2019 – Volunteer Income Tax Assistance Tests (VITA) form 6744

I need the answers of (2019 – Volunteer Income Tax Assistance Tests (VITA) form 6744). The questions are in the book that is freely available online in PDF format. But I attached it with the question.  There are many groups of tests but, I just need these four  :

1.Volunteer Standards of Conduct Test.

2.Intake / Interview and Quality Review Test Questions.

3.Basic Course Scenarios and Test Questions.

4.Advanced Course Scenarios and Test Questions.

I highlighted those Tests in the book.

So Please, Open the PDF file and see the Tests & Question that I highlighted, then reply to me.

6744
VITA/TCE Volunteer Assistor’s Test/Retest
Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE)
2019 RETURNS
Take your VITA/TCE training online at www.irs.gov (keyword: Link
& Learn Taxes). Link to the Practice Lab to gain experience using
tax software and take the certification test online, with immediate
scoring and feedback.
Form 6744 (Rev. 10-2019) Catalog Number 43560V Department of the Treasury Internal Revenue Service www.irs.gov
Form 6744 – 2019 VITA/TCE Test
Table of Contents
Form 6744 – 2019 VITA/TCE Test. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Test Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Test Answer Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retest Answer Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
4
7
9
Volunteer Standards of Conduct Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Test Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Volunteer Standards of Conduct Retest Questions. . . . . . . . . . . . . . . . . . . . . . . . . 15
Intake / Interview and Quality Review Test Questions. . . . . . . . . . . . . . . . . . . . . . . . 21
Intake / Interview and Quality Review Retest Questions. . . . . . . . . . . . . . . . . . . . . . . . 23
Basic Course Scenarios and Test Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Basic Scenario 1: Olivia Otis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic Scenario 2: Felix and Isabella Franklin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic Scenario 3: Henry Howard and Charlotte Criswell. . . . . . . . . . . . . . . . . . . . . . . .
Basic Scenario 4: Mark and Sue Malone. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic Scenario 5: Aurora Davis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic Scenario 6: Noah and Ella Neumann. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic Scenario 7: Evie Adams. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic Course Retest Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
26
27
28
29
31
40
49
Advanced Course Scenarios and Test Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Advanced Scenario 1: Tamara Dennison. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Scenario 2: Charlie and Samantha Collins. . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Scenario 3: Gail Baker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Scenario 4: Sandra Clark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Scenario 5: Archie Hamilton. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Scenario 6: Jennifer Morrison. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Scenario 7: Mark and Barbara Matthews. . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Scenario 8: Ramon Torrez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Course Retest Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
59
60
61
62
64
75
86
93
Military Course Scenarios and Test Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
Military Scenario 1: Dick and Jane Summers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Military Scenario 2: Alfred Booker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Military Scenario 3: Jacob and Anne Todd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Military Scenario 4: Jose Gonzalez. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Military Scenario 5: Oscar and Patricia Hernandez. . . . . . . . . . . . . . . . . . . . . . . . . . .
Military Course Retest Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction & Instructions
1
105
107
108
109
110
117
International Course Scenarios and Test Questions. . . . . . . . . . . . . . . . . . . . . . . . 123
International Scenario 1: Ben and Alice Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Scenario 2: Bob and Carol Jackson . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Scenario 3: Michelle Rock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Course Retest Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123
125
126
133
Health Savings Accounts – Test Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
HSA Scenario 1: Leo Williams. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HSA Scenario 2: Ed and Christine Martinez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HSA Scenario 3: Judy Young. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HSA Scenario 4: Carl and Monica Smith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HSA Scenario 5: Peggy Walker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Health Savings Accounts – Retest Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139
140
141
142
143
149
Federal Tax Law Update Test for Circular 230 Professionals . . . . . . . . . . . . . . . . . 155
Test Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Return Preparation: Ramon Taos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Federal Tax Law Update Retest for Circular 230 Professionals . . . . . . . . . . . . . . 164
2019 VITA/TCE Foreign Student Test for Volunteers . . . . . . . . . . . . . . . . . . . . . . . . 167
Residency Status, Form 8843, and Filing Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Scenario 1: Akari Watanabe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxability of Income, ITINs, and Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Scenario 2: Rachel Bell. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Scenario 3: Sai Singh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Scenario 4: Sumon Azim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refunds, Deductions, and the Best Form to Use . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Introduction & Instructions
168
170
174
175
180
184
188
Form 6744 – 2019 VITA/TCE Test
Preface
Quality Return Process
An accurate return is the most important aspect of providing quality service to the
taxpayer. It establishes credibility and integrity in the program. Throughout the training
material you were introduced to the major components of the VITA/TCE return preparation process, including:
• Understanding and applying tax law
