Registered Tax Return Preparer Exam Rtrp

Front 1

Gross Income

Back 1

is at least the threshold amount for the person's filing status and age.

Hint 1

Example: Stan is single, age 45, with interest income of $1,200 and wages of $20,000. He MUST file a return

Front 2

Earned Income

Back 2

is income from the performance of personal services.

Hint 2

EX: salary, wages, earnings from self-employment, tips, and taxable scholarships and grants

Front 3

Unearned Income

Back 3

is income from investments and other sources not involving personal services

Hint 3

Examples: Taxable Interest, Ordinary dividends, capital gain distributions, unemployment benefits, taxable Social Security benefits, pesions and annuities and distributions of unearned income from trusts

Front 4

What are the 5 Filing Statuses?

Back 4

Single
Head of Household
Married Filing Joint
Married Filing Separate
Qualifying Widower

Hint 4

Also, read as:
S
HH
MFJ
MFS
QW

Front 5

What are the reasons why a person would not have to file a tax return?

Back 5

1. Requesting a refund
2. Obtaining refundable credits
3. Establishing a capital loss

Front 6

When is the Filing Deadline

Back 6

Income tax return is due by the fifteenth dau of the fourth month after the close of the tax year, April 15th.

Hint 6

However, the date is extended if the 15th falls on a weekend or national holiday

Front 7

Why request an Extension of Time to File?

Back 7

If a person cannot meet the filing deadline, they must file Form 4868 by the filing deadline.

Hint 7

Filing an Extension of Time to File is an extension to file, but penalities can still be assessed paying late

Front 8

What is the Late Payment Penalty?

Back 8

1/2 of 1% of the tax not paid by the due date.

Hint 8

It is charged each month or part of a month that the tax is unpaid. The Max is 25%

Front 9

What is the Penalty for Filing Late w/o a Form 4868.

Back 9

The penalty is usually 5% of the amount due for each month or part of the month that the return is late. The Max is 25%

Hint 9

If the return is no more than 60 days late, the minimum penalty is $135 or the balance of the tax due on the return, whichever is smaller

Front 10

what are the 3 different income based forms you can file

Back 10

1040EZ
1040A
1040

Hint 10

also, there is a 1040NR for nonresidents
& 1040X for Admendments

Front 11

Who can file a 1040EZ?

Back 11

* Only those are (S) or (MFJ) and under the age 65 and not blind can use this form.
*Cannot claim dependents
*Theses are the only types of income that can be reported: 1.Wages & Salary 2. Interest Income 3. Unemployment benefits
*Taxable income must be less than $100,000.
*Only Credit that can be claimed is EITC

Hint 11

The standard deduction is built into the return; no separate adjustments to gross income or other deductions can be claimed

Front 12

What kinds of things can you put on a 1040A?

Back 12

*Can be used regardless of filing status, and dependents may be claimed
*Types of Income
1.Wages and Salary
2. Interest and Ordinary Dividends
3. Capital Gain Didtributions
4. Unemployment compsenation
5. Income form annuities, pensions, and IRA's
6. Social security Benefits
*Taxable income must be less than $100,000
* These adjustments may be claimed
1. IRA deduction
2. student Loan Interest ded
3. Tuition and Fees ded
3. Deduction for educator expenses

Hint 12

No Itemized Deductions are allowed

Credits that may be claimed:
1. Child and dependent care cr
2.Earned Income Cr
3. Credit for elderly and the dissbled
4. Child Tax Credit
5.Adoption Credit
6. Retirement savings contribution Cr
7. Education Credits
* Can be used to report estimated tax Payments and estimated tax penalities, Advanced EIC, and the inclusion of a child's unearned income on a parent's return.

Front 13

Why would you use the 1040 Form to file?

Back 13

Anyone who itemized deductions
*business income
*or has income, deductions, credits, and other taxes not allowed to be reported on either of the tax return options.

Hint 13

Anyone can use Form 1040, even if a simplier return is permissble.

