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

Updated on October 29, 2015

VITA Advanced Test Question No. 28

VITA/TCE Advanced Certification Test Question 28 for 2014

In the 2014 Advanced Certification Course for the VITA tax program, sponsored by the Internal Revenue Service, there is the following question found in IRS booklet form 6744 VITA/TCE Volunteer Assistor’s Test/Retest for 2014 Returns.

Question 28 on Advanced Scenarios Page 95: How much of the $17,500 gross distribution reported on Form 1099-R is taxable in 2014?

The following information from Advanced Scenario 8, Page 84: Elliot and Kathy Blackburn, Interview Notes is necessary to answer the question.

Elliot retired from the local school district and began receiving retirement income in November, 2010. No distributions were received prior to his retirement. Eliot and Kathy selected a joint survivor annuity for these payments. Eliot has recovered $1,320 tax free through 2013.

Eliot’s 1099R for tax year 2014 from the Hickory Corporation is found on Advanced Scenarios Page 89. Box 1: Gross Distribution shows $17,500. We need to figure the taxable amount of this distribution that goes into Box 2a.

Eliot has received $1,320 from November, 2010 through December, 2013. Therefore he received benefits for 2 months in 2010; 12 months in 2011; 12 months in 2012 and 12 months in 2013 for a total of 38 months.

We divide the 38 months into the $1,320 that Eliot has received tax free.

[$1,320 divided by 38 months] = $34.7368 per month.

We multiply $34.74 per month times 12 months in 2014. [$34.74 times 12] = $416.84

We then subtract $417 from the $17,500 distribution. [$17,500 minus $417] = $17,083 which is the taxable amount that goes in Box 2a. The answer is $17,083.

To check this answer go to Question 28 on the Advanced Scenario 8: Retest Questions on Advanced Scenario Page 113. Question 28: How much of the $17,500 gross distribution reported on Form 1099-R from the Hickory Corporation is taxable in 2014?

There is a choice of answers: a) $16,786; b) $17,016; c) $17,083; d) $17,134.

The answer is c) $17,083.

When a student studies for this advanced certification exam, the student should do all 40 questions in the test section and all 40 questions in the retest section together. The retest questions help the student re-enforce answers. The exam is open book and the choice of questions only comes from the test and retest sections.


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    • JamesCage profile image
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      JamesCage 9 months ago from New Jersey

      NNM

      I did not do the Vita Program this year but for your question the answer is c ,Qualifying Widow for 2016.

      Her husband died in 2015, so she was able to file married filing jointly.

      For the next two years 2016, 2017 she can file as Qualifying widow.

      In 2018, she files as head of household.

      Which allowable filing status is most advantageous to Valerie?

      a. Single

      b. Head of Household

      c. Qualifying Widow(er)

      d. Married Filing Jointly

      This is VITA basic 2016 Scenario 8.Please help

    • profile image

      jacobs1934 9 months ago

      I understand no problem

    • JamesCage profile image
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      JamesCage 9 months ago from New Jersey

      jacobs1934

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

      James

    • JamesCage profile image
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      JamesCage 10 months ago from New Jersey

      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

    • profile image

      karen 10 months ago

      Question 21. What is the total taxable interest income shown on Line 8a of Form 1040? $70, $95, $150, $245

      same question as peter

      when you say "Check some of the previous answers on other questions in this forum. There should be a similar answer."

      where do i go?

    • JamesCage profile image
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      JamesCage 10 months ago from New Jersey

      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

    • profile image

      Mike 10 months ago

      https://www.irs.gov/pub/irs-pdf/f6744.pdf

      Page 69 through Page 120.

      Advanced Scenario : Answers

    • JamesCage profile image
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      JamesCage 10 months ago from New Jersey

      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

    • profile image

      jamescage 10 months ago

      Peter: I am not doing the VITA program this year. So I have not done the exam.

      But Question 11: False because he underestimated his income therefore he will have to pay back some of the premium credit he received.

      Question 22: Code Q means a Roth IRA and all the tax was previously paid.

      Therefore the entire distribution is not taxable. However there can be a 10% penalty for early withdrawal unless it is used for education expenses, health reasons or buying a first home. In this case the 10% penalty is waived for education expense. Books with a college bookstore receipt count as an education deduction with the tuition.

      For Questions 21 and Question 23: Look through some of the previous questions and answers from other years. You may come up with the answers you want from them.

      James

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      Lbram

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

      James

    • profile image

      Lbraman 20 months ago

      Hi, thank you. I am also wondering about the taxable portion of the 1099-R, box 2a. I would like to know the manual calculation for this amount.

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      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

    • profile image

      Lbraman 20 months ago

      Where is your blog for the basic VITA, and where you show the calculation for the taxable portion of the social security from advanced scenario 7?

