TAX PREPARER EXAM STUDY GUIDE
(2026/2027) COMPLETE QUESTIONS
WITH VERIFIED CORRECT ANSWERS |
100% GUARANTEED PASS LATEST
EDITION
1. How can a married individual meet the joint return test to remain a
qualifying child? - ANSWER They can meet this test by not filing a joint
return with their spouse, or they can file a joint return with their spouse if
they are filing only to claim a refund of any taxes withheld. (4.4)
2. How can you determine who paid more than half of the person's support? -
ANSWER Total support is determined and reduced by the funds received
by and for the person from all sources other than the taxpayer. The
remaining support is considered to be provided by the taxpayer. (4.9)
3. How much is the Child Tax Credit worth? - ANSWER Up to $1,000 for
each qualifying child (4.13)
4. What additional requirements must be met by a qualifying child for purposes
of the Child Tax Credit? - ANSWER • Must be under age 17
• Must be claimed on taxpayer's return
• Must be a US citizen, US national or resident of the US. (4.15)
5. What is the purpose of the alternative minimum tax (AMT)? - ANSWER
The purpose of the alternative minimum tax is to make sure that taxpayers
, with higher incomes cannot entirely avoid taxes through the use of certain
deductions and credits. (22.2)
6. In what way is a clergy member's compensation treated differently from
compensation of other employees? - ANSWER Compensation of clergy
members is subject to self-employment tax instead of social security and
medicare tax withholding. (22.5)
7. Under what circumstances are tips not subject to social security and
medicare taxes? - ANSWER Tips totaling less than $20 in a calendar month
are not subject to these taxes. Also, if the taxpayer has already paid the
maximum social security tax for the year, further tips are not subject to
social security tax. (22.11)
8. Under what circumstances is Form 4137 prepared? - ANSWER Only if the
taxpayer did not report tips to his employer as required, or if he is reporting
allocated tips. (22.9)
9. What form is used to report household employment taxes? - ANSWER
Schedule H, Household Employment Taxes is filed to report household
employment taxes paid. The calculated amount is then carried to Form 1040,
line 59. (22.17)
10.Who may qualify for the Additional Child Tax Credit? - ANSWER •
Taxpayers with earned income in excess of $3,000 for 2009.
• Those with three or more qualifying children for child tax credit
purposes, whose child tax credit was limited by their tax liabilities..
(7.3)
11.Kris (26) has an earned income and AGI of $9,256. He has no other income.
He lived in the United States all year and is no one's dependent. He has a
, valid SSN and is filing as single. He is a U.S. citizen. Does Kris qualify for
EIC? - ANSWER Yes. His Earned Income is under $13,440 (7.5)
12.What is the possible penalty for failing to comply with the EIC due diligence
rules? - ANSWER $100 fine for each occurrence (7.15)
13.What happens if an individual is a qualifying child for more than one
taxpayer? - ANSWER The taxpayers may decide among themselves who
will claim the credit. (7.9)
14.What happens when more than one taxpayer claims the same qualifying
child? - ANSWER The IRS will decide based on the tiebreaker rules. (7.9)
15.How does one determine the taxable income of the taxpayers who itemize
deductions? - ANSWER Adjusted gross income (AGI) minus total itemized
deductions and total exemptions. (12.2)
16.What types of taxes are deductible? - ANSWER • State and local taxes
• Real property taxes
• Personal property taxes
• Foreign income taxes
(12.12)
17.A taxpayer makes his final 2008 state estimated tax payment on January 15,
2009. Where should he report this item? - ANSWER It is included on his
2009 Schedule A, line 5. This payment also should have been included on
the estimated payments line of his 2008 state return.
, 18.Why is it important to distinguish qualified home mortgage interest from
personal interest? - ANSWER Mortgage Interest is deductible, Personal
Interest is not. (12.20)
19.Is the cost of items purchased to benefit a charitable organization deductible,
for example, ballet tickets to raise money for a non-profit hospital? -
ANSWER Only the amount paid in excess of the value of the item is
deductible. (12.27)
20.A taxpayer wrote a check for a $500 donation to his mosque. Is his cancelled
check sufficient documentation to support his deduction? - ANSWER No.
Donations of $250 or more must have written substantiation from the donee.
(12.29)
21.Are scholarships and fellowships taxable? - ANSWER • If a W-2 is
received it is FULLY taxable.
