1. You must have lived in the house you maintained to claim head of household. This is true unless this house is for:                                                                  

A. A dependent child
B. A dependent parent
C. An dependent aunt
D. A dependent cousin

2. You must provide over half of the cost of keeping up a home for a child, parent, or other qualifying relative to file as "Head of Household." 

True False

3. If you are married, you could be considered unmarried for Head of Household purposes.                                                                                                  

True False

4. To qualify for you for Head of Household, a qualifying person can be   

A. A single son for whom you cannot claim and exemption but who lived with you for more than half the year.
B. A married child for whom you can claim an exemption.
C. A parent for whom you cannot claim an exemption.
D. A brother whom did not live with you for more than half of the year.

5. If a taxpayer is married, he must file jointly.      

True False

6. What are the five Filing Status' for tax year 2010 in the order that you see them on tax forms?

A. Single, Married filing jointly, Married filing separately, Head of household, and Qualifying Widow (er).    
B. Single, Married filing separately, Married Filing jointly, Head of household, and Qualifying Widow (er).
C. Single, Head of household, Married filing jointly, Married filing separately, and Qualifying Widow (er).
D. Single, Married filing jointly, Married filing separately, Qualifying widow (er) and Head of household.

7. A person who is single, is living alone, and has no dependents can file as Head of Household.                                   

True False

8. Esteban and his wife have been separated since May. They are not yet divorced. She has one child living with her. Esteban also has a child living with him. Of the following choices, what is the filing status that would not be possible for neither Esteban nor his wife?           

A. Single
B. Married filing jointly
C. Married filing separate
D. Head of Household

9. Jose is the only person maintaining a household for his father. He paid for all his father's upkeep. To claim him as a dependent, his father must be a resident of which of the following countries?                                

A. United States
B. Mexico
C. Canada
D. Any of the above

10. In order for a dependent to qualify you for the Head of Household filing status, the dependent can                       

A. Be your child who lived with you for at least 6 months of the year.
B. Be your parent who does not need to live with you any part of the year. 
C. Be your aunt who lived with you for at least 6 months of the year.
D. Any of the above

11. Which of the following does NOT meet the requirements to claim the Head of Household filing status?                              

A. Your spouse did NOT live in your home during the last 6 months of the tax year.
B. You paid more than half of the cost of keeping up your home for the entire year.
C. You are unmarried or considered unmarried on the last day of the year.
D. Your home was the main home for your foster child for only 5 months of the tax year.

12. For Head of Household purposes, if your father is your qualifying relative and he does not live with you, you must pay more than half the cost of keeping up his home for the year.                      

True False

13. Your standard deduction is zero and your should itemize any deductions you have if                                                      

A. Your filing status is married filing separately and your spouse itemizes deductions on his or her return.
B. You are filing a tax return for a short tax year because of a change in your annual accounting period.
C. You are a nonresident or dual-status alien during the year.
D. Any of the above.

14. If you and your spouse file separately, and your spouse itemizes her deductions, you must                                                           

A. Itemize your deductions also.
B. Use the standard deduction instead.
C. Tell her that she can't itemize because you are claiming the standard deduction
D. Split income between the two

15. If your spouse died in 2010, you can use the _______ filing status for tax year 2010, because it is more advantageous to do so.  

A. Single
B. Married Filing Jointly
C. Married Filing Separate
D. Qualifying Widow(er) With Dependent Child.
                 

16. If you were married on or before December 31, 2010,  what can your filing status be for tax year 2010?

A. Single
B. Married Filing Jointly.
C. Married Filing Separate.
D. Both B and C are correct.

17. Hector was widowed before January 1, 2010. He did not remarry in tax year 2010, and he did not have a child living with him. What is the only filing status that Hector can use?    

A. Single
B. Married Filing Jointly
C. Married Filing Separate
D. Qualifying Widow(er) With Dependent Child.

18. To qualify for 'Qualifying Widow(er) With Dependent Child' filing status, you must

A. Have a qualifying child living with you all year.
B. Have not remarried by the end of the year.
C. Have paid more than half of the cost of keeping up a home for your child.
D. All of the above

19. Henry wants to claim his aunt on his return. His aunt lives in Mexico and does not qualify for a social security number. How does Henry claim an exemption for her if she doesn't have a valid social security number?   