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      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

    • profile image

      M.T 20 months ago

      Thank you James Cage!!!!!!!!!! All of your explanations were extremely helpful!!!!!!!!!!!

    • profile image

      AB 20 months ago

      How does the code Q on Elliot's Form 1099-R from Essex Bank affect the return?

      A. The entire $4,500 distribution is taxable.

      B. Half of the $4,500 distribution is taxable.

      C. There is a 10% additional tax on the distribution.

      D. The entire $4,500 distribution is not taxable.

      -The net capital gain or loss reported on Form 1040, Line 13 is a gain of $1,239.

      True

      False

      20. What is the amount of additional tax on IRAs, other qualified retirement plans, etc., from the Other Taxes section of Kelly's Form 1040, page 2?

      Thank you

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      Jeff

      Question 33. $7,906

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

      Question 35. True or retest question Any of the Above

    • profile image

      Jeff 20 months ago

      Not sure if this posted correctly,

      33. What is Enrique’s total itemized deductions on Schedule A, line 29? $______.

      34. What is the amount of Enrique's retirement savings contributions credit? $______.

      35. Enrique is not able to pay the entire balance due. One way to reduce the amount of penalties and interest is to file his return and pay as much as he can by April 15. True or False?

      Thank you

    • profile image

      Jeff 20 months ago

      33. What is Enrique’s total itemized deductions on Schedule A, line 29? $______.

      34. What is the amount of Enrique's retirement savings contributions credit? $______.

      35. Enrique is not able to pay the entire balance due. One way to reduce the amount of penalties and interest is to file his return and pay as much as he can by April 15. True or False?

      Thank you

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      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

    • profile image

      Jeff 20 months ago

      Question 11: 11. Matthew will receive an additional amount of premium tax credit on his tax return. True or False?

    • profile image

      Jeff 20 months ago

      Question 10:

      10. Matthew's Form 1095-A contains information that must be entered on Form 8965. True or False?

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      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

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      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

    • profile image

      cm 20 months ago

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

      true or false

    • profile image

      Richard 20 months ago

      The wording for this is confusing can someone help?

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

    • profile image

      TJ 20 months ago

      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

      B. Distribution made for purchase of a first home

      C. Distribution due to total and permanent disability

      D. He does not qualify for an exception

    • profile image

      Sam 20 months ago

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

      A. Enrique's self-employment tax is not reported anywhere on Form 1040.

      B. A portion of the self-employment tax is deducted as a business expense on Schedule C-EZ or C.

      C. The self-employment tax is shown on Form 1040, Other Taxes section, and the full amount is deducted on Schedule A, Taxes You Paid section.

      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.

      This one is a little tricky for me!

    • profile image

      Danielle 20 months ago

      26. The Blackburns are not required to make a shared responsibility payment on Form 1040, page 2.

      True

      False

    • profile image

      Randy 20 months ago

      25. Is Elliot's Social Security income taxable?

      A. No, because their total income is less than $32,000.

      B. No, Social Security benefits are never taxable.

      C. Yes, a portion of the Social Security income is taxable.

      D. Yes, all of the Social Security income is taxable.

    • profile image

      WillC 20 months ago

      need help with 3, 8, 24, 25... thank you in advance!

    • JamesCage profile image
      Author

      JamesCage 20 months ago from New Jersey

      ms

      You are welcome.

      James

    • profile image

      ms 20 months ago

      your explaination was so helpful,

      thanks again

    • profile image

      ms 20 months ago

      thanks a million

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      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

    • profile image

      ms 20 months ago

      hi

      would you please explain the question # 15 & 16 on advanced test?

      thanks

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      Jae Yoo and Patrick Villarreal

      You are all very welcome.

      James

    • profile image

      Patrick Villarreal 20 months ago

      You saved me and my roommates life! I owe you!

    • profile image

      Jae Yoo 20 months ago

      Thank you so much.

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      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

    • profile image

      BMorales24 20 months ago

      Also, Where should Enrique's cash income be reported on the tax return?

      Would it be on form 1040, line 7?

      Because first he does the Schedule C-Ez and then he reports the total of that in line 7. Doesn't he? I am confused.

    • profile image

      BMorales24 20 months ago

      Would being married to a nonresident alien prevent a taxpayer from being eligible for the EIC?

      (Yes) Incorrect. Nonresidents may qualify for the EIC if they file a joint return with a U.S. citizen or resident.

      Isn't George a U.S citizen with SSN?

      Don't they have one child, Isabel, who is 5 years old and lived with them all year? And also has a SSN

    • JamesCage profile image
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      JamesCage 20 months ago from New Jersey

      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

    • profile image

      Miti 20 months ago

      Can you please answer to Q # 6

      "George and Maria are eligible to claim the earned income credit:?

