day earlier than his or her 65th
birthday.
Give some examples of a "transient absence" for a qualifying baby who is a established. -
ANS-Examples of temporary absences consist of hospitalization, university attendance,
enterprise, vacation, military service, kidnapping, and detention in a juvenile facility.
Give a few examples of qualifying costs for a Section 529 qualified lessons plan. -
ANS-Distributions from a Section 529 plan may be used to pay training, required charges,
books, components and device in addition to qualifying fees in an apprenticeship software.
How are court damages recovered for non-public bodily harm or illness handled, for tax
functions? - ANS-Damages received as compensation for a physical private injury or infection
are not taxable to the recipient.
How are property settlements "incident to divorce" treated, for IRS purposes? - ANS-Generally,
there's no recognized benefit or loss at the switch of belongings between spouses, (or former
spouses) if the switch is because of a divorce.
How are scholarships treated for purposes of calculating gross earnings? - ANS-A scholarship
or fellowship is tax-loose if used by a student at a qualifying better training institution to pay
certified education fees, which includes tuition and required charges.
How can an person taxpayer deduct jury responsibility pay that has to be remitted to an
organisation? - ANS-Jury fees grew to become over to an employer are deductible as an
adjustment to income.