A. He can obtain an individual taxpayer identification number (ITIN) from the IRS.
B. He can get her a fake number.
C. He can write "Applied For" in the social security number column.
D. Since she lives in Mexico a number is not required.

20. If you are filing a joint return and your spouse could be claimed as a dependent by someone else,                                         

A. You and your spouse can claim dependents on your joint return.
B. You and your spouse cannot claim dependents on your joint return.
C. If you have a qualifying child or qualifying relative, you can claim that person as a dependent.
D. As long as you file jointly, you can claim any dependents on your joint return.

21. If at the end of the tax year, you are married and living together, you can file   

A. Married filing separate
B. Married filing jointly
C. Head of Household
D. Both A and B are correct

22. If a husband and his wife file Married Filing Separate, they generally 

A. Split their wages in half.
B. Both sign each other's return.
C. Both report only their own income, exemptions, credits and deductions on their individual returns (unless they live in a community property state).
D. File as Head of Household although they did not live apart at any time during the year.

23. Mary's spouse, Joseph, died in an auto accident in 2009. Mary had not remarried and she supported their 5-year-old son all year. She qualifies to use the 'Qualifying Widow(er) With Dependent Child' filing status on her Federal return for the tax year 2010.  

True False

24. One of the requirements to use the 'Qualifying widow(er) With Dependent Child' filing status is that you use

A. 'Qualifying Widow(er) With Dependent Child' filing status in the year your spouse died.
B. 'Qualifying Widow(er) With Dependent Child' filing status for next 2 years that does not include the year of spouse's death
C. 'Qualifying Widow(er) With Dependent Child' for third year of spouse's death
D. 'Qualifying Widow(er) With Dependent Child' even if you remarry in that year.

25. If your child is considered temporarily absent from home, you can still claim him as living with you if he is away because of   

A. Illness
B. Education or business
C. Vacation or military service
D. Any of the above

26. If your filing status is Married Filing Separate, you CANNOT take the earned income credit.   

True False

27. Once you file a joint return, you CANNOT choose to file separate returns for that year after the due date of the return.   

True False

28. If you or your spouse (or both of you) filed a separate return, you generally can change to a joint return any time within 3 years from the due date of the separate return or returns.

True False

29. You are considered married for Head of Household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your non-resident spouse as a resident alien.

True False

30. What is the 'Standard Deduction' amount for a single dependent who earned $4,000 from his or her job in tax year 2010?      

A. $4,000 Federal.
B. $950 Federal.
C. $4,300 Federal.
D. $5,700 Federal.

31. The following are community property states:

A. California and New Mexico.
B. Texas and Louisiana.
C. Nevada, Wisconsin and Arizona.
D. Any of the above.

32. Community property laws affect how you figure your income on your federal income tax return if you are married, live in a community property state or community property country and

A. File separate returns.
B. File married filing jointly.
C. File single.
D. You don't file a tax return.

33. If you are married, your tax usually will be more if you file married filing jointly than if you file married filing separately.

True False

34. Sometimes it can be to your advantage to file separate tax returns. If you and your spouse file separate returns, you have to determine your

A. Community income.
B. Separate income.
C. Both A and B above.
D. Non-taxable income.

35. A registered domestic partner (RDPs) who are domiciled in Nevada, Washington, or California and individuals in California who, for state law purposes, are married to an individual of the same sex generally must

A. Not file a federal tax return.
B. Follow state community property laws and report half the combined community income of the individual and his or her RDP.
C. Combine his or her income with the spouse or RDP.
D. None of the above.

36. For years prior to 2010, RDPs who reported income without regard to the community property laws are required to file amended returns to report half of the community income of the RDPs.

