2015 Annual Federal Tax Refresher (AFTR) Course

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2015 Filing a Tax Return Tax Updates

Once you complete the Filing a Tax Return Course, you will have satisfied the 20 requirements. This tax Course allows you 3 hours of continuing education which satisfies the required 3 hours Updates part of the 20 hour tax course.

Tax School Home Page

Student Instructions: Follow the following 4 steps:

Step	Instructions - You must do all of the following (steps 1 - 4)	Links:
	(We must receive from you both an assignment and a quiz for each Tax Subject)
1	Print the checklist:
2	Read the reading material.	Reading Material
3	Submit the answers to the Review Questions online (the questions on this page). Scroll down for all questions on this page. When you are ready to submit click on the Review Questions link. Make sure you either write your answers or print the page before you click on the Review Questions link.	Review-Questions
4	Complete a quiz on the reading material. You have 60 minutes to complete 50 questions for this quiz. You must study the reading material. You won't have time to look up questions in the reading material.	Quiz Online

Important: If you fail a topic you can try again until you pass. You can try again as many times as you need in order to pass. Every time you try the questions will be different.

Most forms are in Adobe Acrobat PDF format. You will need Adobe Reader to view and print these forms. If you do not already have Adobe Reader installed on your computer, you may download the software for free.

Review Questions

Question

1 of 50

When beginning your business, you must decide what form of business entity to establish because your form of business determines which reports you must file. Which one of the following business structures is fairly new structure allowed by state stature?

A. Sole proprietorship.
B. Partnership.
C. Limited Liability Company (LLC).
D. S corporation.

2 of 50

Tax advisors should provide clients with the highest quality representation concerning federal tax issues by adhering to best practices in providing advice and in preparing or assisting in the preparation of a submission to the Internal Revenue Service. Best practice includes

A. Advising a client to take a position on a document, affidavit or other paper submitted to the Internal Revenue Service.
B. Advising a client to submit a document, affidavit or other paper to the Internal Revenue Service even if this impedes the administration of the federal tax laws.
C. Establishing the facts, determining which facts are relevant, evaluating the reasonableness of any assumptions or representations, relating the applicable law to the relevant facts, and arriving at a conclusion supported by the law and the facts.
D. Advising a client to take any step necessary to avoid the payment of tax at all cost.

3 of 50

The self-employment tax rules apply

A. Only if you are old enough.
B. If you are not already receiving Social Security or Medicare.
C. Both A and B above.
D. None of the above.

4 of 50

You may be eligible to file as Head of Household if the individual who qualifies you for this filing status is born or died during the year. You are considered to have provided more than half of the cost of keeping up a home for this individual if

A. That was the individual's main home for more than half of the period during which the qualifying individual lived.
B. The qualifying individual lived for at least 6 months.
C. You spent a substantial amount that would be considered more than half if the individual had lived.
D. None of the above.

5 of 50

Both you and your spouse must include all of your income, exemptions, and deductions on your tax return. In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint tax return. The type of relief available is

A. Innocent spouse relief.
B. Separation of liability.
C. Equitable relief.
D. Any of the above.

6 of 50

You can change your filing status by filing an amended tax return using Form 1040X. If you or your spouse (or both) file a separate tax return, you generally

A. Can change to a joint tax return any time within 3 years from the due date of the separate tax return or returns.
B. Cannot choose to file separate tax returns for that year after the due date of the tax return.
C. Can have your personal representative change from a joint return to a separate tax return.
D. None of the above.

7 of 50

You may be eligible to file as head of household if the individual who is born or dies during the year qualifies you for this filing status and

A. You must have provided more than half of the cost of keeping up a home that was the individual's main home only if the individual lived for more than half of the year.
B. You must have provided more than half of the cost of keeping up a home that was the individual's main home for the period during which the individual lived.
C. Both A and B above.
D. None of the above.

8 of 50

The foreign earned income exclusion

A. Remains the same at $100,100 for tax year 2014.
B. Rises to $99,200 for tax year 2014.
C. Lowers to $97,600 for tax year 2014.
D. None of the above.

