Tax Preparer Final Exam Review Questions and
Answers Latest Version Top Rated A+
Question>> 1
What types of taxes are deductible?
Answer>>
• State and local taxes
• Real property taxes
• Personal property taxes
• Foreign income taxes (12.12)
Question>> 2
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)
Page 1 of 39
,Question>> 3
How much is added to the standard deduction if the taxpayer (or spouse) is age 65
or older or blind?
Answer>>
$1,400 per condition for S and HH
$1,100 per condition for MFS, MFJ and QW (3.6)
Question>> 4
What information do you need to know to determine whether a return is required?
Answer>>
• Marital Status
• Age & Student Status
• Gross Income
• Over 65 and Blindness
• Dependent Status (3.2)
Question>> 5
What are the rates for the Saver's Credit?
Answer>>
The rates are 10%, 20%, or 50%, depending upon filing status and modified AGI.
(21.17)
Question>> 6
Page 2 of 39
,How is cost of goods sold determined?
Answer>>
Beginning inventory plus purchases, plus labor, supplies, depreciation, etc.
attributable to product manufacture or preparation for sale, minus ending
inventory. (15.7)
Question>> 7
Where are moving expenses deducted on Form 1040?
Answer>>
Line 26, from Form 3903
Question>> 8
What activities are considered farming activities?
Answer>>
• Cultivating land, operating dairy farms, fruit farms, nurseries, orchards,
poultry farms, fish farms, plantations, ranches, stock farms, truck farms;breeding
and raising fur-bearing animals or laboratory animals.
• Does NOT include breeding, raising dogs, cats or pets. (17.28)
Question>> 9
What is the maximum lifetime learning credit?
Answer>>
$2,000, annually per return. (9.17)
Page 3 of 39
, Question>> 10
What does it mean if a proprietor "materially participates" in the business?
Answer>>
He is active in running the business in a substantial way on a day-to-day basis.
(15.5)
Question>> 11
What kinds of property may be expensed using the Section 179 deduction?
Answer>>
New or used tangible personal property (usually equipment or office furniture)
purchased for use in a trade or business. (17.2)
Question>> 12
What form is used to request a six-month extension to file?
Answer>>
Form 4868 Application for Automatic Extension of Time to File US Individual
Income Tax Return (25.2)
Question>> 13
What traditional IRA distributions are fully taxable?
Answer>>
Page 4 of 39
Answers Latest Version Top Rated A+
Question>> 1
What types of taxes are deductible?
Answer>>
• State and local taxes
• Real property taxes
• Personal property taxes
• Foreign income taxes (12.12)
Question>> 2
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)
Page 1 of 39
,Question>> 3
How much is added to the standard deduction if the taxpayer (or spouse) is age 65
or older or blind?
Answer>>
$1,400 per condition for S and HH
$1,100 per condition for MFS, MFJ and QW (3.6)
Question>> 4
What information do you need to know to determine whether a return is required?
Answer>>
• Marital Status
• Age & Student Status
• Gross Income
• Over 65 and Blindness
• Dependent Status (3.2)
Question>> 5
What are the rates for the Saver's Credit?
Answer>>
The rates are 10%, 20%, or 50%, depending upon filing status and modified AGI.
(21.17)
Question>> 6
Page 2 of 39
,How is cost of goods sold determined?
Answer>>
Beginning inventory plus purchases, plus labor, supplies, depreciation, etc.
attributable to product manufacture or preparation for sale, minus ending
inventory. (15.7)
Question>> 7
Where are moving expenses deducted on Form 1040?
Answer>>
Line 26, from Form 3903
Question>> 8
What activities are considered farming activities?
Answer>>
• Cultivating land, operating dairy farms, fruit farms, nurseries, orchards,
poultry farms, fish farms, plantations, ranches, stock farms, truck farms;breeding
and raising fur-bearing animals or laboratory animals.
• Does NOT include breeding, raising dogs, cats or pets. (17.28)
Question>> 9
What is the maximum lifetime learning credit?
Answer>>
$2,000, annually per return. (9.17)
Page 3 of 39
, Question>> 10
What does it mean if a proprietor "materially participates" in the business?
Answer>>
He is active in running the business in a substantial way on a day-to-day basis.
(15.5)
Question>> 11
What kinds of property may be expensed using the Section 179 deduction?
Answer>>
New or used tangible personal property (usually equipment or office furniture)
purchased for use in a trade or business. (17.2)
Question>> 12
What form is used to request a six-month extension to file?
Answer>>
Form 4868 Application for Automatic Extension of Time to File US Individual
Income Tax Return (25.2)
Question>> 13
What traditional IRA distributions are fully taxable?
Answer>>
Page 4 of 39