      1) True

      2) False

    • profile image

      AccountingKing 21 months ago

      Youre awesome James

    • JamesCage profile image
      Author

      JamesCage 21 months ago from New Jersey

      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

    • profile image

      AccountingKing 21 months ago

      James. If you can, please clear something up. When I'm trying to input figures in the w2's in the software, I keep getting the "calculated entries" message. So it wont let me fix the wages, taxes withheld, etc. I tried to just link it to a replacement w2 but I cant type all the information in the replacement either. I even unchecked "remove calculated areas". Also help with advanced problems #11 and #26 would be much appreciated. Thanks!

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      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

    • profile image

      Jason 21 months ago

      Thanks James! I included the $100. I guess I should not have.

      Greatly appreciated!

    • profile image

      roger 21 months ago

      hi james question 7 still confused maria must make a share responsibility parment? (true or false)

      question 10 and 11

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      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

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      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

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      super s 21 months ago

      Thank you so much ! I just pass the advance exam too!

    • profile image

      ms.tiff 21 months ago

      can assistance be provided for question 25

    • profile image

      sunshine 21 months ago

      James Cage! YOU ARE THE MAN! thank you very much for all your answers and posts! I just finished my advanced test and I passed with all your help!

    • profile image

      Jason 21 months ago

      James,

      Not sure if you have looked at the military scenarios. My issue is with #12 - What are Madeline’s total deductible rental expenses?

      I came up with $5010 and I was wrong. Why is it not $5010?

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      You are all welcome.

      James

    • profile image

      :) 21 months ago

      This has been the most helpful thing ever and I really appreciate all of your posts! Thank you so, so much! :)

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      retiii

      You are very welcome.

      James

    • profile image

      retiii 21 months ago

      thanks james cage!!! u are awesome! I just passed the test thanks to you!

    • JamesCage profile image
      Author

      JamesCage 21 months ago from New Jersey

      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.

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      Cara,

      I have not done the Foreign Student Exam.

      James

    • profile image

      cara 21 months ago

      Hi James,

      Do you have any support for the Foreign Student exam?

    • JamesCage profile image
      Author

      JamesCage 21 months ago from New Jersey

      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

    • profile image

      Christoper 21 months ago

      Is there a discussion or forum about the Basic Exam for 2015 VITA volunteer ?

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      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

    • profile image

      SarbanesFoxley 21 months ago

      Hi James,

      I think I figured out Enrique...you mentioned you keep getting a refund.

      Add the Unreported Tips on Form 4137 - this will change your numbers for Income Line 7, Line 27, Line 57 and Line 58.

      The other answers are not affected.

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      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.

    • profile image

      karina 21 months ago

      Hi, I'm confused with questions 7 and 9 of the advance

      Question 7 -maria must make a shared responsibility payment ( true or false) and Question 9 -which of the following are chad's qualified educational expenses for the lifetime learning credit? a. 1,095 b.350 c. 90 d. none of his expenses qualify

    • profile image

      michelle 21 months ago

      answers for 2015 please

      1, 2,4,5,7,9,10,17,19,20,21,22,23,27

      thank you

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      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.

    • profile image

      JAMESBON 21 months ago

      Hi James

      Could you help with Q.15 Which allowable filing status is most advantageous to Kelly? b . Head of Household d . Qualifying Widow with Dependent Child. with answer D Kelly gets more refund, but in the program I used head of household. so I'm a little confused which one would be the correct answer for the advanced exam.

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      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.

    • JamesCage profile image
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      JamesCage 21 months ago from New Jersey

      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.

    • profile image

      taxconfused 21 months ago

      Hi James,

      Thank you for all your assistance! I just passed the advanced exam but I still have trouble running through the Enrique. I know that they didn't ask for how much he owes or gets refunded but would you be able to tell me what that number is so I know that I got it right?

      I really wish the IRS released a few more practice problems with solutions so I can get the hang of this.

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      JamesCage 21 months ago from New Jersey

      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.

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      JamesCage 21 months ago from New Jersey

      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

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      JamesCage 21 months ago from New Jersey

      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

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      anna2803 21 months ago

      Mr. Cage,

      Thank you for your help. You have a great forum here. I want to mention that I already passed the exam, but the correct answer, at least on my exam was 572.

      Maybe the IRS updated the answers. Who knows!

      One last question: do you know how many attempts do we have for the Foreign Students Test? I ask this because I don't see any retests on the publication 4704-FS.

      Thank you!

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      Maggie 21 months ago

      I am taking advance Exam 2015, I am confusing for the following retest questions:

      Scenario 3: Geroge & Maria Newton

      #6 George & Maria are eligible to claim the earned income credit?

      Scenario 4: Which education credit is Chad eligible to take:

      a. American opportunity credit

      b. Lifetime learning credit

      c. Both American opportunity credit and lifetime learning credit

      d. He does not qualify for any education credit

      Scenario 7:

      #24 How much of the $17,500 gross distribution reported on Form 1099-R from Hickory Corporation ts taxable in 2015?

      a. $16.719

      b. $16,905

      c. $17,097

      d. $17,500

      Please help me.