Front 14

Review Question:
Sara who is single has gross income of $7000 and self-employment income of $500. Which statement best describes her filing status

Back 14

a. must file a tax return
b. may file a tax return
c. is not required to file a tax return
d. should not file a tax return

Hint 14

ANSWER:
A. Filingt a tax return is mandatory bc she has self-employment income of at least $400

Front 15

Review Question:
carlos, who is required to file a tax return, wnats to obtain a filing extension. which of the Following actions is required?

Back 15

a. Paying all of the taxes due
b. Giving a good reason for wanting an extension request.
c. Having a paid preparer submit the extension request.
d. Requesting the ext. no later than the filing deadline

Hint 15

Answer:
D. The request for the extension must be made no later than the filing deadline.

Front 16

Which of the following factors would make a taxpayer ineligible to file Form 1040EZ?

Back 16

Please select an answer to the question to continue.

a. Taxable income exceeding $99,000
b. Taxable interest exceeding $1,400
c. Itemized deductions
d.Scholarship income

Front 17

Which of the following is a write-in adjustment on form 1040?

Back 17

Alimony paid to a former spouse
Moving expenses
Repayment, of jury duty pay, to an employer
Student loan interest
Please select an answer to the question to continue.

Front 18

Merida, a citizen of Italy, attends State University. She received income working part time and received a Form W-2. She filed a Form 1040 in 2008. She is a non-resident alien and will need to file an amended return. Which form should Merida use?

Back 18

Form 1040NR only.
1040EZ only.
Form 1040X and Form 1040NR.
Form 1040X only.
Please select an answer to the question to continue.

Front 19

Who issues the Individual Tax Identification Number (ITIN)?

Back 19

U.S. Citizenship and Immigration Services
Social Security Administration
Internal Revenue Service
Treasury Department
Please select an answer to the question to continue.

Front 20

A taxpayer could not be claimed as a dependent on another person's return the year she took out a student loan. Qualified student loan interest on the loans is paid by her grandparents. Who is eligible to claim the student loan deduction?

Back 20

The taxpayer may claim the deduction.
The grandparents may claim the deduction.
The taxpayer and grandparents may split the deduction.
No one may claim the deduction.
Please select an answer to the question to continue.

Front 21

Your client brings in a Form 1099-B showing $6,521 in net proceeds from a securities sale on May 7, 2009. What are all of the other items you need to know to complete Schedule D?

Back 21

The purchase price paid for the securities.
Whether the client sold stocks or mutual funds.
The asset basis on the sale date.
The date(s) the asset was acquired and the asset basis on the sale date

Front 22

Whitley received Form 1099-DIV reporting $50 in dividends for 2009. She had previously elected to have these dividends reinvested. Which of the following statements regarding the reinvested dividends is true?

Back 22

The dividends are not taxable until the stock is sold.
The dividends are not taxable in 2009, but increase her basis in the stock.
The dividends are taxable on her 2009 return and increase her basis in the stock.
None of the above.
Please select an answer to the question to continue.

Front 23

What does box 9 of the Form 1099-MISC indicate?

Back 23

Other income.
Direct sales of $5,000 or more.
Prizes and awards.
Nonemployee compensation

Front 24

Which of the following is a true statement in regards to OID?

Back 24

OID is treated as interest and is taxable as it accrues over the term of the bond.
OID is treated as dividends and is taxable as it accrues over the term of the bond.
OID is treated as dividends and is not taxable until the bond matures.
OID is treated as interest and is not taxable until the bond matures

Front 25

Which of the following factors would make a taxpayer ineligible to file Form 1040EZ?

Back 25

Taxable income exceeding $99,000
Taxable interest exceeding $1,400
Itemized deductions
Scholarship income
Please select an answer to the question to continue.

Front 26

Which of the following is a write-in adjustment on form 1040?

Back 26

Alimony paid to a former spouse
Moving expenses
Repayment, of jury duty pay, to an employer
Student loan interest
Please select an answer to the question to continue.

Front 27

Merida, a citizen of Italy, attends State University. She received income working part time and received a Form W-2. She filed a Form 1040 in 2008. She is a non-resident alien and will need to file an amended return. Which form should Merida use?

