REG CPA Exam UPDATED ACTUAL
Questions and CORRECT Answers
Qualified Higher Education Expense - CORRECT ANSWER✔✔- up to $4,000 of tuition
and fees for enrollment may be deducted by taxpayers with AGI up to $65,000
1040 Adjustments - CORRECT ANSWER✔✔- I EMBRACED Education, Health, and Farm
Interest on student loan
Employment tax
Business expense
Rent/Royalty
Alimony paid
Contributions to retirement
Early withdrawal penalty
Jury duty pay
Education expense
Health savings account
Farm income
Federal and state income tax refunds - CORRECT ANSWER✔✔- excluded from a
taxpayer's taxable income to the extent that the refund did not reduce the amount of tax for
the earlier year
interest earned is considered taxable
Itemized Deductions - CORRECT ANSWER✔✔- COMMITT
Charitable contributions
Other miscellaneous
Miscellaneous expenses - 2%
,Medical expenses - 10%
Interest
Taxes
Theft or casualty 10% - $100
When must an individual file a tax return? - CORRECT ANSWER✔✔- if their income is
greater than the sum of their personal exemption plus their standard deduction
Kiddie tax - CORRECT ANSWER✔✔- child's unearned income ($2,100) about the
thresholds is subject to tax at the parents higher rate
Social security benefits - CORRECT ANSWER✔✔- up to 85% of benefits may be taxable
if less than $25,000 provisional income - the person can exclude all SS income
provisional income exceeding $60,000 - maximum of 85% inclusion
Net operating losses for an individual - CORRECT ANSWER✔✔- Carryback 2 years carry
forward 20 years
student loan interest for higher education - CORRECT ANSWER✔✔- $2,500 phase out
applies
Self employment tax - CORRECT ANSWER✔✔- 50% of tax is deductible on return
100% of medical insurance premiums paid for self an family are deductible
Moving expenses - 1040 - CORRECT ANSWER✔✔- must work at least 39 weeks (9
months)
direct costs of moving you and stuff
Hobby loss - CORRECT ANSWER✔✔- if no profit 3 of 5 years - loss is not deductible and
it is considered a hobby loss
, net income= other income
expenses = sch. A misc. 2%
Alimony paid - CORRECT ANSWER✔✔- CANNOT
Cash only
Apart when payments mad
Not child support
Not designated as property settlement
Own return for payer and payee
Terminates on death of recipient
alimony is both taxable to the recipient and deductible by the payer
Traditional IRA contributions - CORRECT ANSWER✔✔- deductible in arriving at AGI
Roth IRA contributions - CORRECT ANSWER✔✔- not deductible
Roth IRA distributions - CORRECT ANSWER✔✔- withdrawals after the age 59 1/2 are
exempt from taxation
IRA - early withdrawals - CORRECT ANSWER✔✔- penalty of 10% if withdrawn before
age 59 1/2
IRA early withdrawal penalty exclusions - CORRECT ANSWER✔✔- medical expenses
education costs
death
first time home purchase
Questions and CORRECT Answers
Qualified Higher Education Expense - CORRECT ANSWER✔✔- up to $4,000 of tuition
and fees for enrollment may be deducted by taxpayers with AGI up to $65,000
1040 Adjustments - CORRECT ANSWER✔✔- I EMBRACED Education, Health, and Farm
Interest on student loan
Employment tax
Business expense
Rent/Royalty
Alimony paid
Contributions to retirement
Early withdrawal penalty
Jury duty pay
Education expense
Health savings account
Farm income
Federal and state income tax refunds - CORRECT ANSWER✔✔- excluded from a
taxpayer's taxable income to the extent that the refund did not reduce the amount of tax for
the earlier year
interest earned is considered taxable
Itemized Deductions - CORRECT ANSWER✔✔- COMMITT
Charitable contributions
Other miscellaneous
Miscellaneous expenses - 2%
,Medical expenses - 10%
Interest
Taxes
Theft or casualty 10% - $100
When must an individual file a tax return? - CORRECT ANSWER✔✔- if their income is
greater than the sum of their personal exemption plus their standard deduction
Kiddie tax - CORRECT ANSWER✔✔- child's unearned income ($2,100) about the
thresholds is subject to tax at the parents higher rate
Social security benefits - CORRECT ANSWER✔✔- up to 85% of benefits may be taxable
if less than $25,000 provisional income - the person can exclude all SS income
provisional income exceeding $60,000 - maximum of 85% inclusion
Net operating losses for an individual - CORRECT ANSWER✔✔- Carryback 2 years carry
forward 20 years
student loan interest for higher education - CORRECT ANSWER✔✔- $2,500 phase out
applies
Self employment tax - CORRECT ANSWER✔✔- 50% of tax is deductible on return
100% of medical insurance premiums paid for self an family are deductible
Moving expenses - 1040 - CORRECT ANSWER✔✔- must work at least 39 weeks (9
months)
direct costs of moving you and stuff
Hobby loss - CORRECT ANSWER✔✔- if no profit 3 of 5 years - loss is not deductible and
it is considered a hobby loss
, net income= other income
expenses = sch. A misc. 2%
Alimony paid - CORRECT ANSWER✔✔- CANNOT
Cash only
Apart when payments mad
Not child support
Not designated as property settlement
Own return for payer and payee
Terminates on death of recipient
alimony is both taxable to the recipient and deductible by the payer
Traditional IRA contributions - CORRECT ANSWER✔✔- deductible in arriving at AGI
Roth IRA contributions - CORRECT ANSWER✔✔- not deductible
Roth IRA distributions - CORRECT ANSWER✔✔- withdrawals after the age 59 1/2 are
exempt from taxation
IRA - early withdrawals - CORRECT ANSWER✔✔- penalty of 10% if withdrawn before
age 59 1/2
IRA early withdrawal penalty exclusions - CORRECT ANSWER✔✔- medical expenses
education costs
death
first time home purchase