• Amounts to Non-degree candidates are FULLY taxable and reported
on Line 7 marked "SCH"
• Amounts to Degree candidates spent for qualified expenses are NOT
taxable. (18.5)
22.Under what circumstances are gross gambling winnings taxable? -
ANSWER Always. Gambling losses may be deductible up to the amount of
winnings. (13.18)
23.What document will the taxpayer receive from their employer reporting their
disability pension? - ANSWER 1099-R (18.8)
24.How can a disability pension qualify as earned income for the EIC? We've
learned pensions are not earned income. - ANSWER Before the taxpayer
reaches minimum retirement age, it's considered earned income (18.11)
(2026/2027) COMPLETE QUESTIONS
WITH VERIFIED CORRECT ANSWERS |
100% GUARANTEED PASS LATEST
EDITION
1. How can a married individual meet the joint return test to remain a
qualifying child? - ANSWER They can meet this test by not filing a joint
return with their spouse, or they can file a joint return with their spouse if
they are filing only to claim a refund of any taxes withheld. (4.4)
2. How can you determine who paid more than half of the person's support? -
ANSWER Total support is determined and reduced by the funds received
by and for the person from all sources other than the taxpayer. The
remaining support is considered to be provided by the taxpayer. (4.9)
3. How much is the Child Tax Credit worth? - ANSWER Up to $1,000 for
each qualifying child (4.13)
4. What additional requirements must be met by a qualifying child for purposes
of the Child Tax Credit? - ANSWER • Must be under age 17
• Must be claimed on taxpayer's return
• Must be a US citizen, US national or resident of the US. (4.15)
5. What is the purpose of the alternative minimum tax (AMT)? - ANSWER
The purpose of the alternative minimum tax is to make sure that taxpayers
, with higher incomes cannot entirely avoid taxes through the use of certain
deductions and credits. (22.2)
6. In what way is a clergy member's compensation treated differently from
compensation of other employees? - ANSWER Compensation of clergy
members is subject to self-employment tax instead of social security and
medicare tax withholding. (22.5)
7. Under what circumstances are tips not subject to social security and
medicare taxes? - ANSWER Tips totaling less than $20 in a calendar month
are not subject to these taxes. Also, if the taxpayer has already paid the
maximum social security tax for the year, further tips are not subject to
social security tax. (22.11)
8. Under what circumstances is Form 4137 prepared? - ANSWER Only if the
taxpayer did not report tips to his employer as required, or if he is reporting
allocated tips. (22.9)
9. What form is used to report household employment taxes? - ANSWER
Schedule H, Household Employment Taxes is filed to report household
employment taxes paid. The calculated amount is then carried to Form 1040,
line 59. (22.17)
10.Who may qualify for the Additional Child Tax Credit? - ANSWER •
Taxpayers with earned income in excess of $3,000 for 2009.
• Those with three or more qualifying children for child tax credit
purposes, whose child tax credit was limited by their tax liabilities..
(7.3)
11.Kris (26) has an earned income and AGI of $9,256. He has no other income.
He lived in the United States all year and is no one's dependent. He has a
, valid SSN and is filing as single. He is a U.S. citizen. Does Kris qualify for
EIC? - ANSWER Yes. His Earned Income is under $13,440 (7.5)
12.What is the possible penalty for failing to comply with the EIC due diligence
rules? - ANSWER $100 fine for each occurrence (7.15)
13.What happens if an individual is a qualifying child for more than one
taxpayer? - ANSWER The taxpayers may decide among themselves who
will claim the credit. (7.9)
14.What happens when more than one taxpayer claims the same qualifying
child? - ANSWER The IRS will decide based on the tiebreaker rules. (7.9)
15.How does one determine the taxable income of the taxpayers who itemize
deductions? - ANSWER Adjusted gross income (AGI) minus total itemized
deductions and total exemptions. (12.2)
16.What types of taxes are deductible? - ANSWER • State and local taxes
• Real property taxes
• Personal property taxes
• Foreign income taxes
(12.12)
17.A taxpayer makes his final 2008 state estimated tax payment on January 15,
2009. Where should he report this item? - ANSWER It is included on his
2009 Schedule A, line 5. This payment also should have been included on
the estimated payments line of his 2008 state return.
, 18.Why is it important to distinguish qualified home mortgage interest from
personal interest? - ANSWER Mortgage Interest is deductible, Personal
Interest is not. (12.20)
19.Is the cost of items purchased to benefit a charitable organization deductible,
for example, ballet tickets to raise money for a non-profit hospital? -
ANSWER Only the amount paid in excess of the value of the item is
deductible. (12.27)
20.A taxpayer wrote a check for a $500 donation to his mosque. Is his cancelled
check sufficient documentation to support his deduction? - ANSWER No.
Donations of $250 or more must have written substantiation from the donee.
(12.29)
21.Are scholarships and fellowships taxable? - ANSWER • If a W-2 is
received it is FULLY taxable.
• Amounts to Non-degree candidates are FULLY taxable and reported
on Line 7 marked "SCH"
• Amounts to Degree candidates spent for qualified expenses are NOT
taxable. (18.5)
22.Under what circumstances are gross gambling winnings taxable? -
ANSWER Always. Gambling losses may be deductible up to the amount of
winnings. (13.18)
23.What document will the taxpayer receive from their employer reporting their
disability pension? - ANSWER 1099-R (18.8)
24.How can a disability pension qualify as earned income for the EIC? We've
learned pensions are not earned income. - ANSWER Before the taxpayer
reaches minimum retirement age, it's considered earned income (18.11)
