Intuit Turbo Tax Level 1
Study online at https://quizlet.com/_hkp0fb
1. Is this a requirement for a taxpayer to be eligible for Yes. You can't claim the EIC
the Earned Income Tax Credit for tax year 2023? unless your investment in-
A taxpayer must have investment income below come is $11,000 or less.
$11,000.00.
Hints:
To claim the Earned Income Tax Credit (EITC), you
much have what qualifies as earned income and meet
certain adjusted gross income (AGI) and have invest-
ment income of $11,000 or less and meet certain filing
status requirements.
https://www.irs.gov/publica-
tions/p596#:~:text=You%20can't%20claim%20the,can't%20claim%20the%2
it.
2. A taxpayer filing as Single has $25,600 of taxable in-
come. Included in gross income is a 1099-INT with box
1 Interest Income of $5,000 tax exempt of $3,000 and
interest on U.S savings bonds of $1,200. Additionally,
the taxpayer has a 1099-DIV with dividend income of
$3,000 of which $2,000 is qualified dividends and cap-
ital gains distributions of $500.
3. A taxpayer needs help identifying and understanding $20,000 Wages
their Adjusted Gross Income (AGI) for the tax year $ 5,000 Capital Gains
2023. Filing status is Single, their total income consists $ 5,000 Pension
of the following, wages $20,000, capital gains $5,000, -$ 5,000 Alimony Paid Tax
Pension income $5,000. The taxpayer paid alimony in Deduction
the amount of $5,000 for a divorce decree dated 2017, -$ 5,500 Student Loan In-
$5,500 of student loan interest and $3,000 for child terest Tax Deduction
care. What is the taxpayers AGI? -$ 3,000 Child Care Tax
Hints: Credit
Adjusted Gross Income (AGI) is your annual gross in- _______________________
, Intuit Turbo Tax Level 1
Study online at https://quizlet.com/_hkp0fb
come minus certain adjustments that the IRS uses to $16,800.00 Adjusted
determine your income tax liability for the year. Gross Income
How to calculate AGI for tax purposes
* Determine your total income
* Subtract deductions and expenses from your total
income
4. Is this item an allowable adjustment to income on the Yes. Under divorce or sep-
Federal U.S 1040 for tax year 2023? aration instruments exe-
The taxpayer pays alimony under a divorce or separa- cuted on or before De-
tion agreement executed June 15, 2016. cember 31, 2018, alimo-
Hints: ny payments are taxable
https://www.irs.gov/faqs/interest-dividends-oth- to the recipient (and de-
er-types-of-income/alimony-child-sup- ductible by the payer).
port-court-awards-damages/alimony-child-sup-
port-court-awards-damages-1
https://turbotax.intuit.com/tax-tips/marriage/fil-
ing-taxes-after-a-divorce-is-alimony-taxable/L3RVrB-
fu7#GoTo-Alimony-taxation
5. Is this item an allowable adjustment to income on the No, because Roth IRA's are
federal US 1040 for tax year 2023? not deductible.
The taxpayer has earned income of $77,690 and is not
covered by an employer's retirement plan. The taxpay-
er contributed $4,700 to their Roth IRA.
Hints:
https://www.irs.gov/tax-
topics/tc451#:~:text=for%20more%20informa-
tion.-,Roth%20IRAs,aren't%20subject%20to%20tax.
https://www.irs.gov/retirement-plans/ira-deduc-
tion-limits
, Intuit Turbo Tax Level 1
Study online at https://quizlet.com/_hkp0fb
6. Is this item an allowable adjustment to income on the Yes. You may deduct the
federal US 1040 for tax year 2023? lesser of $2,500 or the
A single taxpayer paid $3,000 in interest on student amount of interest you ac-
loans during the tax year. With all adjustments to in- tually paid during the year.
come (except student loan interest adjustment), their The deduction is gradu-
MAGI is below the limits. They can deduct $2,500 of ally reduced and eventu-
their student loan interest as an adjustment to in- ally eliminated by phase-
come. out when your modified
Hints: adjusted gross income
https://www.irs.gov/taxtopics/tc456 (MAGI) amount reaches
https://turbotax.intuit.com/tax-tips/college-and-edu- the annual limit for your
cation/about-student-loan-tax-credits/L0mIiywan filing status.
7. The taxpayer owns an interest in a partnership that is- No. Section 1061 rechar-
sued them a 1065 K-1. They do not actively participate acterizes certain net
in the partnership. The taxpayer files Single and has long-term capital gains
an adjusted gross income of $350,000. Is the following of a partner that holds
statement true regarding this partnership income? one or more applicable
Capital gains reported by the partnership will always partnership interests as
be considered long-term. short-term capital gains.
Hints:
https://www.irs.gov/publications/p541
https://turbotax.intuit.com/tax-tips/invest-
ments-and-tax-
es/guide-to-short-term-vs-long-term-capital-gains-tax-
es-brokerage-ac-
counts-etc/L7KCu9etn#GoTo-What-s-the-differ-
ence-between-a-short-term-and-long-term-capi-
tal-gain-or-loss-
https://turbotax.intuit.com/tax-tips/invest-
ments-and-tax-
es/guide-to-short-term-vs-long-term-capital-gains-tax-
Study online at https://quizlet.com/_hkp0fb
1. Is this a requirement for a taxpayer to be eligible for Yes. You can't claim the EIC
the Earned Income Tax Credit for tax year 2023? unless your investment in-
A taxpayer must have investment income below come is $11,000 or less.
