VITA/TCE Advanced Certification Test Question 28 for tax year 2014

If you use Table 2 on Page 40 of simplified worksheet in Publication 575, the number is 360 for line (3) divided into $12,500 line (2) and you get $34.72. Multiple that by 12 months and you get $416.64 or $417. Subtract that from $17,500 and you get the same answer $17,083. Your method is the correct method. I used a quicker method because the $1,320 was given in the Interview Notes.

You did a good job.

Debbie,

I am not allowed to give out too many answers because of my job. I did #28 because most people have problems with the answer.

Question 25. The amount of taxable income shown on line 8a is $70?

The answer is FALSE. The correct answer is $95. The answer is found on ABC INVESTMENTS. Form INT 2014 Interest Income $95.00

I teach classes for the VITA program. So the people I work for don't want me to give out answers to students. I guide them to find the correct answers. Advanced Exam Question 27 is somewhat complex. Re-Test Question 27: The net capital gain or loss reported on line 13 is a gain of $1,614? The answer is FALSE.

Test Question 27: What is the amount shown on Form 1040, line 13 -Capital gain or loss? Answer $1,239. You have short term and long term investment income on ABC Investments. Short term gain $1,098 plus long term gain $516 = $1,614. Then you look at ABC Investments Form 1099 DIV. That shows a capital gain distribution on line 2a of $75. Add $1,614 plus $75 = $1689. Next go to Schedule D carry over worksheet with a carryover loss of $450. Subtract $450 from $1,689.

$1,689 minus $450 = $1,239.

The best way to answer these questions is to run the Eliot Blackburn scenario through the practice lab using the Tax-Wise software. When you work as a volunteer you will be doing taxes using Tax-Wise. A part of the Blackburn's social security is taxable. They are entitled to the earned income credit for their son Carter, because Kathy Blackburn has earned income form the ITASCO Company. The Blackburn's are also entitled to an earned income credit because their investment income is less than $3,350. Look up the answers in IRS Publication 4012 the VITA resource tax guide for 2014 returns.

Kelly Floyd does not qualify for an exemption on the early withdrawal of her Kent Company 401K plan because is she under 59 1/2 years old, she did not use the distribution for medical, education or a first home buy. On Form 1099-R The Distribution code in box 7 is shown as 1, an early distribution. Look at box 4, the Federal Income Tax with-held. It shows $420. $210 is the 10% tax she must pay. Then add the $210, an additional 10% tax penalty. That is where the $420 federal with-holding tax comes from. Therefore the penalty for early withdrawal is $210.

For Enrique Clayton you should do the Itemized Deductions in the Tax-Wise software on Schedule A. Look at the Forsyth Mortgage Company Statement on page 102. Mortgage Interest is $5,252 and Real Estate Tax is $954. That adds up to $6,206. State income tax on his W-2 is $1,200. Add that and you get $7,406. Next add the $500 he donated to his church in 2014. The total is $7,906 which is the answer. Enrique does not get the medical deduction for an $80 eye exam and $300 for contact lenses because his medical expenses do not add up to more than 10% of his adjusted gross income.

On Enrique's W-2 form box 12a, code D, he contributed $1,200 to his retirement. He qualifies for a 10% retirement savings contribution of $120. Tax-wise software automatically calculates this amount on page two form 1040, year 2014 in Tax and other Credits. It should be on line 51. On the 1040 form in 2013 this was line 50.

You should run these scenarios through the practice lab Tax-Wise software. The software calculates the credit. For question #16, the amount of qualified TUITION expense for Matthew's American Opportunity Credit is $2,600. Here is an explanation. Matthew's fall tuition is $5,600. You subtract the $3,000 scholarship and get $2,600. The key is his TUITION expense and the answer is $2,600.

For question #15, he also has a qualified book expense of $500 for the American Opportunity Credit. Parking, Meals, (Room and Board) are not allowed as an expense.

Nicole,

For question #12 it is only the tuition $1095 for the lifetime learning credit because he bought the book online. You are correct. If Chad had a receipt from the college book store the book would have been a qualified lifetime learning credit expense.

Sam,

For retest question #34, The answer is 2750 business miles for Enrique. Add the 750 miles from his main job to the gym job and 2000 miles from his main job to his individual clients' home. That adds to 2750 miles.

