The Microsoft Corporation

Topics: Taxation in the United States, Taxation, Tax Pages: 72 (8391 words) Published: February 24, 2014
Comprehensive Income Tax Course: Module 2 Final Exam
1.

Fred prepared his own tax return last year. This year Fred decided to have his tax return prepared by a professional. During the interview process Fred’s tax preparer realized Fred needs to repay the education credit he took for his son last year. For which of the following reasons would a taxpayer be required to repay an education credit? a) Taxpayer received a refund of personal living expenses

b) Taxpayer received tax-free educational assistance for an expense used to calculate a higher education credit on their return
c) Taxpayer received a refund of transportation expenses
d) Taxpayer received a gift from relative to help pay the lodging expenses

2.

Where should the repayment of the education credit Fred claimed in a previous year be reported?
a)
b)
c)
d)

3.

Mr. Smith’s neighbor tells him about the mortgage interest credit he took on his return. Now Mr. Smith wonders if he is also eligible for a mortgage interest credit. He checks with his tax preparer to find out what would make him eligible. Which of the following would qualify a taxpayer for a mortgage interest credit?

a)
b)
c)
d)

4.

Owned a home
Paid mortgage interest
Received a mortgage credit certificate
Files a Schedule A

Which of the following is an invalid condition in which Mr. Smith’s mortgage credit certificate must be used?
a)
b)
c)
d)

5.

On Form 8863
Is not reported
On line 44, Form 1040
On an amended return for the year the credit was claimed

The purchase of the certificate holder’s main home
The qualified rehabilitation of the certificate holder’s main home Qualified home improvement of the certificate holder’s main home The qualified refinancing of the certificate holder’s main home

Ellen and her husband separated in November. She wants to be able to claim the child and dependent care credit for her 6-year son who lives with her. Which of the following is not one of the four conditions that must be met for a separated married taxpayer to be considered unmarried and eligible to claim the dependent care credit? a) The taxpayer must file a separate return.

b) The taxpayer’s home is the home of a qualifying individual for more than half the year. c) The taxpayer’s spouse must sign a release to allow the taxpayer to claim the dependent care credit.
d) The taxpayer paid more than half the cost of keeping up his home for the year.

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Comp Module 2 Student - 1

6.

Bob had two jobs in 2012 earning a total of $116,350 in taxable wages. He paid Social Security taxes (SST) in the amount of $4,172.70 from his primary job, ($99,350), and $714.00 from his second job, ($17,000). What is the amount of Bob’s excess SST? a)

b)
c)
d)

7.

Who must refund the excess SST to Bob?
a)
b)
c)
d)

8.

$2,398.20
$ 25.20
$
0
$ 871.80

Clark is preparing a return for a client who has a son in college. The son’s college expenses are partly paid for by tax-free education assistance. Which of the following would be omitted as a tax-free education assistance program?

a)
b)
c)
d)

10.

The excess is refunded through Bob’s income tax return
Bob’s primary employer
Bob’s secondary employer
Bob can decide who refunds the excess SST

In 2012, Tom and Darla were employed all year. They each worked for only one employer the entire year. Tom paid SST in the amount of $2,373.00 and Darla paid $4,649.40. What is the amount of their excess SST which they can claim as a credit? a)

b)
c)
d)

9.

$714.00
$ 0.00
$262.50
$614.70

Qualified scholarships
Qualified grants
Employer provided education assistance
Earnings from a work-study program

Carla works during the day and pays a provider to come to her home to take care of her baby son. Carla will pay the provider over $8,000 for the tax year. Which of the following is the appropriate manner in which Carla...
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