VITA/TCE Advanced Certification Test Question 28 for Tax Year 2014

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

jacobs1934

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

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

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

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

Lbram

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

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

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

Jeff

Question 33. $7,906

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

Question 35. True or retest question Any of the Above

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

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

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

ms

You are 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

Jae Yoo and Patrick Villarreal

You are all very welcome.

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

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

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

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

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

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

You are all welcome.

James

retiii

You are very welcome.

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.

Cara,

I have not done the Foreign Student Exam.

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

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

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.

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.

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.

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.

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.

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

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

Gail,

Thanks

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.

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 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.

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

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.

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.

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.