Question 22, the child and dependent care credits are calculated on form 2441 line 11. Stone's child care is $1200 for Mia and $1200 for Logan that totals $2400. The software multiplies this by 21% automatically and the answer is $504.

Question 36: The self employment tax is shown on form 104o page 2, other taxes section line 57 and the deductible part is an adjustment to income on form 1040 page 1 , line 27.

When you calculate Enrique's self employment income on schedule C or schedule C-EZ. The Tax-wise software will calculate his self employment tax from his net income. The form is Schedule SE. You should download this form to take a look at it from the IRS website. The Tax-Wise software automatically calculates the self employment tax on form 1040 page 2 line 57. The adjustment to self employment tax, (the part that is deducted from Enrique) is on form 1040 page 1 line 27.

You are very welcome.

Jacky,

You are correct that is False. If you are talking about Bill Flager, 22 years old, test question #1, Bill can claim 0 (zero) exemptions, because his parents can claim him as a dependent on their tax return even if they don't take him (that would be their mistake.) When an individual, such as Bill can be claimed as a dependent by his parents, he cannot take the exemption for himself.

For Question 9: If Steven does not know the basis for his stock he can do any of the following. a. He can use zero basis as his stock. b. He can contact his broker for help calculating his basis. c. He can calculate his by basis by locating and reviewing all the relevant XYZ stock records. The answer is D. Any of the above. Note you can look up the basis in the historical stock records on Yahoo finance. Type in a stock, get the quote then look up the stock record for a specific date and time.

For Question 9, on the retest: Steven files his 2014 return showing zero basis for the XYZ shares he sold. The following month, he determines the correct basis of his XYZ stock is $950. What should he do?

The answer is B. File an amended return reporting the correct basis.

Question 10: What is the total basis of all Steven's PSA mutual fund shares held on December 31, 2014? The answer is C. $7,700.

His initial purchase was $7,500. Then you add the reinvested capital gain distribution of $200 and get $7,700. The retest Question 10 is: The reinvested capital gain distribution increased Steven's total basis in his PSA mutual fund shares? The answer is A. True.

Blia gave the correct answer for the foreign tax credit of $15 for question #31. For #33 Enrique's cash income is reported on Schedule C-EZ or C. For #34 mileage is calculated using 2000 miles from his main job is his clients plus 750 from his main job to the gym job which equals 2750 miles. Multiple that by the mileage rate of 56 cents per mile (0.56) and you get $1,540 as mileage expense.

#17 Form 1040 Page 1 Line 21 Other Income.

Earned Income Credit because he is disabled.

Question 10: The answer is $7700 and true on the retest question. This question is explained in this forum higher up.

Question 20: Brian is disabled and meets the other tests. He is a qualifying child for the Earned Income Credit, you have the correct answers.

You are welcome.

Kelly,

Question #3. Can Beth claim Piper as a dependent?

No, because Beth is a dependent of Julia.

Question #4. Julia has one qualifying child for the Earned Income Credit.

True Only Piper (Beth is Julia daughter and is 27 years old, she is to old to be claimed as a child for the earned income credit. The oldest she could be is 24 and a full time student.

Lisa,

Question #13. Because Deborah only has Medicare Part A coverage. Matthew must make a shared responsibility payment?

The answer is FALSE because Deborah has minimal essential coverage.

Question #14. Matthew's most advantageous allowable filing status is Single. Answer False because Matthew's Mom is his dependent. He should file as Head of Household.

Nina,

Question 37: The most Enrique can take as a student load deduction is $2500. That is the maximum amount allowed.

Nina,

The maximum amount Enrique can take as a student load deduction is $2500.

Hyun,

Question #36 Test. Answer: The self employment tax is shown on

Form 1040 page two Other Taxes line 57. The deductible part is shown on Form 1040 page one line 27, adjusted gross income.

Question #36 Retest: The answer is FALSE.

Zaxphone,

Question #32 Test. The Blackburns are eligible to claim the earned income credit because Kathy Blackburn has earned income and their adjusted gross income is within the AGI limits for an earned income credit.

Enrique's total itemized deductions on Schedule A, Line 29 are $7,906. I ran this through the tax-wise practice lab.

Logan,

The amount of Enrique's retirement savings contribution credit is $120.