True False

37. RDPs and individuals in California who are married to an individual of the same sex are

A. Not married for federal tax purposes.
B. Required to use the single filing status.
C. Able to use the head of household filing status if they qualify.
D. All of the above.

38. Whether you have community property and community income depends on

A. The state where you are domiciled.
B. The filing status you are using.
C. How many exemptions you are claiming on your tax return.
D. the involvement of your community in your area.

39. You have only one domicile even if you have more than one home. Your domicile is a permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intent to return. The question of your domicile is mainly

A. A matter of what you have communicated to your community.
B. A matter of what you have communicated to the IRS.
C. A matter of your intention as indicated by your actions.
D. A matter of where you have grown up.

40. A factor to consider when determining domicile would be

A. Where you pay state income tax.
B. Your business and social ties to the community.
C. The location of any property you own.
D. All of the above.

41. Whether a dependent has to file a return generally depends on

A. The amount of the dependent's earned and unearned income.
B. Whether the dependent is married.
C. Whether the dependent is age 65 or older, or is blind.
D. Any of the above.

42. If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has ________ of gross income (earned and/or unearned).

A. $5 or more.
B. $5,700 or more.
C. $5,800 or more.
D. At least $1.

43. Helena is 17. Her father claims an exemption for her on his income tax return. She worked part time and earned $6,100 in wages. She did not have any unearned income. Helena

A. Does not need to file a return.
B. Must file a return because her earned income and total income is more than $5,700.
C. Must file a return because her total income is more than $5.
D. Must file a return because her total income is more than $950.

44. A single dependent who has only unearned income under 65 years old and is not blind must file a return if the total is more than

A. $950.
B. $5,700.
C. $5.
D. $7,900

45. Mark is 17 and single. His parents can claim an exemption for him on their income tax return. He received $990 of taxable interest and dividend income. He did not work during the year. He must file a return because

A. His earned income is more than $950.
B. His unearned income and total income is more than $950.
C. His income is more than $5.
D. None of the above because his total income is not more than $2,350.

46. A parent of a child under age ______ may be able to elect to include the child's interest and dividend income on the parent's return.

A. 19.
B. 24 if a full-time student.
C. Either A or B above.
D. 14

47. Harry is 19, not blind, and a full-time college student. He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. He received $250 taxable interest income and earned income of $2,445 from a part-time job. He has to file a return.

True False

48. Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return.

True False

49. A dependent must file a tax return if he or she owes

A. Alternative minimum tax.
B. Social security and Medicare taxes on tips not reported to his or her employer.
C. Social security and Medicare taxes on wages received from an employer who did not withhold these taxes.
D. Any of the above.

50. A dependent must file a tax return if he or she

A. Received any advanced earned income credit payment from his or her employers in 2010.
B. Had wages of $68 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.
C. Had net earnings from self-employment of at least $200.
D. Any of the above.

51. Even if a dependent is not obligated to file a return he or she

A. Can file only if his or her parents will not claim an exemption for him or her.
B. Income tax was withheld from his or her income.
C. Does not qualify for the earned income credit, additional child tax credit, health coverage tax credit or other credits.
D. Is not due a refund.

52. If a child cannot file his or her own return for any reason, such as age,

A. The child's parent or guardian is responsible for filing a return on his or her behalf.
B. The child should send the return unsigned.
C. The child should not file the return.
D. None of the above.

53. For federal income tax purposes, the income a child received for his or her personal services is the child's, even if the parent is entitled to and receives that income. The following is a correct statement.

A. If the child does not pay the tax due on the income, the child is not liable for the tax.
B. Deductions for payments that are made out of a child's earnings are the parent's if the payments are made by the parent.
C. If the child does not pay the tax on the income, the parent may be liable for the tax.
D. Payments you make on your child's behalf out of a child's earnings can be deducted only on your return.

54. The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to

A. $950.
B. The individual's earned income plus $300, but not over the standard deduction amount.
C. The larger of A and B above.
D. the smaller of A and B above.

55. Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. If the employee claims exemption from withholding on Form W-4, the employer will not withhold

A. Social security tax.
B. Federal income tax.
C. Medicare tax.
D. Any of the above.

56. An employee can claim exemption from withholding for 2011 only if

A. For 2010, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability.
B. For 2011, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability.
C. He or she meets both A and B above.
D. The employee's total income will be more than $950.

57. An employee who is a dependent ordinarily can claim exemption from withholding if

A. The employee's total income will be more than $950, the minimum standard deduction for 2011.
B. The employee's unearned income will be more than $300.
C. Both A and B are true.
D. None of the above.

58. A person who can be claimed as a dependent on another taxpayer's return can claim his or her own exemption if the other taxpayer does not actually claim the exemption.

True False

59. The standard deduction for a married dependent filing a separate return whose spouse itemizes deductions is

A. $950.
B. Zero.
C. $300.
D. $5,700.

60. To claim exemption from withholding, an employee must enter "Exempt" in the space provided on Form W-4, line 7. An exemption from withholding is good for only one year. To continue the exemption, an employee must file a new Form W-4 by

A. February 15 of each year.
B. March 15 o each year.
C. April 15 of each year.
D. December 31 of each year.

61. As a U.S. citizen or resident alien, your worldwide income generally is subject to U.S. income tax, regardless of where you are living.

True False

62. An individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year.

A. A permanent resident.
B. A resident alien.
C. A U.S. citizen.
D. A temporary resident.

63. To be considered a resident alien an individual must meet which test (s)?

A. No test is needed as long as the individual has U.S. income.
B. Either the green card test or the substantial presence test.
C. The substantial presence test only.
D. The green card test only.

64. You are considered a U.S. resident if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least

A. 31 days during the current year.
B. 183 days during the current year and the 2 preceding years.
C. Counting all the days of physical presence in the current year, but only 3 days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year.
D. Only A and B above.

65. Juan was physically present in the United States on 120 days in each 2008, 2009, and 2010. To determine if Juan meets the substantial presence test for 2010, count the full 120 days of presence in 2010, 40 days in 2009 (1/3 of 120) and 20 days in 2008 (1/6 of 120). As a result

A. Juan is considered a resident under the substantial presence test for 2010.
B. Juan is not considered a resident under the substantial presence test for 2010.
C. Juan's total for the 3-year period was 183 days so he is not considered a resident under the substantial presence test for 2010.
D. None of the above.

66. If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad.

True False

67. Your income, filing status, and age generally determine whether you must file an income tax return. If you are single, age 27, you must file an income tax return if your income from worldwide sources is at least

A. $9,350.
B. $11,500.
C. $8,950.
D. $10,750.

68. You must make all federal income tax determinations in your functional currency. The U.S. dollar is the functional currency for all taxpayers except some qualified business units (QBUs). A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records. Even if you have a QBU, you functional currency is the dollar if

A. You conduct the business in U.S. dollars and the principal place of business is located in the United States.
B. You choose to or are required to use the U.S. dollar as your functional currency.
C. The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities are conducted.
D. Any of the above.

69. Make all income tax determinations in your functional currency. Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, 

A. Use the rate that is higher and more advantageous.
B. Use the rate that was previously approved by the IRS.
C. Use the rate that most properly reflects your income.
D. Either A or B are correct.

70. If your functional currency is not the U.S. dollar, make all income tax determinations in your functional currency. At the end of the year,

A. Report your income in your currency and write in red ink "Used my currency" across the top of the first page of your return.
B. Translate the results, such as income or loss, into U.S. dollars to report on your income tax return.
C. Postpone the reporting of the income until functional currency can be determined.
D. None of the above.

71. If, because of restrictions in a foreign country, your income is not readily convertible into U.S. dollars or into other money or property that is readily convertible into U.S. dollars or into other money or property that is readily convertible into U.S. dollars, your income is "blocked" or "deferrable" income. You can

A. Report the income and pay your federal income tax with U.S. dollars that you have in the United States or in some other country.
B. Postpone the reporting of the income until it becomes unblocked.
C. Use the one that most properly reflects your income.
D. Either A or B above.

