WGU C239 Advanced Tax Concepts OA ACTUAL
EXAM STUDY GUIDE 2026 COMPLETE
QUESTIONS WITH CORRECT DETAILED
ANSWERS || 100% GUARANTEED PASS <RECENT
VERSION>
Individual Taxation: Gross Income & Adjustments
1. Which of the following is fully includible in gross income?
A) Child support payments received
B) Life insurance proceeds paid due to the death of the insured
C) A gift of $15,000 from a parent
D) Compensation for services rendered
Answer: D) Compensation for services rendered - Compensation is
always taxable income. Child support, life insurance death benefits, and gifts
are generally excluded from the recipient's gross income.
2. A taxpayer receives a $1,000 bonus from their employer. How is this
reported?
A) As an adjustment to income on Schedule 1
B) As part of gross income on Form 1040, from a W-2
C) As a tax-free gift
D) As other income on Schedule C
Answer: B) As part of gross income on Form 1040, from a W-2 -
Bonuses are considered supplemental wages and are included in the W-2
wages reported on Form 1040.
3. Which payment is considered taxable alimony under the current tax law
(for divorce agreements executed after 2018)?
A) Payments designated as child support
B) Lump-sum property settlements
C) Payments to a former spouse under a divorce decree that are deductible
by the payor
D) None of the above
, Answer: D) None of the above - For divorce or separation agreements
executed after December 31, 2018, alimony payments are not deductible by
the payor and not includible in the income of the payee.
4. A taxpayer pays $3,000 in student loan interest and has a MAGI of
$75,000 (single). What is the maximum adjustment they can claim?
A) $0
B) $1,500
C) $2,500
D) $3,000
Answer: C) $2,500 - The student loan interest deduction is capped at
$2,500, subject to a phase-out based on MAGI. At $75,000 MAGI (single),
the taxpayer is within the phase-out range but can still claim the full $2,500
if their interest paid is at least that much.
5. Contributions to a traditional IRA are claimed as:
A) An itemized deduction on Schedule A
B) A tax credit on Form 1040
C) An adjustment to income on Schedule 1 (Form 1040)
D) A business expense on Schedule C
Answer: C) An adjustment to income on Schedule 1 (Form 1040) -
Traditional IRA contributions are "above-the-line" deductions, meaning they
are adjustments to arrive at AGI.
Individual Taxation: Deductions & Credits
6. The standard deduction for a married couple filing jointly in 2024 is:
A) $13,850
B) $20,800
C) $27,700
D) $14,600
Answer: C) $27,700 - (Note: This uses a projected 2024 figure. Always
verify the current year's standard deduction amounts for the exam).
7. Which expense is not deductible as an itemized medical expense?
A) Prescription medication
B) Health insurance premiums
, C) Non-prescription vitamins
D) Transportation costs for essential medical care
Answer: C) Non-prescription vitamins - Only medically necessary
items prescribed by a physician are deductible. General health items like
vitamins are not.
8. A taxpayer has $12,000 of state income taxes withheld and pays $5,000
in property taxes. Their total itemized deduction for these taxes on
Schedule A is limited to:
A) $17,000
B) $12,000
C) $10,000
D) $5,000
Answer: C) $10,000 - The SALT (State and Local Tax) deduction is
capped at $10,000 ($5,000 if MFS).
9. The Child Tax Credit for 2023 is up to $2,000 per qualifying child and
is:
A) Fully refundable
B) Nonrefundable
C) Partially refundable (up to $1,600 per child for 2023)
D) Only available to low-income families
Answer: C) Partially refundable (up to $1,600 per child for 2023) -
The refundable portion is known as the Additional Child Tax Credit.
10.Which credit is designed to provide relief to low and moderate-income
workers and families?
A) Lifetime Learning Credit
B) Earned Income Tax Credit (EITC)
C) Child and Dependent Care Credit
D) Saver's Credit
Answer: B) Earned Income Tax Credit (EITC) - The EITC is a
refundable credit for working people with low to moderate income.