On the Pace Construction W2 in box 12a D is $1,200. That is his retirement savings contribution. His credit is 10% of that or $120.

Retirement savings contribution credit is shown on form 1040 page 2 line 51. You would calculate this automatically in the tax wise software.

Sara

I just did the answers for the Advanced Exam. Sorry.

Eli,

The answer is: Julia must make a shared responsibility payment or claim an exemption, if Beth qualifies for one on Julia's return.

Note when clicking on links be very careful when downloading. Run the download through anti-virus software.

The answer to number 24 is $210. That is a 10% penalty for early withdrawal of the 401K retirement plan of $2100.

The basis for the 25 shares of ABC stock Steven sold in 2014 is $1250.

25 shares times $50 per share equals $1250.

Steven purchased 100 shares of ABC stock in 2005 for $5000.

$5000 divided by 100 shares equals $50 per share basis.

For question 21. Kelly's Federal Income Tax With-holding is $2,800. W2 With-holding $2,200 plus State Unemployment With-holding $180 plus Kent 401K With-holding $420 equals $2,800.

Question 26: Code Q is a qualified distribution from a Roth IRA. The entire $4,500 is not taxable because when you have a Roth IRA you paid taxes previously on the money you put into the plan.

Yes, they qualify for a health care coverage exemption. Because they have ITINS and not social security numbers. They are considered resident aliens for tax purposes.

For Brian

I am moderating my answer for Brian.

Question 20. Since Brian is disabled and meets the other tests, he is Kelly's qualifying child for which of the following benefits?

The test takes Answer C. The Earned Income Credit as the Correct Answer.

But this cannot be correct when using Tax Wise software.

Other choices a) Exemption for a dependent. b) Child tax credit. c) Earned Income Credit. d) All of the Above.

The answer would have to be d) All of the Above.

Kelly's brother Brian Bolivar was born on 10/27/1991 which makes him only 23 years old for the 2014 tax season. His date of birth is found on form 13614 C. He is a qualifying dependent because he is Kelly's brother. He has a valid social security number and lives with Kelly all year.

Again this is a very tricky question. Because Brian is totally disabled he does not file an income tax return since social security disability is not taxable.

When Kelly files in Tax Wise she claims Brian as a dependent. She also marks that he is totally disabled and cannot be claimed on another person's tax. Therefore Kelly gets the dependency exemption of $3950. She marks the box for EIC on the main information form and the software MAY mark the Child Tax Credit automatically because Brian is disabled. To get a Child Tax Credit the child would have to be under 17 years of age (unless the child is totally disabled?)

It does not matter that Brian receives disability income that pays for half of his own support.

This is a tricky question and I am not sure if it is written correctly. I took the advanced exam in early December and went back to dig this answer out.

When you fill out an actual tax in Tax Wise, you will see that the answer to Test Question #20 should be All of the Above and the retest Question #20, Brian receives an Earned Income Credit is True.

I apologize for any confusion.

Honestly, I am not sure the question is written correctly but the correct answer when you take the test is The Earned Income Credit.

I am not sure I can help you with these questions. I refer you to Publication 4012 for the VITA tax program. Maria cannot use VITA because she has an employee should be the correct answer.

For a schedule C-EZ you cannot have expenses of more than $5000 and for a schedule C you cannot have expenses of more than $10,000.

For question 2, I would be able to prepare the tax therefore, I think the answer is true. But the expenses are $7000, so you would need to file a schedule C, not a C-EZ. Since his wife has wages of $24,000 less the $7000 loss they would have gross income of $17,000.

For question 3: Jolene's gross income of $41,000 may be out of scope. On a schedule C, the $28,000 in expenses is above the guidelines of $10,000 in expenses. Because of the selection of answers, I would say her gross income may be too high but I am not sure. Her expenses are way too high.

The best way to answer these questions is to look up the criteria for schedule C in the VITA tax guidelines in Publication 4012.

I have not done the advanced exam for VITA 2015 yet. Did you run this answer through link and learn Tax Wise Software? Looking at the question quickly, The AGI is what you have total income $41,900. Even if you subtracted the 10% penalty of $210 on line 30 form 1040 the AGI is still $41,690. Therefore in the 2411 instructions she may be able to subtract the early pension distribution of $2,100, so the adjusted AGI would count as $41,900 minus $2,100 equals $39,800 into the .22 bracket. .22 times $2,600 equals $572. You know $546 is incorrect, the answer is not zero and you cannot use .20 because her AGI is not over $43,000. So just guessing the answer should be $572. I will be doing this exam in December.

