1. Look at the Form 1040 you prepared for Maria Escobedo. What is the amount on Form 1040, Line 50?

A. $ 6,800.
B. $ 1,900.
C. $ 3,000. 
D. $ -0-.

2. Look at the Form 1040 you prepared for Maria Escobedo. What is the amount on Form 1040, Line 73a?

A. $ 2,200.
B. $ 1,864.
C. $ -0-. 
D. $ 844.

3. You cannot claim a lifetime learning credit for a qualified education expense paid with the proceeds of a loan.                

True False

4. The lifetime learning credit is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you can can claim an exemption on your tax return. If you paid $1,500 in December 2008 for qualified tuition for the Spring 2009 semester beginning in January 2009, you may be able to use to use the $1,500 in figuring your 2008 credit.                      

True False

5. Generally an amount paid or allowed to, or for the benefit of, a student at an educational institution to aid in the pursuit of studies. The student may be either an undergraduate or a graduate.

A. A scholarship.
B. A fellowship.
C. A grant.
D. Tuition.

6. You can exclude from your income up to _________ of qualified employer-provided educational assistance.

A. $1,500.00.
B. $2,000.00.
C. $5,250.00.
D. $6,350.00.

7. A scholarship or fellowship is tax free only if

A. You are a candidate for a degree at an eligible educational institution.
B. You use the scholarship or fellowship to pay qualified education expenses.
C. You use the scholarship or fellowship to pay for normal living expenses.
D. Both A and B above.

8. If your only income is a completely tax-free scholarship or fellowship,

A. You do not have to file a tax return and no reporting is necessary.
B. You are required to file a tax return to report the non-taxable amount.
C. You must report it on your return if you receive a Form W-2.
D. You must fax a note to the IRS to let them know that the scholarship is tax-free.

9. The Hope credit is a nonrefundable credit. The means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. You may be able to claim a Hope credit of up to $1,800 for qualified education expenses paid for each eligible student. A tax credit reduces the amount or income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit, such as the Hope credit,

A. Is a refundable credit.
B. Directly reduces taxable income.
C. Directly reduces the tax itself.
D. Can be refunded to you.

10. Generally, you can claim the Hope credit if

A. You pay qualified education expenses of higher education.
B. You pay the education expenses for an eligible student.
C. The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.
D. All of the above.

11. You cannot claim the Hope credit for 2008 if

A. You pay qualified education expenses of higher education.
B. The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.
C. Your modified adjusted gross income (MAGI) is $58,000 or more ($116,000 or more in the case of a joint return).
D. You pay the education expenses for an eligible student.

12. For purposes of the Hope credit, qualified educational expenses are

A. Insurance, and medical expenses (including student health fees).
B. Tuition and certain related expenses required for or attendance at an eligible educational institution.
C. Room and board, transportation or similar personal, living, or family expenses.
D. All of the above.

13. To claim the Hope credit, the student for whom you pay qualified education expenses must be an eligible student. This is a student who

A. For at least one academic period beginning in 2008, the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
B. Had expenses that were used to figure a Hope credit in any 2 earlier tax years.
C. Has completed the first 2 years of postsecondary education (generally, the freshman and sophomore years in college) before 2008.
D. Was not free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of 2008.

14.  Larry and Lisa Sanchez are married and file a joint tax return. For 2008, they claim an exemption for their dependent daughter on their tax return. Their MAGI is $63,000. Their daughter is in her sophomore (second) year of studies at the local university (not in a Midwestern disaster area). Larry and Lisa paid qualified educational expenses of $5,700 for their daughter in 2008. Larry and Lisa, their daughter, and the local university meet all of the requirements for the Hope Credit. Their tax for the year was $5,536. 

A. Larry and Lisa can claim a $5,700 Hope credit in 2008.
B. Larry and Lisa can claim a $1,200 Hope credit in 2008.
C. Larry and Lisa can claim a $3,450 Hope credit in 2008.
D. Larry and Lisa can claim a $3,400 Hope credit in 2008.

A. You are only allowed to claim the Hope credit.
B. Can choose to claim both credits.
C. Can choose to claim either credit, but not both.
D. You are only allowed to claim the Lifetime learning credit.

16. Generally, you can claim the Lifetime Learning credit if

A. Your filing status is married filing separately.
B. You are listed as a dependent in the Exemptions section on another person's tax return.
C. You claim the Hope credit or a tuition and fees deduction for the same student in 2008.
D. The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.

17. For lifetime education credit, if you paid qualified higher education expenses with tax free funds, you cannot claim a credit for those amounts. A tax-free educational assistance would be:

A. Tax-free part of scholarships and fellowships.
B. Veteran's educational assistance and Pell grants.
C. Employer-provided educational assistance.
D. Any of the above.

18. Edna went to school in 2008. She is single and her MAGI is $52,850. She paid $3,500 for her tuition and books. Her tax is $7,455. What is the amount of the lifetime learning credit that she is entitled to.   

A. $ 361 Lifetime Learning credit.
B. $ 955 Lifetime Learning credit.
C. $ 700 Lifetime Learning credit.
D. $ 1,800 Hope credit and $2,000 Lifetime Learning credit.

19. For lifetime education credit, this is an expense that would not qualify even if the amount must be paid to institution as a condition of enrollment or attendance.

A. Cost of transportation.
B. Tuition and certain related expenses required for enrollment in a course at an eligible educational institution.
C. Medical expenses (including student health fees).
D. Both A and C above.

20. If there are qualified education expenses for your dependent for a year, the lifetime learning credit can be claimed by

A. Your dependent can claim the lifetime credit, because she was the student.
B. You, because you paid the expenses and you are claiming the dependent's exemption.
C. Either of you, but not both of you, for your dependent's expenses for the year.
D. None of you.