72. If you choose to postpone the reporting of foreign income that is blocked, you must file an information return with your tax return. For this information return, you should use

A. Form 673.
B. Form 2555 or Form 2555-EZ.
C. Another Form 1040 labeled "Report of Deferrable Foreign Income, pursuant to Rev. Rul. 74-351".
D. All of the above.

73. If you choose to postpone reporting blocked income and in a later year you wish to begin including it in gross income although it is still blocked, you

A. Must figure the amount you can pay to the IRS in nonconvertible foreign currency.
B. Should check to see whether that income is still blocked.
C. Must file Form 2555  or Form 2555-EZ.
D. Must obtain the permission of the IRS to do so.

74. Returns with a foreign address cannot be e-filed.

True False

75. If, at the end of the tax year, you are married and one spouse is a U.S. citizen, or resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident. If you make this choice, 

A. You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect.
B. You must file a joint income tax return for the year you make the choice.
C. Neither of you can claim tax treaty benefits as a resident of a foreign country for a tax year for which the choice is in effect.
D. All of the above.

76. If you do not choose to treat your non-resident alien spouse as a U.S. resident, you may be able to use the

A. Single filing status.
B. Head of Household filing status.
C. Married filing jointly filing status.
D. Any of the above.

77. Sarah Jimenez, a U.S. citizen, is married to Arcadio, a non-resident alien. Sarah and Arcadio make the choice to treat Arcadio as a resident alien by attaching a statement to their joint return. Sarah and Arcadio must report their worldwide income for the year they make the choice and for all later years unless the choice is ended or suspended. For the year they make the choice, Sarah and Arcadio

A. Must file separate returns.
B. Can file either joint or separate returns.
C. Must file a joint return.
D. None of the above.

78. If you choose to treat your non-resident alien spouse as a U.S. resident attach a statement, signed by both spouses to your joint return for the first tax year for which the choice applies. The statement should contain

A. A declaration that one spouse was a non-resident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year.
B. A declaration that you choose to be treated as U.S. residents for the entire tax year.
C. The name, address, and social security number (or individual taxpayer identification number) of each spouse.
D. All of the above.

79. The choice to be treated as a resident alien does not apply to any later tax year if neither of you is a U.S. citizen or resident alien at any time during the later tax year.

True False

80. Once made, the choice to be treated as a resident applies to all later years and cannot be suspended.

True False

81. Members of the Armed Forces receive many different types of pay and allowances which are always excluded from gross income.

True False

82. If you are a U.S. citizen with income from sources outside the United States (foreign income), you must report all of that income on your tax return, unless

A. You reside outside the United States.
B. You do not receive a Form W-2 or Form 1099.
C. The amounts that the U.S. law allows you to exclude.
D. This income is unearned income such as interest, dividends, capital gains, pensions, rents or royalties.

83. Certain taxpayers can exclude income earned in foreign countries. For 2010, this exclusion amount can be as much as $91,500. The foreign earned income exclusion applies to

A. The wages and salaries of military and civilian employees of the U.S. government.
B. Those who work at United States Armed Forces exchanges.
C. Armed Forces motion picture services, and similar personnel.
D. None of the above.

84. Residents of American Samoa may be able to exclude income from American Samoa, and this possession exclusion applies to wages and salaries of military employees of the U.S. Government.

True False

85. The pay you earn as a member of the Armed Forces may be subject to community property laws depending on

A. Your marital status.
B. Your domicile.
C. The nature of the payment.
D. All of the above.

86. Community property rules apply to married persons whose domicile during the tax year was in a community property state. The rules may affect your tax liability if you

A. File separate return.
B. Are divorced during the year.
C. Either A or B above.
D. File Married Filing Jointly.

87. Active duty military pay is subject to community property laws.

True False

88. To deduct moving expenses, you generally must meet certain time and distance tests unless you are member of the Armed Forces on active duty and you move because of a permanent change of station. A permanent change of station is

A. A move from your home to your first post of active duty.
B. A move from one permanent post of duty to another.
C. A move from your last post of duty to your home or to a nearer point in the United States.
D. All of the above.