From 2441 instructions.

1. The amount shown on Form 1040, line 7; Form

1040A, line 7; or Form 1040NR, line 8; minus any amount:

d. Received as a pension or annuity from a

nonqualified deferred compensation plan or a

nongovernmental section 457(b) plan. This amount may

be reported in box 11 of Form W-2. If you received such

an amount but box 11 is blank, contact your employer for

the amount received as a pension or annuity.

You are welcome. The only way to know the test answer is to run the numbers through the Tax Wise Software in the Practice Lab.

Sometimes the answers on the test are incorrect. If the answer on the test is wrong the IRS will correct it. I think your answer is right too.

I have not done the test yet. But looking at the questions. 10. Enter information received on form 1095-A on Form 8962 for the premium tax credit. Question 11: I am not sure. A guess is false.

Question 12: Only use tuition and books not meal plan or parking pass.

Tuition is $5,600 plus $500 for books equals $6,100. Subtract the $3,000 scholarship already credited. Therefore $6,100 minus $3,000 equals $3,100. The answer should be $3,100.

Question 13. 1099-c cancellation of debt is reported on form 1040 line 21 other income.

Question 14. Matthew qualifies for an exception to the 10% additional tax on early distribution from his IRA. This is TRUE because he used the money for higher educational expenses. Run the scenario through the Link & Learn Practice Lab. The password is Learntwo. The L is a cap.

Go over the questions again to make sure you have the correct answers.

On the advanced Question 11. The answer is TRUE. Matthew must repay a portion of the advance premium tax credit he received.

Question 12 for the American Opportunity Credit the answer is $3,100.

Look at the Brown College Account. You add tuition for the Fall Semester for $5,600 plus books $500 which equals $6,100. Then subtract the $3,000 scholarship. That gives you $3,100. The meal plan and parking do not count. The Spring 2016 tuition for $5,600 does not count for 2015, that is his account balance. Another way to figure the answer. Matt paid by check $3,540. Subtract the Meal plan for $350 and subtract the Parking Pass for $90 and you get $3,100.

For the 2015 Exam , the answer is YES, there is a shared responsibility payment. The amount owed is on line 61, page 2 of the 1040 form. It says on the 2014 form line 61, Health Care Individual Responsibility.

If you run this through the software the answer should be $475 but you have to check this.

Question 32 How do you report qualified student loan interest paid?

Test Answer is C. $2,500 (is the maximum allowed)

Retest Answer is D. As an adjustment to income on Form 1040 page 1.

Question 33. What are Enrique's total itemized deductions on Schedule A, line 28.

Answer is C, $7,906 (Note the medical deduction of $380 does not count because it is not a high enough percentage of the income.)

Mortgage Interest $5,252 plus Real Estate Tax $954 plus Church $500

plus $1,200 State Income tax equals $7,906.

Question 34. The amount of Enrique's retirement savings contributions credit in the Tax and Credits section of Form 1040 is $120, so the answer is TRUE. It is 10% of $1,200 or $120.

Question 35. Is D. Any of the above. on the Retest Question 35 the answer is TRUE.

Question 28. B. Enrique's cash income is reported on Schedule C-EZ or C.

Question 29. B. Enrique's standard mileage expense is 2,750 miles times 0.575 equals $1,581.

Question 30. A. Enrique cannot deduct nutritional supplements.

Question 31. D. The self employment tax is shown on Form 1040, Other Taxes section, and the deductible part is an adjustment on Form 1040 page 1. The Retest Question 31 is False.

Gail,

Thanks

Anna,

Thanks for letting me know the correct answer is $572. Sometimes they make mistakes on the exam and change to the correct answer.

I did not take the Foreign Students Test. Usually, you have two attempts to pass. So make sure you pass the first time or come close enough to correct your answer.

James

Maggie,

George and Maria are not eligible to take an earned income credit because Maria has an ITIN. So the answer is False.

Chad is eligible for the Lifetime Learning Credit.

