This topic will help you complete the tax preparation course
by teaching you how to search for items in the tax publications. Every year as
tax figures and tax rules change you will need to know how to look them up.
Every year you need to make sure you explore the new tax changes. When you are
interviewing a client, there will always be a time you need to look something up
to make sure that what you are telling the tax client is correct. In
addition, you will become aware of a brief history of taxation.
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You will need
IRS
Publication 17, and History of U.S. Taxes
to complete this
topic. IRS
Publication 17 is a handy
tools to use throughout your tax preparation career. For some of the questions in
this part use the index in
IRS
Publication 17.
Discovering Publication 17
1. Use Publication 17, (in index), find Income. Then go to the page
that it indicates and you see a paragraph
headed 'Gross Income'. Read here to answer the following question.
Gross income includes all income you receive in the form of money, goods,
property, and services that is not exempt from tax.
True
False
2. Use Publication 17, (in index), find
Filing requirements, scroll down to
find individuals then go to that page. Then go to that page and look for
the 'Do I Have To File a Return? section and read the first paragraph to
answer the following.
You must file a federal income tax return if you are a citizen or resident or
the United States (unless the exception for not filing apply).
True
False
3. Use Publication 17,(in index), find Standard Deduction.
Then go to that page and read the first two columns about standard
deduction to answer the following question:
What is 'Standard Deduction'?
A. Dollar amount that reduces the amount of tax directly.
B.
An amount that depends
on your filing status, and whether you are 65 or older or blind.
C.
A variable amount that eliminates the need for taxpayers to file.
D. All
of the above
4. Use Publication 17,(in index), find Filing requirements,
scroll down to "When to file", then go to
that page to answer the
following question:
For tax year 2008, when is the last day most taxpayers have
to file their tax
return?
A. June 16,
2009.
B. April
17, 2009.
C. April
15, 2009.
D. October 15, 2009.
5. Use Publication 17,(in index), find Penalties.
Then go to that page and read the the "frivolous tax submission" section to answer the
following question:
A frivolous tax return is one that does not include enough
information to figure the correct tax or that contains information clearly
showing that the tax you reported is substantially incorrect. You may have to pay a penalty if you file a frivolous
return in the amount of
A. $ 5,000.
B. $ 3,000.
C. $ 2,000.
D. $ 1,000.
6. Use Publication 17,(in index), find Penalties.
Then go to that page and just read the the "Paying tax late" section to answer the
following question:
What is the penalty for failure to pay for each month or part
of each month, after the due date that the return is not paid?
A. 1/4 of 1%
of your unpaid taxes.
B. 1/2 of 3%
of your unpaid taxes.
C. 1/2 of 2%
of your unpaid taxes.
D. 1/2 of 1%
of your unpaid taxes.
7. Use Publication 17,(in index), find Penalties.
Then go to that page and read the the "filing late" section to answer the
following question:
What is the penalty if you do not file your return by the due
date?
A. 1% for each
month or part of a month that return is late, but not more than 10%.
B. 3% for each month
or part of a month that return is late, but not more than 20%.
C. 5% for each month
or part of a month that return is late, but not more than 25%.
D. 1/2 of 1% for
each month or part of a month that return is late, but not more than 25%.
From the link on
History of U.S. Taxes. Answer the following as
accurate as possible.
8. In 1862, Congress enacted the nation's first income tax
law
A. In order for the government to give bonuses to its employees.
B. In order for the government to have more spending money for leisure
activities.
C. In order to support the campaigns of political parties.
D. In order to support the Civil War effort.
9. The Act of 1862 established the office of Commissioner of
Internal Revenue. The Commissioner was given the power to
A. Assess taxes.
B. To enforce the tax laws through seizure of property and income and through
prosecution.
C. Levy and collect taxes.
D. All
of the above.
10. The powers and authority of the office of Commissioner of
Internal Revenue remain very much the same today.
True
False
11. In 1913, the 16th Amendment to the Constitution made the
income tax a permanent fixture in the U.S. tax system. The amendment gave
Congress legal authority to tax income and resulted in a revenue law that taxed
incomes of both individuals and corporations.
True
False
12. On Oct. 22, 1986, President Reagan signed into law the Tax Reform Act of
1986. The act called for and increase in individual taxation over a five-year
period.
True
False
13. The Revenue Reconciliation Act of 1990 was signed into
law on Nov. 5, 1990. The emphasis of the 1990 act was increased taxes on the
wealthy.
True
False
14. On Aug. 10, 1993, President Clinton signed the
Revenue Reconciliation Act of 1993 into law. The act's main purpose was to
A.
Decrease taxation on corporations.
B.
Increase taxation of small business.
C. Reduce taxes of individuals.
D. Reduce the federal deficit.
Use
IRS
Publication 17 for the following.
15. Public assistance benefits from a public welfare fund
is based upon need, such as payments due to blindness. You must include in your
income any
A. Welfare payments.
B. Payments from a welfare state fund for the victims of crime.
C. Welfare payments that are compensation for services or that are obtained
fraudulently.
D. All
of the above.
16. Generally, property you receive as a gift, bequest, or
inheritance is not included in income. If property you receive this way later
produces income such as interest, dividends, or rents,
A. That income is not taxable to you.
B. That gift is taxable to you.
C. That income is taxable to you.
D.
None of the above.
17. If a federal government agency, financial institution, or a
credit union cancels or forgives a debt you owe of ________, you will receive a
Form 1099-C, Cancellation of debt.
A. $1,000 or more.
B. $5,000 or more.
C. $400 or more.
D.
$600 or more.
18. For tax year 2008, generally you must file a federal income
tax return by April 15, 2009. If you are a U.S. citizen or resident, whether you must file
a return depends on
A. Your gross income.
B. Your age.
C.
Your filing status.
D.
All of the above.
19. In regards to penalties, this includes a failure to
make a reasonable attempt to comply with the tax law or to exercise ordinary and
reasonable care in preparing a return.
A.
Negligence or disregard.
B.
Sloppy-ness.
C.
Mal-intended.
D.
Careless-ness.
20. In 2008, if you use e-file (electronically filed), your return is considered
filed on time if
A. Your authorized electronic return transmitter sends all his transmissions by
April 30, 2009.
B. Your authorized electronic return transmitter sends all his transmissions by
April 17, 2009.
C.
The authorized electronic return transmitter postmarks the transmission by April
15, 2009.
D. You mail the copies that the electronic return transmitter gives you by April 15
2009.