Back 27

Form 1040NR only.
1040EZ only.
Form 1040X and Form 1040NR.
Form 1040X only.
Please select an answer to the question to continue.

Front 28

Who issues the Individual Tax Identification Number (ITIN)?

Back 28

U.S. Citizenship and Immigration Services
Social Security Administration
Internal Revenue Service
Treasury Department
Please select an answer to the question to continue.

Front 29

A lender is not required to send a taxpayer a Form 1098 when the combined mortgage interest and points is less than:

Back 29

$1,000
$500
$600
$1,500
Please select an answer to the question to continue.

Front 30

Reading Form 1099-R, what does code 1 in box 7 mean?

Back 30

The distribution is subject to penalty unless an exception applies.
The distribution is eligible for lump-sum treatment.
The distribution is not eligible for rollover treatment.
A distribution was rolled over.

Front 31

Which of the following are NOT deductible on Schedule A?

Back 31

Casualty losses
Federal taxes withheld
Charitable contributions
Dentist fees
Please select an answer to the question to continue.

Front 32

Interest income from which of the following institutions can be called a dividend?

Back 32

Credit unions
Cooperative banks
Mutual savings banks
All of the above
Please select an answer to the question to continue.

Front 33

A client can file Schedule C-EZ instead of Schedule C if they meet certain requirements. Which of the following IS one of the requirements?

Back 33

The net profit was not greater than $50,000.
The net loss was not greater than $10,000.
The business had no employees.
Basis of depreciable property did not exceed $25,000.
Please select an answer to the question to continue.

Front 34

Joann lives in Florida and receives the following payments. Which of these payments is not reported as taxable interest on her federal tax return

Back 34

Interest on a savings account of $8 that is not reported on Form 1099-INT.
Dividends from a savings and loan association.
Interest on a U.S. Treasury bond.
Interest on a California state bond.

Front 35

What is the general SE tax rate?

Back 35

100%
92.35%
15.30%
12.40%

Front 36

Which of the following taxpayers CANNOT claim the standard mileage rate?

Back 36

Leonard bought two new cars this year. He usually uses his Jetta when running errands for his employer. Occasionally, he trades cars with his wife and uses her Jeep.
Drew leased a new Mustang this year. He uses it to travel between his two jobs.
Marla borrows her sister's car while her own car is in the shop. During the time that she has her sister's car, she drives each day to her second job.
Mimi has a Camry that she purchased in 2006. In 2006, she claimed the standard mileage rate. Since then she has claimed actual expenses.
Please select an answer to the question to continue.

Front 37

What is the minimum contribution percentage of qualifying relative's support that a taxpayer must make to be able to claim a dependency exemption based on a multiple support agreement?

Back 37

5%
10%
25%
50%

Front 38

Which of the following taxpayers is NOT able to claim the child and dependent care credit?

Back 38

Alice Keeler is divorced. Her daughter, Janet (5), lived with her all year. Alice would have been able to claim the dependency exemption for Janet except that she signed a waiver allowing her ex-husband to do so. While she was working, Alice sent her daug
Christine Williams' husband, Henry, was disabled and unable to care for himself for the entire year. Christine hired a nurse to care for him in their home while she was at work. The Williamses will file a joint return.
Sidney and Stella Anderson have a dependent daughter, Andrea (8). Sidney works full time and Stella is extensively involved in charity work. They paid the Daily Child Care Center to take care of Andrea while she worked for various charitable organizations
Jim and Mary have two dependent children, Tom (10) and Dana (4). Jim worked all year. Mary looked for a job in July and worked August to December. They paid a babysitter to care for the children from July through December. They will file a joint return.
Please select an answer to the question to continue.

Front 39

Which of the following taxpayers qualifies to deduct moving expenses?