The answer to question 24 is $16,905. I did a blog I this question, so you can see how the answer is figured out.

James

Note to all. The correct answer for Question 18 is $572. My original answer $35,200 plus $3,600 plus $2,100 equals $40,900.

AGI is $40,900 that makes the decimal amount .22. Multiply this by $2,600 on line 6 form 2441 and your answer is $572.

Taxc.

For some reason I am unable to get into the Tax Lab where I had run through Enrique. All I remember is that he owes money. You use Sch. C-EZ for his self employment income. His mileage deduction is $1,581.

Nutritional supplements are not deductible. Deductible part of self employment tax is on page 1 1040 form line 27 as an adjustment to income. Schedule A deductions are $7,906. His medical expenses are not high enough to deduct. The maximum amount for student loan interest deduction is $2500. His retirement saving contributions credit is $120. I tried again to get into the tax lab but it may be under maintenance.

Taxcufused,

I was able to open Enrique Clayton. I found that he has a refund for $328. In other years Enrique Clayton owed tax. According to the test, the correct answers he owes tax. But no matter how many times I go over this he gets a refund because of his federal withholding tax of $2,000.

Page 1, 1040 w-2 wages 19,000 Sch. C-EZ 8,838 equals 27,938

Less Adjustments 120 SE tax and 2,500 student loan equals AGI 25,318

Page 2 1040 less itemized deductions Sch. A 7,906 less exemption 4,000

Taxable Income 13,412 . Income tax from table is $1,553 less retirement savings credit $120

equals $1,433 tax and add $239 self employment tax equals $1,672 tax.

He paid $2,000 withholding less $1,672 equals a refund of $328.

The answer is Head of Household. You are correct. The last time she could use Qualifying Widow with Dependent child was on the 2014 return.

Michele and Karina,

Michele most of these advanced questions are answered within the blog.

First I will do Question 7 Maria does not need to make a shared responsibility payment because she has an ITIN and is not a citizen. She qualifies for a health care coverage exemption --TRUE.

Question 9 The lifetime learning credit is $1,095 tuition only.

Question 1 Bill cannot claim a personal exemption because he is a dependent of his parents. Even if they don't take the exemption, he cannot take a personal exemption.

Question 2. Bill made $7,000 and has a filing requirement because that is more money than the $6,300 standard deduction. You have to look in the publication 4012. He cannot get an exemption of $4,000.

A single person, who is not a dependent has to file a tax return if he makes more than $10,300 which is the personal exemption plus the standard deduction. You have to study the material.

Question 4, Julia can claim Piper but not Beth because she is 27 years old. The cutoff age is 19.

Question 5 Julia must claim a coverage exemption for Beth or make a shared responsibility payment.

Question 10 Enter the info on form 8962 to determine the amount of the Premium Tax Credit.

Question 17 $2,980 (2,200 + 420 + 360) just add them up.

Question 19 She must complete Form 8965 to claim the short coverage gap exemption.

Question 20 $210

Question 21 $95

Question 22 This is a Roth IRA, tax has been paid already. The entire $4,500 distribution is not taxable.

Question 23 The cap gain is $1,239 ($75 + $1,098 + $516 minus the $450 carry over loss.)

Question 27 Yes, the Blackburns can claim an Earned Income Credit because Kathy has earned income.

Thank you. I think that does it. So, Enrique has to pay tax on his 2015 return. Form 4137 is SS and Medicare for unreported tip income. What I did was I added the $3,579 tip income and the $8,850 Form 1099 Misc. and got $12,579 total income for Schedule C. His expenses are $300 advertising, $1,000 Supplies, $610 Business Liability Insurance, $150 Business License and $1,581 driving miles which equals total expenses of $3,641. Net business income is $8,938. The previous year tax return for 2014, Enrique had to pay tax. Because he itemized this year, he had less tax liability. His itemized deductions on Sch. A are $7,906 instead of the Standard Deduction of $6,300. That difference would give him a refund. In 2014, the Standard Deduction was $6,200, so Enrique had to pay. I made some kind of error. But at least the question is answered correctly.

Greatly Appreciated. This will help everyone.

James

Christopher, I have the following question on hub pages for the Basic Exam: VITA Basic exam for 2015 federal income tax return Question 23.