89. If you move because of a permanent change of station, you can deduct the reasonable unreimbursed expenses of moving you and members of your household. You can deduct expenses for

A. Moving household goods and personal effects.
B. Travel.
C. Both A and B above.
D. Moving household goods, travel and entertainment.

90. If you are an enlisted member, warrant officer, or commissioned warrant officer, you can exclude amounts from your income such as

A. Active duty pay earned in any month you served in a Combat Zone.
B. Awards for suggestions, inventions, or scientific achievements you are entitled to because of a submissions you made in a month you served in a Combat Zone.
C. A reenlistment bonus if the voluntary extension or reenlistment occurs in a month you served in a Combat Zone.
D. Any of the above.

91. The following types of military qualify as service in a Combat Zone.

A. Presence in a Combat Zone while on leave from a duty station located outside the Combat Zone.
B. Passage over or through a Combat Zone during a trip between two points that are outside a Combat Zone.
C. Presence in a combat zone solely for your personal convenience.
D. None of the above.

92. Military service outside a combat zone is considered to be performed in a combat zone if

A. The Department of Defense designates that the service is in direct support of military operations in the combat zone.
B. The service qualifies you for special military pay for duty subject to hostile file or imminent danger.
C. Both A and B above.
D. The pay is verifiable by reference to military pay records.

93. For tax purposes, an alien is an individual who is not a U.S. citizen. An alien is in one of three categories: resident, nonresident, or dual-status. The following is a true statement regarding alien status.

A. Aliens who are in the United States only because of military assignments and who have a home outside the United States are resident aliens.
B. Placement in the correct category is crucial in determining what income to report and what forms to file.
C. Under peacetime enlistment rules, you can enlist in the Armed Forces no matter if you have not been admitted to the United States for Permanent residence.
D. Most members of the Armed Forces are either U.S. citizens, resident aliens or nonresident aliens.

94. A nonresident alien spouse can be treated as a resident alien if

A. One spouse is a U.S. citizen or resident alien at the end of the tax year.
B. That spouse is living together with the nonresident alien at the end of the tax year.
C. The nonresident alien chooses to be treated as a nonresident alien.
D. All of the above.

95. To treat a nonresident alien spouse as resident alien both you and your spouse must sign a statement and attach it to your joint return for the first tax year for which the choice applies with

A. A declaration that one spouse was a nonresident alien and the other was a U.S. citizen or resident alien on the last day of the year.
B. A declaration that both spouses choose to be treated as U.S. residents for the entire tax year.
C. The name, address, and taxpayer identification number of each spouse.
D. All of the above.

96. If you are an alien who does not meet the requirements to a resident alien, you are a nonresident alien. If you are required to file a federal tax return, you must file

A. Form 1040.
B. Form 1040NR (or 1040NR-EZ).
C. Form 1040EZ.
D. You cannot file a tax return.

97. If you are a member of the U.S. Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Therefore,

A. You cannot deduct your expenses for meals and lodging while at your permanent duty station.
B. You can deduct your expenses for meals and lodging if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas.
C. You have a home aboard ship for travel expense purposes.
D. You can deduct expenses for personal travel, such as visits to family while on furlough, leave, or liberty.

98. Transportation expenses include the ordinary and necessary costs of

A. Getting from one workplace to another when you are not away from home.
B. Going to a business meeting away from your regular workplace.
C. Getting from your home to a temporary workplace when you have a regular place of work.
D. All of the above

99. A meeting of an Armed Forces reserve unit is a second place of business if the meeting is

A. Held on a day on which you do not work at your regular job.
B. Held on a day on which you work at your regular job.
C. Held in a temporary location and you do not have one or more regular places of work.
D. Held at a temporary location inside your metropolitan area.

100. The tax liability can be forgiven, or if already paid, refunded, if a member of the U.S. Forces dies

A. While in active service in a combat zone.
B. From wounds, disease, or other injury received in a combat zone.
C. From wounds or injury incurred in a terrorist or military action.
D. Any of the above.

