1) A single taxpayer is 43 years old and has only wages of $16,000. Which Schedule is he required to file?
A) Schedule 1.
B) Schedule 2.
C) Schedule 3.
D) The taxpayer is not required to file a Schedule.
2) A 36-year-old taxpayer with a dependent child and claiming head of household status has received $29,000 in alimony payments and earned wages of $44,000. Which Schedule is this person required to file?
A) Schedule 1.
B) Schedule 2.
C) Schedule 3.
D) The taxpayer is not required to file a schedule.
3) A taxpayer is married with a qualifying child (dependent), but she has been living separate from her spouse for the last five months of the year. However, she paid for more than half of the cost of keeping up the household. Her spouse does not want to file jointly. What filing status must she use when filing her tax return? She wants to obtain the maximum legal benefit.
A) Single.
B) Married Filing Separately.
C) Qualifying Widow(er).
D) Head of Household.
4) The taxpayer’s spouse died at the beginning of 2017. He has no qualifying child. Which status should the taxpayer select when filing his tax return for 2018?
A) Single.
B) Married Filing Separately.
C) Married Filing Jointly.
D) Qualifying Widow(er).
5) A legally divorced taxpayer maintains a household for himself and maintains a separate household that is the principal place of abode of his dependent widowed mother. What filing status should he use when filing his tax return?
A) Married Filing Separately.
B) Single.
C) Qualifying widow(er).
D) Head of Household.
6) For tax purposes, one of the requirements to recognize income is:
A) The income can be tax-exempt.
B) The transaction must occur but it’s not necessary to complete it.
C) There must be an economic benefit.
D) All of these.
7) If an attorney performs some estate tax work for a client and the client agrees to pay $6,000 to him and $5,000 to a local financial institution for a debt the attorney owes, the attorney has income of:
A) $5,000.
B) $11,000.
C) $6,000.
D) None of these.
8) Pedro agreed to repair a house for a client and started to work on December 30, 2016. On January 2, 2018, he completed the job and received payment from the client. Pedro must record the income in:
A) 2016.
B) 2017.
C) 2018.
D) Both 2017 and 2018.
9) If Janelle, an accountant, agrees to provide accounting services to Fred, a friend, in exchange for Fred fixing Janelle’s office floor, then:
A) Both of them must report income on their tax returns.
B) Fred must report income on his tax return.
C) Neither Janelle nor Fred must report income on their tax returns.
D) Tom must report income on his tax return.
10) Income may be realized in the form of:
A) Property.
B) Cash.
C) Services.
D) All of these.
11) Beth is a freshman in the UC-Davis degree program in veterinary medicine. In 2018, Beth paid $3,000 in tuition, $500 for books, and $250 for supplies for class. Beth also paid room and board of $3,500. What is the total qualifying education expense for the student loan interest deduction for Beth in 2018?
A) $3,000.
B) $3,750.
C) $7,250.
D) $3,500.
12) Rodrigo graduated from the University of Maryland in 2016. In 2018, to take advantage of a lower interest rate program, he refinanced his qualified education loans with another qualified student loan. He is not a dependent on another person’s tax return. Before AGI limits, what is the maximum deduction available to him for the $3,200 he paid for educational student loan interest in 2018?
A) $2,000.
B) $3,000.
C) $0.
D) $2,500.
13) In 2014 through 2017, Shana borrowed a total of $30,000 for higher education expenses on qualified education loans. In 2018, while still living at home and being claimed by her parents as a dependent, she began making payments on the loan. The first year interest on the loan was reported as $1,750. The amount that Shana can claim on her tax return is:
A) $0.
B) $2,500.
C) $1,750.
D) $1,500.
14) Freya, who is single, had a student loan for qualified education expenses on which interest was due. For 2018, the total interest payments were $2,000. Assuming she has AGI under $65,000, how much may she deduct in arriving at adjusted gross income for 2018?
A) $2,000.
B) $2,500.
C) $1,700.
D) $0.
15) In 2017, Carlos, who is single, received his Bachelor’s degree and started working. In 2018, he began paying interest on qualified education loans and had modified AGI of $70,000. He paid interest of $1,200 in 2018. Which of the following statements is correct?
A) Due to the phase-out rules, only a portion of the $1,200 will be deductible.
B) Taxpayers are not allowed a deduction for education loan interest in 2018.
C) The full $1,200 is deductible in arriving at adjusted gross income.
D) If his modified AGI had been $75,000, the phase-out rules would have reduced his deductible interest to zero.
True or False
1) For 2018, medical expenses in excess of 7.5 percent of adjusted gross income are deductible.
2) In 2017, Roxanne’s nephew was her dependent. For 2018, he no longer qualifies as her dependent. However, she paid $650 in 2018 for medical expenses she incurred in 2017 when he was her dependent. Roxanne can include the $650 in figuring her medical expense deduction in 2018.
3) The cost of aspirin and over-the-counter cough medicine is a deductible medical expense even though they are nonprescription drugs.
4) Prescription drugs obtained outside the United States, such as from Canada, are never deductible on a U.S. tax return.
5) Premiums paid for long-term care insurance policies may be deductible as medical expenses.
6) The Tax Cuts and Jobs Act (TCJA) of 2017 limited the deduction for real estate taxes and other state and local taxes on the Schedule A. Effective beginning in 2018, the limitation for the deductibility of these taxes in total is $10,000 ($5,000 for MFS).
7) Real estate property taxes are deductible in the calculation of federal taxable income with no limitation.
8) Ramon lives in Los Angeles and has state taxable income of $120,000. His state income tax is $7,200. If he itemizes, Ramon gets a deduction on Schedule A for that amount in the year the tax is paid.
9) A taxpayer generally has the option of deducting foreign taxes paid on Schedule A or taking a foreign tax credit.
10) Sales taxes are deductible as an itemized deduction based only on the actual amount of sales taxes paid.