9 of 50

You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. This deduction only affects

A. Your income tax.
B. Your net earnings from self-employment.
C. Your self-employment tax.
D. All of the above.

10 of 50

You must give the payer of your interest income your correct social security number. If you do not, you may be subject to

A. A penalty.
B. Backup withholding.
C. Both A and B above.
D. None of the above.

11 of 50

EITC is a refundable tax credit meaning you could qualify for a tax refund

A. Even if you did not have a valid Social Security Number.
B. Even if your spouse does not have a valid Social Security Number.
C. Even if you did not have federal income tax withheld.
D. Even if you do not have any investment income.

12 of 50

Internal Revenue Code and related regulations set out the EITC Due Diligence requirements and the penalties for failure to comply with them. Additionally,

A. There are four due diligence requirements.
B. Generally, if you prepare EITC claims, you must ask all the questions required on Form 8867.
C. Ask additional questions when the information your client gives you seems incorrect, inconsistent or incomplete.
D. All of the above.

13 of 50

Generally, you must include in gross income everything you receive in payment for personal services such as

A. Wages, salaries and commissions.
B. Commissions, fees and or tips.
C. Fringe benefits and stock options.
D. Any of the above.

14 of 50

If you are single dependent, you must file a return if

A. Your earned income was more than $1,000.
B. Your earned income was more than $6,100.
C. Your gross income was more than the larger of $1,000 or your earned income up to $5,750 plus $350.
D. Any of the above.

15 of 50

A penalty will not be imposed on any part of an underpayment if there was reasonable cause for your position and you acted in good faith in taking that position. However, if you failed to keep proper books and records or failed to substantiate items properly, you

A. Can avoid the penalty by disclosure.
B. Cannot avoid the penalty by disclosure.
C. Cannot file Form 8275-R.
D. Should just pay the preparer penalty.

16 of 50

If more than one filing status applies to you, choose the one that will give you

A. More deductions and credits.
B. The lowest tax.
C. A higher refund.
D. All of the above.

17 of 50

Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. As a result,

A. Health insurance coverage that is not recognized by the Department of Health & Human Services as minimum essential coverage will still qualify.
C. You will pay for coverage when you file your 2014 federal income tax return in 2015.
C. You will report minimum essential coverage, report exemptions, or make any individual shared responsibility payment when you file your 2014 federal income tax return in 2015.
D. All of the above.

18 of 50

In order to avoid certain penalties, taxpayers may

A. Not need to increase their tax withholding or estimated taxes in association with the NIIT.
B. Send an additional tax payment by January 31st in consideration of the NIIT.
C. Need to increase their income tax withholding or estimated taxes to consider any additional tax liability associated with the NIIT.
D. None of the above.

19 of 50

Even if you do not otherwise have to file a tax return, you should file

A. To get a refund of any federal income tax withheld.
B. If you are eligible for the Earned Income Credit.
C. If you are eligible for a refundable credit for prior year minimum tax.
D. Any of the above.

20 of 50

When figuring your estimated tax for the current year,

A. You can use the worksheet in Form 1040-ES to figure your estimated tax.
B. Use your prior year's federal tax return as a guide.
C. It may be helpful to use your income, deductions, and credits for prior year as a starting point.
D. Any of the above.

21 of 50

If you hold the asset for more than one year before you dispose of it, your capital gain or loss is

A. Short term
B. Long term.
C. Not a capital gain.
D. None of the above.

22 of 50

A scholarship or fellowship is tax free 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. Both A and B above.
D. None of the above.

23 of 50

If you do not provide information regarding the care provider, you

A. May not be eligible for the credit if you don't show the required information.
B. May still be eligible for the credit if you can show that you exercised due diligence in attempting to provide the required information.
C. May receive a penalty for not providing the information on the tax return.
D. None of the above.

24 of 50

The following is a types of deductible non-business tax.

A. State, local and foreign income taxes.
B. State, and local personal property taxes.
C. State and local general sales taxes.
D. All of the above.