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      anna2803 22 months ago

      Hello Mr. Cage,

      For Question #18 (Advanced Exam - 2015) I get d) $572 for the credit for child and dependent care expenses on Form 2441, line 11.

      On Form 2441, line 6 is $2,600 and Kelly's AGI is 40,900

      Anyone else got this answer as well?

      Thank you

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      JamesCage 22 months ago from New Jersey

      Gail,

      Thanks

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      gail0955 22 months ago

      Thank you so much Mr.Cage! I just passed the advanced exam!

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      Lana 22 months ago

      Hello,

      I am stuck on two questions from the 2015 advanced scenarios

      2015 Advanced Exam - Scenario 6: Kelly Floyd - Question 5 of 6.

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

      T

      F

      2015 Advanced Exam - Scenario 6: Kelly Floyd - Question 4 of 6.

      18. What is the credit for child and dependent care expenses on Form 2441, line 11? $___?

    • JamesCage profile image
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      JamesCage 22 months ago from New Jersey

      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.

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      gail0955 22 months ago

      Just want to clarify, my answer for question 28-31 are B B A D, question 35 C. Is that all correct?

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      gail0955 22 months ago

      Thanks for help!

      I have another several questions, 2015 Advanced Scenario 8 question 32, is the answer c correct?

      Question 33, my answer in the software show is $10911, which is not found in options, I don't know why.

      Question 34, is the answer False? Because in the software it shows $0 not $120. I still have some red worksheet in the software and I cannot figure out the error in my own. Could you please help me?

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      JamesCage 22 months ago from New Jersey

      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.

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      gail0955 22 months ago

      advanced scenario 7, question 26. Is there a shared responsibility payment on the Blackburn's Form 1040 Page 2? Could you tell me on the Form 1040 Page 2, which line shows shared responsibility payment?

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      Naj 22 months ago

      Yes you are right

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      JamesCage 23 months ago from New Jersey

      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.

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      IHateMyLife 23 months ago

      Thanks, I finished this part of the Advanced test and passed after struggling :( and I saw your answers later after I finished. I almost got that one wrong on Question 14, but found out about the educational exemption and got it right. I can't remember which number it was, but the one I got wrong was the American Opportunity Credit, I think I only put the cost of the book for $500. Not sure why I answered that way. If I am correct there is one scenario where he was billed but didn't pay the bill yet and that question was confusing at first because he can only deduct an expense if he made a payment. You have to look carefully at the school bill. The wording had confused me, then I realized later that there were 2 tuition bills for each semester and he paid one of them.

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      JamesCage 23 months ago from New Jersey

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

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      JamesCage 23 months ago from New Jersey

      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.

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      IHateMyLife 23 months ago

      I wanted to add that I am also doing the 2015 test and a little stressed, but for me on line 7 I put AGI of 40,900 X .22 to get the 572. Not sure if this helps.

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      IHateMyLife 23 months ago

      for the 2015 I also got $572 for that one I remember distinctly so I think you are right and I am filling out the 1040's by hand I have it somewhere here. I was wondering with Mathew Clark he has a scholarship for $3,000 and I listed everything on there for income but his scholarship because I am pretty sure it is tax free, but some of the info seems vague in the scenarios they give you. So long as they don't specify otherwise I assume you go with the information they give you and not list it as income.. I have a little trouble i think I got it right. If Mathew Clarke underestimated his income when buying healthcare through the marketplace, but he did buy minimal essential coverage so that he is covered for the year does he need to take info from form 1095-A and enter it on 8965. I put false because I do not think he can claim an exemption and 8965 is only used for exemptions. This is for the 2015 test. Any feedback is appreciated. Thanks.

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      JamesCage 23 months ago from New Jersey

      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.

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      andrew23mc 23 months ago

      I did and the number indicated the credit on form 2441 was $546 ( 21% bracket) Yet, the test results stated that this was incorrect. So I don't understand what I did that was incorrect--unless I just clicked on the wrong answer by mistake, not sure.

    • JamesCage profile image
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      JamesCage 23 months ago from New Jersey

      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.

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      andrew23mc 23 months ago

      Thank you James for your response. Subtracting the $2100 would put the AGI in the 22% bracket which rationalizes $572 as an answer but according to the scenario, Kelly cashed in her 401k (which IS a earned income from a qualified deferred compensation plan, challenges 2441 instructions) and "she does not qualify for any exception" from early distribution, which I understand to mean that form 5329 with a exception code cannot be used. So I am still not sure how the $2100 can be subtracted from being included with the AGI. Form 2441 provides the qualified expense of $2600 which I believe is the correct sum. Thanks again for spending time with this.