Individual Taxation: Capital Gains & Losses
EXAM STUDY GUIDE 2026 COMPLETE
QUESTIONS WITH CORRECT DETAILED
ANSWERS || 100% GUARANTEED PASS <RECENT
VERSION>
Individual Taxation: Gross Income & Adjustments
1. Which of the following is fully includible in gross income?
A) Child support payments received
B) Life insurance proceeds paid due to the death of the insured
C) A gift of $15,000 from a parent
D) Compensation for services rendered
Answer: D) Compensation for services rendered - Compensation is
always taxable income. Child support, life insurance death benefits, and gifts
are generally excluded from the recipient's gross income.
2. A taxpayer receives a $1,000 bonus from their employer. How is this
reported?
A) As an adjustment to income on Schedule 1
B) As part of gross income on Form 1040, from a W-2
C) As a tax-free gift
D) As other income on Schedule C
Answer: B) As part of gross income on Form 1040, from a W-2 -
Bonuses are considered supplemental wages and are included in the W-2
wages reported on Form 1040.
3. Which payment is considered taxable alimony under the current tax law
(for divorce agreements executed after 2018)?
A) Payments designated as child support
B) Lump-sum property settlements
C) Payments to a former spouse under a divorce decree that are deductible
by the payor
D) None of the above
, Answer: D) None of the above - For divorce or separation agreements
executed after December 31, 2018, alimony payments are not deductible by
the payor and not includible in the income of the payee.
4. A taxpayer pays $3,000 in student loan interest and has a MAGI of
$75,000 (single). What is the maximum adjustment they can claim?
A) $0
B) $1,500
C) $2,500
D) $3,000
Answer: C) $2,500 - The student loan interest deduction is capped at
$2,500, subject to a phase-out based on MAGI. At $75,000 MAGI (single),
the taxpayer is within the phase-out range but can still claim the full $2,500
if their interest paid is at least that much.
5. Contributions to a traditional IRA are claimed as:
A) An itemized deduction on Schedule A
B) A tax credit on Form 1040
C) An adjustment to income on Schedule 1 (Form 1040)
D) A business expense on Schedule C
Answer: C) An adjustment to income on Schedule 1 (Form 1040) -
Traditional IRA contributions are "above-the-line" deductions, meaning they
are adjustments to arrive at AGI.
Individual Taxation: Deductions & Credits
6. The standard deduction for a married couple filing jointly in 2024 is:
A) $13,850
B) $20,800
C) $27,700
D) $14,600
Answer: C) $27,700 - (Note: This uses a projected 2024 figure. Always
verify the current year's standard deduction amounts for the exam).
7. Which expense is not deductible as an itemized medical expense?
A) Prescription medication
B) Health insurance premiums
, C) Non-prescription vitamins
D) Transportation costs for essential medical care
Answer: C) Non-prescription vitamins - Only medically necessary
items prescribed by a physician are deductible. General health items like
vitamins are not.
8. A taxpayer has $12,000 of state income taxes withheld and pays $5,000
in property taxes. Their total itemized deduction for these taxes on
Schedule A is limited to:
A) $17,000
B) $12,000
C) $10,000
D) $5,000
Answer: C) $10,000 - The SALT (State and Local Tax) deduction is
capped at $10,000 ($5,000 if MFS).
9. The Child Tax Credit for 2023 is up to $2,000 per qualifying child and
is:
A) Fully refundable
B) Nonrefundable
C) Partially refundable (up to $1,600 per child for 2023)
D) Only available to low-income families
Answer: C) Partially refundable (up to $1,600 per child for 2023) -
The refundable portion is known as the Additional Child Tax Credit.
10.Which credit is designed to provide relief to low and moderate-income
workers and families?
A) Lifetime Learning Credit
B) Earned Income Tax Credit (EITC)
C) Child and Dependent Care Credit
D) Saver's Credit
Answer: B) Earned Income Tax Credit (EITC) - The EITC is a
refundable credit for working people with low to moderate income.
Individual Taxation: Capital Gains & Losses