25 of 50

To be deductible, charitable contributions

A. Must be made to qualified organizations.
B. May include payments made to individuals if they are going through a hardship.
C. Must be over a certain amount.
D. All of the above.

26 of 50

For self-employment income earned in 2013 and 2014, the self-employment tax rate is

A. 10%
B. 15%
C. 15.3%
D. 20%

27 of 50

Your father lives with you and receives 25% of his support from social security, 40% from you, 24% from his brother (your uncle), and 11% from a friend.

A. You can claim the exemption for your father because you contributed more than anyone else.
B. Either you or your uncle can take the exemption for your father if the other signs a statement agreeing not to take the exemption.
C. You can claim the exemption for your father because your father lived with you.
D. No one can claim your father as a dependent because he received his own income.

28 of 50

These are entities (colleges, financial institutions, accounting firms, etc.) who are authorized by the IRS to assist applicants in obtaining ITINs.

A. Acceptance Agents.
B. IRS walk-in offices.
C. Tax preparer office.
D. All of the above.

29 of 50

The expenses qualifying for the computation of the child and dependent care credit must be reduced by

A. The amount of any dependent care benefits provided by your employer that you include in gross income.
B. Up to $3,000.
C. The amount of any dependent care benefits provided by your employer that you exclude from gross income.
D. None of the above.

30 of 50

If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you

A. Are considered unmarried only if you did not file joint returns for earlier years.
B. Are considered unmarried even if you filed joint returns for earlier years.
C. Are considered married if you filed joint returns for previous years and you don't need to file amended returns.
D. You have a choice to file single, married filing jointly or married filing separate.

31 of 50

In addition to deducting your cash contributions, you generally can deduct

A. The fair market value of any other property you donate to any needy organization.
B. The amount that it would take for you to replace the item new.
C. The fair market value of any other property you donate to qualified organizations.
D. Only A and B above.

32 of 50

Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining eligibility for, or the amount of, the credit allowable shall pay a penalty of

A. $500 for each such failure.
B. $1,500 for each such failure.
C. 6 month jail time due diligence failure.
D. None of the above.

33 of 50

You generally are not an employee unless you are

A. Subject to the will and control of the person who employs you as to what you are to do and how you are to do it.
B. Have your own business establishment.
C. Get a form 1099 misc. form.
D. Any of the above.

34 of 50

Capital gains may be taxed at rates greater than 15% when

A. The taxable part of a gain from selling section 1202 qualified small business stock is taxed at a maximum 28% rate.
B. Net capital gains from selling collectibles (like coins or art) are taxed at a maximum 28% rate.
C. The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate.
D. Any of the above.

35 of 50

Generally, if your primary purpose is income or profit and your are involved in the rental activity with continuity and regularity, then

A. Your rental activity is a business.
B. Your rental activity is not for profit.
C. Your rental activity is not a taxable entity.
D. None of the above.

36 of 50

This applies to individuals, estates and trusts that have certain investment income above applicable threshold amounts.

A. The 3.8 percent Net Investment Income Tax.
B. The 15.3 percent Net Investment Income Tax
C. The .09 percent Net Investment Income Tax
D. None of the above.

37 of 50

If you began receiving annuity payments from a qualified retirement plan after July 1, 1986 and before November 19, 1996, you generally could have chosen to use either the Simplified Method or the General Rule to figure the tax-free part of the payments. If you receive annuity payments from a nonqualified retirement plan

A. You must use the General Rule.
B. You must figure the taxable and tax-free parts of your annuity payments using life expectancy tables prescribed by the IRS.
C. Both A and B above.
D. None of the above.

38 of 50

The director of the Office of Professional Responsibility must inform the EA enrollment applicant as to the reason for any denial of an applicant for enrollment. The applicant may

A. Petition to retake the EA examination to be reconsidered.
B. Within 30 days after receipt of the notice of denial of enrollment, file a written appeal of the denial with the Secretary of the Treasury or his or her delegate.
C. Be granted temporary recognition to practice pending a determination as to whether enrollment to practice should be granted.
D. Within 6 months after receipt of the notice of denial of enrollment, file a written appeal of denial.