There has not been too much discussion on the Basic Exam because you can take the Advanced Exam without taking the Basic Exam. The Basic Exam is just as difficult as the Advanced Exam but does not include a few items. If you have any questions go to my Basic Exam Question and I will answer them.

James

Cara,

I have not done the Foreign Student Exam.

James

Note to all. For the Enrique Clayton Advanced Scenario I originally made an input error. Enrique owes tax, I have either $620 amount due or $1,192. I am not sure which is correct.

retiii

You are very welcome.

James

You are all welcome.

James

Jason,

I have not done the military examples. But looking at the problem for rental expenses: Insurance $700 plus Management Fees $510 plus Real Property Tax $1,300 plus Depreciation $2,000 plus Plumbing Materials for Repairs $400 equals $4,910. I did not add the $100 the plumber would have charged. She saved a buck by doing it herself.

James

Ms Tiff,

Question 25: Part of Eliot's Social Security Income is taxable. Therefore the answer is: Yes, a portion of the Social Security Income is Taxable.

You either run the scenario through the Tax Wise Practice Lab or do the problem in a social security worksheet. Quickly, one half of the $15,000 SS is $7,500 plus line 7 $15,290 plus taxable interest $95 plus Ordinary dividends $325 plus Capital Gains $1,239 plus taxable 1099-r $16,905 equals $41,354 minus $32,000 equals $9,354. One half of $9,354 equals $4,677 times .85 equals $3,975. I may have made a mistake but it is close to that number.

James

Roger,

Question 7: The answer is FALSE. Maria does not have a shared responsibility payment because she has an ITIN and is not lawfully present in the USA. Note, she also has an health care exemption because she has an ITIN.

James

AccountinKing

Make sure you use Windows Explorer when you use TaxWise Software. The software does not work properly using Google Chrome. That may be your problem. To enter W-2, Click on Line 7, click on the Gray Arrow, Click on the light Blue Box, Click on New Form W-2 or a W-2 that is already there. Then you should be able to input the data.

Question 11: Matthew must repay a portion of the advanced premium tax credit that he received is TRUE because he underestimated his income and received more of a premium. He must repay it.

Question 26: Is there a shared responsibility payment on the Blackburn's Form 1040, page 2. Answer is YES because Kathy does not have Health Insurance. The payment would be on 1040, page 2, line 61.

James

Miti

Question 6: George and Maria are NOT eligible for the earned income credit because Maria has an ITIN and is not legally in the country.

The answer is FALSE.

James

BMorales,

Maria has an ITIN and is not lawfully present in the USA. Therefore they are not eligible for an earned income credit even though George and Isabel are citizens. Because Maria is not a citizen she is exempt from health insurance and gets a health insurance waver.

Enrique's self employment income (cash income) always goes on a schedule C or schedule C-EZ and is reported on Line 12 Business Income or Loss. Self employment income does not go on Line 7 which is wages, salaries and tips reported on a W-2. Look at a 1040 form when you do taxes and you will be able to see where Income goes on the different lines.

James

Jae Yoo and Patrick Villarreal

You are all very welcome.

James

MS,

Question 15. Kelly files as Head of Household. In 2012 her husband died, she applied as Married Filing Jointly. In 2013 and 2014 she filed as a Widow with Dependents. In 2015 she applies as Head of Household.

Question 16: She can claim Brian for the Earned Income Credit. This is a tricky question. She gets the Earned Income Credit for her brother as a qualifying child because he is totally disabled. Even though he provides more than half his own support, that support is usually from Social Security Disability and is not taxable. She does not get an exemption for him as a dependent because he provides over half of his own support. Brian is not a child, he is 24 yours old. But because he is totally disabled she can claim him as a child for the Earned Income Credit. Again, this is a difficult question to answer.

James

ms

You are welcome.

James

Ms. and Randy and Danielle

Quest. 3. b. Julia can claim Piper, Beth cannot claim Piper because Beth qualifies as Julia's dependent.

Question 8. b. False. Chad takes the Lifetime Learning Credit, he is NOT eligible for the American Opportunity Credit.

Quest. 24 Answer $16,905. There is an explanation in this blog or another blog that I posted.

Question 25. c. Yes a portion of the Social Security income is Taxable.

