Q1. John's W-2 wages are $158,000 for the 2017 tax year. What would be his Social Security tax and his Medicare tax?
a. Social Security tax: $9,796.00; Medicare tax: $2,291
b. Social Security tax: $7,886.40; Medicare tax: $2,291
c. Social Security tax: $7,347.00; Medicare tax: $2,291
d. Social Security tax: $7,886.40; Medicare tax: $1,844.40
Q2. Stephanie has decided to use a professional tax preparer this year since her return is more complicated. She has never filed electronically and is curious to how it works. Her tax preparer informs her that by using the PIN program, she may file a paperless return by supplying a five-digit number along with:
a. Form 8879
b. Her mother's maiden name
c. The amount of her refund for last year
d. Two shared secrets from last year's tax return
Q3. Integrity and thoroughness are vital attributes for tax professionals. A paid preparer can be penalized by the IRS for failing to properly prepare returns. Which of the following situations is listed incorrectly as one that would cause the IRS to assess a preparer penalty?
a. Failure to sign a return
b. Failure to provide a preparer identification number
c. Willful understatement of taxpayer's liability due to an unreasonable position
d. Taxpayer failure to provide information regarding all earned income
Q4. A & F Tax Services is an authorized e-file provider. Alicia, the owner and general manager goes over some basic e-file information with her new tax preparers. She tells them that some tax returns are not eligible for electronic filing. Which of the following returns would be ineligible for IRS e-file?
a. A current year tax return
b. A return with itemized deductions
c. A return where the taxpayer's address changed from the previous year
d. A tax return with a fiscal year tax period
Q5. Amy, a single taxpayer,had a long-term capital gain of $12,000 from the sale of AT&T stocks. Her taxable income for 2017 is $82,000. What tax rate will apply to her capital gain?
a. 15%
b. 20%
c. 0%
d. 28%
Q6. Alicia owns A & F Tax Service and is an authorized e-file provider. She had a number of clients that to file Form 8885 for the health coverage tax credit. Alicia knows this form cannot be electronically filed using Form 8879 only and the form will need to be mailed to the IRS. What does Alicia need to send to the IRS with the client's Form 8885?
a. Form W-2
b. Form 8453
c. A copy of the taxpayer's return
d. All income statements
Q7. Evan is 60 years old and blind. His wife died in 2016, leaving him with 3 children. What is the correct standard deduction amount for Evan using the Qualifying Widow(er) with Dependent Child filing status for tax year 2017?
a. $14,250
b. $13,950
c. $12,700
d. $10,900
Q8. Jeremy is a paid tax preparer and follows the objectives practiced by professional preparers. He gives copies of the completed returns to his clients and maintains the records for the duration of the statute of limitations that applies to each individual return. Jeremy is very surprised when he is penalized by the IRS for failing to follow proper protocol. Which statement shows the violation?
a. Jeremy follows the statute of limitations which is usually the later of, three years from the date the return is due or the date the return is filed.
b. Jeremy forgets to retain a copy of his clients' tax returns.
c. Jeremy and his paid tax preparers had a PTIN (Preparer Tax Identification Number) before preparing any federal tax returns.
d. Jeremy has not endorsed any taxpayer's refund checks.
Q9. James and Janice are married and file jointly, they are both over 65. They claim one dependent, Janice's mother, Regina who is legally blind and 85 years old. What would their standard deduction be for 2017?
a. $12,700
b. $15,200
c. $16,450
d. $13,950