39 of 50

The tuition and fees deduction can reduce the amount of your income subject to tax by up to

A. $2,500
B. $3,500
C. $4,000
D. None of the above.

40 of 50

For estates and trusts, the 2013 net investment income tax threshold is

A. $10,250
B. $11,950
C. $12,990
D. None of the above.

41 of 50

Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals

A. Who work.
B. Who work for themselves.
C. Who own well established businesses
D. All of the above.

42 of 50

If your spouse died during the year and you did not remarry before the end of the year, your filing status will be

A. Married filing jointly.
B. Qualifying Widow(er) with qualifying child.
C. Single.
D. Any of the above.

43 of 50

You cannot claim the tuition and fees deduction if

A. Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return).
B. You were a nonresident alien for any part of the year and did not elect to be treated as a resident alien for tax purposes.
C. You or anyone else claims an education credit for expenses of the student for whom the qualified education expenses were paid.
D. Any of the above.

44 of 50

An individual who prepares and signs a taxpayer's tax return as the preparer, or who prepares a tax return but is not required (by the instructions to the tax return or regulations) to sign the tax return may represent the taxpayer before revenue agents, customer service representatives or similar officers and employees of the Internal Revenue Service during an examination of the taxable year or period covered by that tax return,

A. And this right permits such individual to represent the taxpayer before appeal officers.
B. And this right permits such individual to represent the taxpayer before employees of the Internal Revenue Service or the Department of Treasury.
C. But, this right does not permit such individual to represent the taxpayer before the appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service.
D. Is subject to rules of general applicability regarding standards of conduct and other matters as the Director of the Office of Professional Responsibility prescribes.

45 of 50

The following statement is true regarding social security benefits.

A. Your income and filing status affect whether you must pay taxes on your social security.
B. If your total income is more than the base amount for your filing status, then some of your benefits may be taxable.
C. If Social Security was your only source of income, your benefits may not be taxable and you may not need to file a federal income tax return.
D. All of the above.

46 of 50

A shareholder of a corporation may be deemed to receive a dividend if

A. The corporation pays the debt of its shareholder.
B. The shareholder receives services from the corporation.
C. The shareholder is allowed the use of the corporation's property.
D. Any of the above.

47 of 50

A taxpayer who is married cannot file using head of household filing status. However,

A. A married taxpayer may use the head-of-household filing status if the taxpayer lives apart from his or her spouse for the first 6 months of the year.
B. A married taxpayer may use the head of household filing status if the taxpayer provides more than half of the support for a dependent regardless of where the dependent lived.
C. A same-sex spouse can file using the head of household filing status if he or she can be considered unmarried for tax purposes and lives apart from his or her spouse for the last 6 months of the tax year plus other requirements.
D. None of the above.

48 of 50

To file your annual business tax return, you will need to use _________ to report your income or loss from a business your operated or a profession you practiced as a sole proprietor.

A. Schedule C or Schedule C-EZ
B. Schedule E
C. Both A and B above.
D. Schedule A

49 of 50

Complete and submit Form 8867 for all paper and electronic tax returns and for all other EITC claims for

A. Claims with a qualifying child.
B. Claims with no qualifying child.
C. Both A and B above.
D. Only for claim with qualifying children.

50 of 50

April 15 of each year is the due date for filing your federal individual income tax return if your tax year ends on December 31. Also,

A. Your return is considered filed timely if the envelope is properly addressed and postmarked no later than April 15.
B. If you use a fiscal year your return is due on or before the April 15th.
C. If the due date falls on a Saturday, Sunday, or legal holiday, the due date will be the business day before the April 15th.
D. All of the above.

Please Note: If you filled out the answers directly on this page, please print this page or write down the answers before you proceed to submit them by clicking on "Review Questions" link in step 3 above.

Back to Tax School Homepage

Revised: 05/28/15