101. The maximum recovery rebate credit is $600 ($1,200 if married filing jointly) plus $300 for each qualifying child. You may be able to take this credit if                                                                  

A. You did not get an economic stimulus payment.
B. Your economic stimulus payment was less than $600 ($1,200 if MFJ for 2007) plus $300 for each qualifying child you had for 2008.
C. Either A or B above.
D. You received an economic stimulus payment in 2007.

102. New rules apply to losses of personal use property attributable to federal declared disasters declared in tax years beginning after 2007 and that occurred before 2010. A federally declared disaster is   

A. Any disaster determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Acts.
B. Any disaster determined by the Governor of the state where the disaster happened.
C. Any disaster determined by the county in which the disaster happened.
D. Any of the above.

103. If you claimed a casualty or theft loss deduction and in a later year you received more reimbursement than you expected, you   

A. Re-compute the tax for the year in which you claimed the deduction.
B. Must include the reimbursement in your income for the year in which it was received only to the extent the original deduction reduced your tax for the earlier year.
C. Must file an amended income tax return (Form 1040X) for the tax year in which you claimed the deduction.
D. None of the above.

104. If you choose to file an amended return reducing a prior casualty or theft loss deduction, any underpayment of tax resulting from the reduced deduction will not have to be paid with the amended return.

True False

105. Tax-exempt interest on the following is not an item of AMT tax preference and therefore is not subject to the AMT if issued after July 30, 2008.

A. An exempt facility bond for which 95% or more of the net proceeds are to be used to provide qualified residential rental projects.
B. A qualified mortgage bond.
C. A qualified veteran's mortgage bond.
D. All of the above.

106. An AMT adjustment is required for depreciation of qualified disaster assistance property that is eligible for the special depreciation allowance.                                   

True False

107. The 90% qualified disaster loss limit on the alternative tax net operating loss deduction (ATNOLD) does not apply to the portion of an ATNOLD attributable to qualified disaster losses.

True False

108. The following apply to the AMT for the Kansas Disaster area.           

A. No AMT adjustment is required for depreciation of qualified recovery assistance property that is eligible for the special depreciation allowance.
B. The 90% limit on the ATNOLD does not apply to the portion of an ATNOLD attributable to qualified recovery assistance losses.
C. Both A and B above.
D. An AMT adjustment is required for depreciation of qualified recovery assistance property that is eligible for the special depreciation allowance.

109. For tax years beginning after 2007, the 5% maximum tax rate on qualified dividends and net capital gain (the excess of net long-term capital gain over net short-term capital loss) is                                

A. Reduced to 0% and this applies for both regular tax and AMT.
B. Reduced to 15% and this only applies to regular tax.
C. Increased to 5% and this only applies to AMT.
D. Reduced to 0% and this applies only to the AMT.

110. The rules regarding the age of a child whose investment income may be taxed at the parent's tax rate have changed for 2008. These rules

A. Will not continue to apply to a child under age 18.
B. Will apply in certain cases to a child who was age 18 at the end of 2008 and did not have earned income that was more than half of the child's support. 
C. Will apply in certain cases to a child who was a full-time student over age 18 and under age 24 at the end of 2008 and had earned income that was more than half of the child's support.
D. Either A or B above.

111. For tax years beginning after 2007 and before 2011, gross income

A. Includes rebates or reductions of property or income taxes provided by a state or local government for providing services as a member of a qualified emergency response organization.
B. Includes qualified payments made by a state or local government for providing services as a member of a qualified emergency response organization.
C. Does not include rebates or reductions of property or income taxes provided by a state or local government for providing services as a member of a qualified emergency response organization.
D. None of the above.

112. If you do not file your return by the due date (including extensions) you may have to pay a failure-to-file penalty. For income tax returns required to be filed after 2008, the failure-to-file penalty for returns more than 60 days after the due date is increased. In this situation, the minimum penalty is   

A. $135.
B. 100% of the unpaid tax.
C. The smaller of A or B above.
D. $100

113. For tax years 2009 and 2010, changes have been made to the American opportunity tax credit. The following is one of the these changes.