$11,000.00.
Hints:
To claim the Earned Income Tax Credit (EITC), you
much have what qualifies as earned income and meet
certain adjusted gross income (AGI) and have invest-
ment income of $11,000 or less and meet certain filing
status requirements.
https://www.irs.gov/publica-
tions/p596#:~:text=You%20can't%20claim%20the,can't%20claim%20the%2
it.
2. A taxpayer filing as Single has $25,600 of taxable in-
come. Included in gross income is a 1099-INT with box
1 Interest Income of $5,000 tax exempt of $3,000 and
interest on U.S savings bonds of $1,200. Additionally,
the taxpayer has a 1099-DIV with dividend income of
$3,000 of which $2,000 is qualified dividends and cap-
ital gains distributions of $500.
3. A taxpayer needs help identifying and understanding $20,000 Wages
their Adjusted Gross Income (AGI) for the tax year $ 5,000 Capital Gains
2023. Filing status is Single, their total income consists $ 5,000 Pension
of the following, wages $20,000, capital gains $5,000, -$ 5,000 Alimony Paid Tax
Pension income $5,000. The taxpayer paid alimony in Deduction
the amount of $5,000 for a divorce decree dated 2017, -$ 5,500 Student Loan In-
$5,500 of student loan interest and $3,000 for child terest Tax Deduction
care. What is the taxpayers AGI? -$ 3,000 Child Care Tax
Hints: Credit
Adjusted Gross Income (AGI) is your annual gross in- _______________________
, Intuit Turbo Tax Level 1
Study online at https://quizlet.com/_hkp0fb
come minus certain adjustments that the IRS uses to $16,800.00 Adjusted
determine your income tax liability for the year. Gross Income
How to calculate AGI for tax purposes
* Determine your total income
* Subtract deductions and expenses from your total
income
4. Is this item an allowable adjustment to income on the Yes. Under divorce or sep-
Federal U.S 1040 for tax year 2023? aration instruments exe-
The taxpayer pays alimony under a divorce or separa- cuted on or before De-
tion agreement executed June 15, 2016. cember 31, 2018, alimo-
Hints: ny payments are taxable
https://www.irs.gov/faqs/interest-dividends-oth- to the recipient (and de-
er-types-of-income/alimony-child-sup- ductible by the payer).
port-court-awards-damages/alimony-child-sup-
port-court-awards-damages-1
https://turbotax.intuit.com/tax-tips/marriage/fil-
ing-taxes-after-a-divorce-is-alimony-taxable/L3RVrB-
fu7#GoTo-Alimony-taxation
5. Is this item an allowable adjustment to income on the No, because Roth IRA's are
federal US 1040 for tax year 2023? not deductible.
The taxpayer has earned income of $77,690 and is not
covered by an employer's retirement plan. The taxpay-
er contributed $4,700 to their Roth IRA.
Hints:
https://www.irs.gov/tax-
topics/tc451#:~:text=for%20more%20informa-
tion.-,Roth%20IRAs,aren't%20subject%20to%20tax.
https://www.irs.gov/retirement-plans/ira-deduc-
tion-limits
, Intuit Turbo Tax Level 1
Study online at https://quizlet.com/_hkp0fb
6. Is this item an allowable adjustment to income on the Yes. You may deduct the
federal US 1040 for tax year 2023? lesser of $2,500 or the
A single taxpayer paid $3,000 in interest on student amount of interest you ac-
loans during the tax year. With all adjustments to in- tually paid during the year.
come (except student loan interest adjustment), their The deduction is gradu-
MAGI is below the limits. They can deduct $2,500 of ally reduced and eventu-
their student loan interest as an adjustment to in- ally eliminated by phase-
come. out when your modified
Hints: adjusted gross income
https://www.irs.gov/taxtopics/tc456 (MAGI) amount reaches
https://turbotax.intuit.com/tax-tips/college-and-edu- the annual limit for your
cation/about-student-loan-tax-credits/L0mIiywan filing status.
7. The taxpayer owns an interest in a partnership that is- No. Section 1061 rechar-
sued them a 1065 K-1. They do not actively participate acterizes certain net
in the partnership. The taxpayer files Single and has long-term capital gains
an adjusted gross income of $350,000. Is the following of a partner that holds
statement true regarding this partnership income? one or more applicable
Capital gains reported by the partnership will always partnership interests as
be considered long-term. short-term capital gains.
Hints:
https://www.irs.gov/publications/p541
https://turbotax.intuit.com/tax-tips/invest-
ments-and-tax-
es/guide-to-short-term-vs-long-term-capital-gains-tax-
es-brokerage-ac-
counts-etc/L7KCu9etn#GoTo-What-s-the-differ-
ence-between-a-short-term-and-long-term-capi-
tal-gain-or-loss-
https://turbotax.intuit.com/tax-tips/invest-
ments-and-tax-
es/guide-to-short-term-vs-long-term-capital-gains-tax-