Question 26. False Note that the Blackburns are required to make a shared responsibility payment because Kathy does not have health insurance.

James

James

Sam and TJ and Richard and CM

31. How does Enrique's self-employment tax affect his tax return?

D. The self-employment tax is shown on Form 1040, Other Taxes section(page 2), and the deductible part is an adjustment on Form 1040, page 1.

TJ

14. Which exception can Matthew use to avoid the 10% additional tax on the early distribution from his IRA on Form 5329?

A. Distribution made for higher education expenses

Richard

If Beth does not qualify for a health coverage exemption, Julia must make a shared responsibility payment. TRUE/FALSE?

Answer is TRUE.

CM

19. Kelly and her children qualify for the short coverage gap exemption.

This is TRUE because Kelly was not covered for two months. The short term coverage gap exemption is for 90 days.

James

Jeff,

Question 10. FALSE You enter the information on Form 8962 from Form 1095-A to determine the amount of Premium Tax Credit.

Question 11: FALSE, Matthew must repay a portion of the advance premium tax credit that he received because he underestimated his income. Note that these questions have reverse answers on the test and retest. Read them carefully.

James

Jeff

Question 33. $7,906

Question 34. $120 10% of $1,200

Question 35. True or retest question Any of the Above

The additional tax on Pensions and IRA's that are taken early before 59 and 1/2 years old and without an exemption is 10%. In Kelly's case Question 20: it is $210 or 10% of the $2,100 from the early withdrawal of her pension.

James

Lbraman

The answer is C. A portion of Eliot Blackburn's Social Security is Taxable. This is done on a Social Security Worksheet. The taxable portion is shown on form 1040 page 1, line 20B. The exact answer is somewhere in this blog. I am away from home and don't have the answers with me.

For the Basic Exam.

I have the following question on hub pages for the Basic Exam: VITA Basic exam for 2015 federal income tax return Question 23.

There has not been too much discussion on the Basic Exam because you can take the Advanced Exam without taking the Basic Exam. The Basic Exam is just as difficult as the Advanced Exam but does not include a few items.

James

Lbram

Go to Question 24 Advanced Exam Vita Program Tax Year 2015 in the Hubpages for your answer.

James

Peter: I am not doing the VITA program this year but:

Question 11. Lamar will receive an additional amount of premium tax credit on his tax return. FALSE because he underestimated his income he will have to pay back some of the credit.

Question 21: Check some of the previous answers on other questions in this forum. There should be a similar answer.

Question 22: Code Q is a Roth IRA. The entire distribution is not taxable. Money put into a Roth IRA, the income is already taxed. There is a 10% penalty for early withdrawal but not in this case because he used the funds for education.

Question 23: There should be a similar answer in this forum or under one of the other VITA tax program questions.

James

I did not volunteer for the VITA program this year, so I have not done the tests. But:

Question 15: Head of Household. She was a qualifying widow with dependent child the first two years.

Question 16: Howard is totally disabled. He qualifies for the Earned Income Credit because he is Disabled.

Question 17: The basis of Samantha's home is not reduced by $45,000, so the answer is FALSE. The bank cancelled debt. Because she is not bankrupt she will owe taxes on the COD.

Question 18: The maximum amount for child dependent care tax credit is $6000 or $3000 per child. The total amount paid for two children is $3800. You will have to calculate this answer from the $3800. Run this answer through the software on form 2441. There may be a calculation for this shown in one of the forums. You have to know what the adjusted gross income is to calculate this so do these questions in the software.

Question 19: She can claim the short coverage gap exemption.

Question 20: She received $1000 on a 1099-Misc. Subtract the $50 for expenses on Schedule C-EZ. That gives her $950 taxable income. Run this through the software and you will come up with the self-employment tax. This is calculated in other taxes, page 2 on the 1040. She will get a reduction on page one of the 1040 for the self employment part of the tax.

Run all this through the software to get the answers. It will help you when you are doing the VITA tax returns. Check my answers. I did this quickly and it is very easy to make a mistake.

James

Karen,

I am not doing the VITA program this year. But you have to read the scenario and check the documents to find the interest. All interest is taxable with the exception of tax free municipal bonds. Similar answers can be found in the VITA advanced question for 2015.

James

jacobs1934

I did not do the VITA tax program this year. I am unable to help answer questions.

James