A. The maximum amount of the Hope credit increases to $5,500 per student.
B. The Hope credit can now be claimed only for the first two years of post-secondary education.
C. The term "qualified tuition and related expenses" has been expanded to include expenditures for "course materials".
D. All of the above.

114. For tax years 2009 and 2010, generally 40% of the Hope credit is now a refundable credit, which means that you receive up to _________ even if you owe no taxes.

A. $2,500.
B. $1,000.
C. $500
D. $100

115. Any economic recovery payment you receive during 2009 is taxable.  

True False              

116. The $250 economic recovery payments are being made to most people who

A. Receive social security benefits, supplemental security income (SSI), railroad retirement benefits or veteran disability compensation or pension benefits.
B. Live in a U.S. state, the District or Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, or the Northern Mariana Islands.
C. Both A and B above.
D. Apply for the credit.

117. Two new credits you may be able to take for 2009 are

A. The Hope credit and the American opportunity tax credit.
B. The Making work pay credit and the Government retiree credit.
C. The economic recovery credit and the Government retiree credit.
D. All of the above.

118. You may be able to take the Making work pay credit if you have earned income from work and

A. Your modified AGI is $95,000 ($190,000 if MFJ) or more.
B. You are a nonresident alien.
C. You can be claimed as a dependent on someone else's return.
D. None of the above

119. Even if your federal income tax withholding is reduced during 2009 because of the Making work credit, you must claim the credit on your return to benefit from it.  

True False

120. The Making work pay credit is 6.2% of your earned income but cannot be more than $400 ($800 if MFJ) and it will be reduced if                                         

A. You don't qualify for the government retiree credit.
B. You receive a $250 economic recovery payment.
C. Your modified AGI is not more than $25,000 ($50,000 if MFJ).
D. Any of the above.

121. To claim either the Making Work Credit or the Government retiree credit, you must include your social security number or the identification number issue by the IRS.

True False

122. Both the Making Work Pay credit and the Government retiree credits are refundable and generally you will use

A. Schedule M (Form 1040A or 1040).
B. Schedule L (Form 1040A or 1040).
C. Schedule C (Form 1040A or 1040).
D. Form 1040 alone to take the credits.

123. If you are filing Form 1040EZ, you can take the Making Work Pay credit on that form and you do not have to file Schedule M.  

True False

124. For any tax year beginning in 2009, each recipient of unemployment compensation can exclude for gross income up to ________ of the amount he or she received during the year.

A. $2,500.
B. $3,000.
C. $2,400.
D. $1,000.

125. The following change to the AMT went into effect for 2009.

A. Qualified motor vehicle tax is allowed against AMT.
B. The AMT exemption amount for a child has decreased.
C. The AMT exemption amount has decreased.
D. All of the above

126. Tax-exempt interest on specified private activity bonds issued in 2009 or 2010 is

A. An item of tax preference and therefore subject to the AMT.
B. Not an item of tax preference and therefore not subject to the AMT.
C. Not an item of tax preference and therefore subject to the AMT.
D. None of the above.

127. For 2009, a qualifying child is defined as

A. A child younger than you.
B. A child who does not file a joint return unless the return was filed only as a claim for refund.
C. A child you claim that is your child and if not your child, your AGI must be higher than the highest AGI of any parent of the child.
D. All of the above.

128. For 2009, your qualifying child for purposes of the child tax credit is a qualifying child only if you can and do claim an exemption for him or her.

True False

129. In 2009, you can deduct the state or local sales and excise taxes imposed on the purchase of a qualified motor vehicle after February 16, 2009, and before 2010.

True False

130. The definition of qualified higher education expenses for tax-free distributions fro a qualified tuition program is expanded to include amounts paid in 2009 or 2010 for the purchase of equipment that is to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is enrolled at an eligible educational institution. Such equipment as

A. Computer software.
B. Any computer or related peripheral equipment.
C. Fiber optic cable related to computer use, and internet access and related services.
D. Any of the above.