LSU ACCT 3221 Chapter 4 | Questions and Answers

LSU ACCT 3221 Chapter 4 | Questions and Answers True/False: Tuition, fees, books, supplies, room, board, and other necessary expenses of attendance are qualified education expenses for purposes of the student loan interest deduction. True True/False: For 2009, the amount of the student loan interest deduction is limited to $3,500. False True/False: The student loan interest deduction may be limited based on the modified AGI of the taxpayer. True True/False: For the interest on a student loan to qualify for the student loan interest deduction, the student must be enrolled full-time. False True/False: A Health Savings Account (HSA) is a tax-exempt savings account to be used for qualified medical expenses. True True/False: To be eligible to fund a Health Savings Account (HSA), a taxpayer must be a self-employed, or an employee (or spouse) of an employer who maintains a high deductible health plan, or an employee of a company that offers no health coverage and the employee has purchased a high deductible health plan on their own. True True/False: Distributions from Health Savings Accounts (HSAs) are subject to tax, if they are used to pay for qualified medical expenses. False True/False: For 2009, unreimbursed qualifying moving expenses are an itemized deduction. False True/False: Deductible moving expenses include moving household goods and personal effects from the old residence to the new residence. True True/False: There is both a distance test and a time test that must be met to be able to deduct qualifying moving expenses. True True/False: For the moving expense distance test, the new job location must be at least 100 miles farther from the taxpayer's old residence than was the old job location. False True/False: Self-employment tax is calculated on the gross earnings of the business. False True/False: Self-employed persons are allowed a for AGI deduction equal to one-half of the self-employment tax imposed. True True/False: Qualified self-employed taxpayers can deduct, as a for AGI deduction, 80% of health insurance payments for 2009. False True/False: The self-employed health insurance deduction is also available to a partner in a partnership and to a shareholder in a Subchapter S corporation who owns more than 2% of the stock in the corporation. True True/False: If a taxpayer incurs an early withdrawal of savings penalty, the taxpayer is entitled to report the penalty as a for AGI deduction on Form 1040. True True/False: The payment of alimony has tax ramifications. These tax ramifications only affect the payor of the alimony. False True/False: Under a divorce agreement executed in 2009, periodic payments of either cash or property must be made at regular intervals to be deductible as alimony. False True/False: In lieu of making payments of alimony directly to a former spouse, payments to a third party on behalf of the former spouse can qualify as alimony. True True/False: Roberto files his tax return as married filing separately. He has not lived with his wife for over three years. In the current year, by order of the court, he paid her $500 per month for 12 months as separate maintenance. He will be able to deduct $6,000 as alimony for the year. True True/False: Eligible educators can deduct up to $250 of qualified educational expenses as above-the-line deduction. True True/False: An eligible educator for the education expense deduction must work at least 600 hours during the school year. False True/False: Expenses for home schooling or for non-athletic supplies for health or physical education courses qualify for the education expense deduction. False True/False: For 2009, taxpayers can take an above-the-line deduction for qualified tuition and related expenses paid during the year for the taxpayer, taxpayer's spouse, or a dependent. True True/False: Books purchased for courses at the campus bookstore, independent of tuition charges, are eligible expenses for the tuition and fees deduction. False Paola is a freshman in the UC-Davis degree program in veterinary medicine. In 2009, Paola paid $3,000 in tuition, $500 for books, and $250 for supplies for class. Paola also paid room and board of $3,500. What is the total qualifying education expense for education loan interest for Paola in 2009? A. $7,250. B. $3,750. C. $3,500. D. $3,000. Henry graduated from the University of Maryland in 2007. In 2009, to take advantage of lower interest rates, he refinanced his qualified education loans with another loan. He is not a dependent on another person's tax return. What is the maximum deduction available to him for the $3,200 he paid for educational loan interest in 2009? A. $0. B. $2,000. C. $2,500. D. $3,000. In 2005 through 2008, Rory borrowed a total of $30,000 for higher education expenses on qualified education loans. In 2009, while still living at home and being claimed by his parents as a dependent, he began making payments on the loan. The first year interest on the loan was reported as $1,750. The amount that Rory can claim on his tax return is: A. $0. B. $1,500. C. $1,750. D. $2,500. Charde had a student loan for qualified education expenses on which interest was due. For 2009, the total interest payments were $1,500. Assuming she has AGI under $60,000, how much may she deduct in arriving at adjusted gross income for 2009? A. $2,500. B. $1,500. C. $1,200. D. $0. In 2008, Robert, who is single, received his Bachelor's degree and started working. In 2009, he began paying interest on qualified education loans and had modified AGI of $65,000. He paid interest of $1,200 in 2009. Which of the following statements is correct? A. The full $1,200 is deductible in arriving at adjusted gross income. B. Taxpayers are not allowed a deduction for education loan interest in 2009. C. If his modified AGI had been $70,000, the phase-out rules would have reduced his deductible interest to zero. D. Due to the phase-out rules, only a portion of the $1,200 will be deductible. For a taxpayer to be eligible to fund a Health Savings Account (HSA), he or she must be: A. An employee (or spouse) who works for an employer with a high deductible health plan. B. An employee of a company that offers no health coverage and the employee has purchased a high deductible health plan on their own. C. A self-employed individual. D. a or b or c. If an employer contributes to an employee's HSA, the payment will be: A. deductible by the employee. B. not allowed as a contribution on behalf of the employee. C. not counted as income to the employee. D. none of the above. Taxpayers who contribute to or withdraw from an HSA during the year must: A. attach a written note to their tax return. B. file a Form 8889 and attach it to their Form 1040.