VITA BASIC EXAM 2025 |TAX CREDITS AND DEDUCTIONS|90 QUESTIONS WITH
ACCURATE SOLUTIONS
1. If the Reynolds family has a total income that exceeds the threshold for
the child tax credit, what impact would this have on their eligibility?
They would qualify for an additional deduction.
They would not qualify for the child tax credit.
They would still qualify for the full credit.
They would receive a reduced credit amount.
2. Rosa and Jonathan have two children and earn $42,000 a year. What
federal tax credit would they probably qualify for?
AFDC
EITC
SNAP
HOME
3. If Joe's circumstances change and he no longer has a qualifying person
living with him, which filing status would he likely have to use for the next
tax year?
Head of Household
Qualifying Widow(er)
Single
Married Filing Jointly
4. Taxpayers with no qualifying children do not qualify for the earned
income credit
true
, false
5. If Shelia has two children, Rebecca and Thomas, but only Rebecca meets
the criteria for EITC, how should Shelia report her eligibility for the
credit?
Shelia should claim EITC for both children regardless of eligibility.
Shelia should claim EITC based on her income alone without
considering her children.
Shelia should claim EITC based on Rebecca as her qualifying
child.
Shelia should not claim EITC since Thomas does not qualify.
6. How can Julia prevent having a balance due next year?
She can use the IRS withholding calculator to estimate her
withholding for next year.
She can make estimated tax payments
She can increase the withholding on her Form W-4.
All of the above
7. What is the additional tax percentage applied to early distributions from
retirement accounts?
25%
20%
15%
10%
8. Interpret the statement: 'Alan must take a required minimum distribution
in 2021.' What does it imply about his retirement account status?
, It implies that Alan is subject to RMD rules, but in this case, it is
false, indicating he may not be of the required age or may not
have an account that mandates it.
It implies that Alan has already taken his distribution for the year.
It implies that Alan must withdraw funds regardless of his age or
account type.
It implies that Alan is exempt from all tax-related rules.
9. If Mary also had an additional $100 in supplies that were reimbursed by
her employer, how much can she claim as an adjustment for her supplies?
$350
$150
$200
$250
10. Describe the tax implications of the Economic Impact Payment 3 (EIP3)
for individuals filing their tax returns.
The EIP3 must be reported as taxable income on the tax return.
The EIP3 is exempt from all tax reporting requirements.
The EIP3 is partially taxable and should be reported accordingly.
The EIP3 is not considered taxable income and does not need
to be reported as such.
11. Under which condition may a taxpayer claim the student loan interest
deduction?
The student loan is from a related person.
The taxpayer is legally obligated to pay interest on a qualified
student loan.
ACCURATE SOLUTIONS
1. If the Reynolds family has a total income that exceeds the threshold for
the child tax credit, what impact would this have on their eligibility?
They would qualify for an additional deduction.
They would not qualify for the child tax credit.
They would still qualify for the full credit.
They would receive a reduced credit amount.
2. Rosa and Jonathan have two children and earn $42,000 a year. What
federal tax credit would they probably qualify for?
AFDC
EITC
SNAP
HOME
3. If Joe's circumstances change and he no longer has a qualifying person
living with him, which filing status would he likely have to use for the next
tax year?
Head of Household
Qualifying Widow(er)
Single
Married Filing Jointly
4. Taxpayers with no qualifying children do not qualify for the earned
income credit
true
, false
5. If Shelia has two children, Rebecca and Thomas, but only Rebecca meets
the criteria for EITC, how should Shelia report her eligibility for the
credit?
Shelia should claim EITC for both children regardless of eligibility.
Shelia should claim EITC based on her income alone without
considering her children.
Shelia should claim EITC based on Rebecca as her qualifying
child.
Shelia should not claim EITC since Thomas does not qualify.
6. How can Julia prevent having a balance due next year?
She can use the IRS withholding calculator to estimate her
withholding for next year.
She can make estimated tax payments
She can increase the withholding on her Form W-4.
All of the above
7. What is the additional tax percentage applied to early distributions from
retirement accounts?
25%
20%
15%
10%
8. Interpret the statement: 'Alan must take a required minimum distribution
in 2021.' What does it imply about his retirement account status?
, It implies that Alan is subject to RMD rules, but in this case, it is
false, indicating he may not be of the required age or may not
have an account that mandates it.
It implies that Alan has already taken his distribution for the year.
It implies that Alan must withdraw funds regardless of his age or
account type.
It implies that Alan is exempt from all tax-related rules.
9. If Mary also had an additional $100 in supplies that were reimbursed by
her employer, how much can she claim as an adjustment for her supplies?
$350
$150
$200
$250
10. Describe the tax implications of the Economic Impact Payment 3 (EIP3)
for individuals filing their tax returns.
The EIP3 must be reported as taxable income on the tax return.
The EIP3 is exempt from all tax reporting requirements.
The EIP3 is partially taxable and should be reported accordingly.
The EIP3 is not considered taxable income and does not need
to be reported as such.
11. Under which condition may a taxpayer claim the student loan interest
deduction?
The student loan is from a related person.
The taxpayer is legally obligated to pay interest on a qualified
student loan.