Back 39

Alicia moved from New York to Los Angeles on January 15, 2009, to take a new job as a television reporter. She worked full time all of 2009. Alicia paid $1,750 to move all of her personal belongings to her new apartment and $375 for her airfare.
Bill moved 32 miles on March 1 of last year, for a new full-time job with an 86-mile commute. He paid $985 to move his personal belongings . His old job was 3 miles from his former home, the new job is 54 miles from his former home.
Jason moved from Denver to Chicago on November 2, 2009. Jason was employed in construction in Denver and moved to be closer to his family. He is not currently employed. He paid $485 for airfare and $1,895 to move all of his personal belongings.
Linda moved in February last year, for a new job. She paid $1,385 to move her personal belongings . Her old job was 5 miles from her former home, the new job is 50 miles from her former home.
Please select an answer to the question to continue.

Front 40

Form 4137 is used to calculate social security and Medicare taxes on what income?

Back 40

Tips of less than $20 per month.
Allocated tips.
Noncash tips.
None of the above.
Please select an answer to the question to continue.

Front 41

In most cases, a child of divorced or separated parents is the qualifying child of the custodial parent. However, the child will be treated as the qualifying child of the noncustodial when the following is true:

Back 41

The custodial parent signs a written declaration that he or she will not claim the child as a dependent. Generally, this declaration is IRS Form 8332.
The non-custodial parent sends along a copy of a few pages of the divorce decree granting them the right to claim.
The child lived with the non-custodial parent the greater part of the year.
The custodial parent gives verbal permission for the non-custodial parent to claim the child.
Please select an answer to the question to continue.

Front 42

Under which of the following circumstances might it be appropriate for a taxpayer to file an injured spouse claim?

Back 42

If the taxpayer is unable to pay the tax liability because his or her spouse has suffered some type of injury.
If the taxpayer filed a joint return and the joint overpayment was applied to a prior tax liability on a joint tax return filed by the taxpayer and his or her spouse.
If the taxpayer filed a joint return and there is an understatement of tax due because of omitted income of the taxpayer's spouse.
If the taxpayer filed a joint return and the joint overpayment was applied to his or her spouse's past-due child support.
Please select an answer to the question to continue.

Front 43

Under which of these scenarios is filing Form 8606 NOT required?

Back 43

The client makes a partially-deductible traditional IRA contribution.
The client takes a qualified Roth IRA distribution.
The client converts a SEP IRA to a Roth IRA.
The client who is over age 59½ and converts a traditional IRA to a Roth IRA.
Please select an answer to the question to continue.

Front 44

The ACTC is filed using which form?

Back 44

Form 8812
Form 8332
Form 8901
Form 4137

Front 45

In which of the following situations would Form 8821, Tax Information Authorization, be most appropriate?

Back 45

When an enrolled agent wants to request tax documents from the IRS for a client, for whom he has a Form 2848 on file.
When an attorney wants to advise clients she agrees to represent them.
When a CPA wants to advise the IRS he represents a particular taxpayer.
When a CPA wants to enable her unenrolled assistant to request and inspect tax documents from the IRS.
Please select an answer to the question to continue.

Front 46

When a return is e-filed by an electronic return originator (ERO), which of the following forms is used as the declaration document and signature authorization for an e-filed return?

Back 46

Form 8332
Form 8453
Form 8879
Form 8885
Please select an answer to the question to continue.

Front 47

The purpose of Form 8888 is to:

Back 47

Report potential fraud.
Apply for the additional child tax credit.
Compute a penalty.
Directly deposit a refund into more than one account.

Front 48

Joe, a self-employed plumber, uses the cash-basis of accounting. In 2009, he redid the plumbing in Sarah's house and billed her $13,000. She did not pay his bill. How much should Joe deduct as bad debt expense on his 2009 income tax return?

Back 48

$0
$2,500
$5,000
$10,000
Please select an answer to the question to continue.

Front 49

Which of the following is a correct statement about filing for an automatic extension of time to file an individual income tax return?

Back 49

A taxpayer can file a Form 4868 after the normal April 15th filing deadline.
Once the taxpayer files for an automatic extension you cannot file your return until six months (4 if out of the country) has passed.
Use Form 4868 to apply for 6 more months (4 if out of the country and a U.S. citizen or resident) to file Form 1040, 1040A, 1040EZ, 1040NR, or 1040NR-EZ.
Form 4868 automatic extension for time to file an individual income tax return can only be filed by mailing the form to the IRS.
Please select an answer to the question to continue.