• Screening and interviewing taxpayers
• Using references, resources, and tools
• Conducting quality reviews
During training, you were given an opportunity to apply the tax law knowledge you
gained. You learned how to verify and use the information provided by the taxpayer on
the intake and interview sheet in order to prepare a complete and correct tax return.
You also learned how to use your reference materials and conduct a quality review.
Now it is time to test the knowledge and skills you have acquired and apply them to
specific scenarios. This is the final step to help you prepare accurate tax returns within
your scope of training.
We welcome your comments for improving these materials and the VITA/TCE
programs. You may follow the evaluation procedures located on Link & Learn Taxes at
www.irs.gov, or e-mail your comments to partner@irs.gov.
Thank you for being a part of this valuable public service for your neighbors and
community.
Introduction & Instructions
3
Test Instructions
Special Accommodations
If you require special accommodations to complete the test, please advise your instructor, Site Coordinator, or other VITA/TCE volunteer contact immediately.
Reference Materials
This test is based on the tax law that was in effect when the publication was printed.
Use tax year 2019 values for deductions, exemptions, tax, or credits for all answers on
the test. Remember to round to the nearest dollar. Test answers have been rounded up
or down as directed in the specific instructions on the form.
• This is an open book test. You may use your course book and any other reference material you will use as a volunteer. A draft Form 13614-C, Intake/Interview &
Quality Review Sheet, is included in the return preparation scenarios. Use this form
when completing the tax returns and answering the test questions.
Please complete this test on your own. Taking the test in groups or with outside assistance is a disservice to the customers you volunteered to help.
Using Tax Preparation Software
The Practice Lab is a tax year 2019 tax preparation tool developed to help in the certification process for VITA/TCE volunteers. Go to www.irs.gov and type “Link & Learn
Taxes” in the keyword search field. Click on the link to open the website. The link to the
Practice Lab is listed under “Additional Resources.” A universal password will be
needed to access the Practice Lab. Your instructor, Site Coordinator, or other VITA/TCE
volunteer contact will be able to provide you with the universal password. Once you
access the Practice Lab, you will need to create an account if you do not already have
one.
Using prior year software will not generate the correct answers for the 2019 test.
When entering Social Security numbers (SSNs) or Employer Identification Numbers
(EINs), replace the Xs as directed, or with any four digits of your choice. Use your city,
state, and ZIP code when completing any of the forms, unless otherwise indicated. Any
question posed by the software not addressed in the interview notes can be answered
as you choose.
All taxpayer names, SSNs, EINs, and account numbers provided in the scenarios are
fictitious.
Taking the Test
When taking the tests, you may encounter both mini-scenarios and tax preparation
scenarios. The mini-scenarios do not require you to prepare a tax return. For each of
these, read the interview notes for each scenario carefully and use your training
and resource materials to answer the questions after the scenarios.
The tax preparation scenarios require you to complete a sample tax return. You can
use the Practice Lab to prepare the sample returns. Answer the questions following the
scenario.
You can complete the certification tests online using the Link & Learn Taxes website for
4
Introduction & Instructions
immediate scoring. Go to the Link & Learn Taxes e-learning application at
www.linklearncertification.com or at www.irs.gov, using keyword search: Link & Learn. If
your instructor prefers, you can complete the test answer sheet to be graded by hand.
Test Answer Sheet
The test scenarios on Link & Learn Taxes are the same as in this booklet. Read
each question carefully before entering your answers online.
Mark your answers in the test booklet. Use the answer sheet if you are submitting
the paper test to your instructor for grading. In that case, make sure your name is at
the top of the page and give your Test Answer Sheet and the completed Form 13615,
Volunteer Standards of Conduct Agreement to your instructor, Site Coordinator, or other
VITA/TCE volunteer contact as directed. Do not submit your entire test booklet unless
otherwise directed.
The retest questions are all based on the test scenarios. There are mini-scenarios and
questions in Basic, Advanced, Military, and International. The Interview Notes for the
mini-scenarios are included on the retest pages.
To answer the retest questions for return preparation scenarios, refer to the Interview
Notes, Intake/Interview & Quality Review Sheet, and the tax return you prepared for the
scenario.
Test Score
Once you submit your responses, Link & Learn Taxes will grade your test, provide you
with an immediate score, and allow you to print or save your Form 13615, Volunteer
Standards of Conduct Agreement. The system will also provide feedback for any
missed questions.
If you submit your paper test answer sheet to your instructor, he or she will advise you
of your test results. Your signed Volunteer Standards of Conduct Agreement will be
maintained by your Site Coordinator or other VITA/TCE volunteer contact.
Certification
A score of 80% or higher is required for certification. If you do not achieve a score of at
least 80%, you should review the subjects you missed or discuss it with your instructor,
Site Coordinator, or other VITA/TCE volunteer contact. For most tests, a retest is available. Retest questions are included in this test booklet.
Introduction & Instructions
5
Certification Tests
6
Introduction & Instructions
Volunteer Standards of Conduct Test
It is important that all individuals who volunteer their time and services in the VITA/TCE Programs understand
their roles and responsibilities under the program. All volunteers are expected to:
• Take the Volunteer Standards of Conduct (VSC) Training, at a minimum, the first year of volunteering with
VITA/TCE Programs
• Annually, pass the VSC/Ethics certification test with a score of 80% or higher; and
• Sign and date Form 13615, Volunteer Standards of Conduct Agreement, indicating they have successfully
completed the certification test(s) and agree to adhere to the VSC.
These Volunteer Standards of Conduct requirements are in addition to the tax law certification process (i.e.,
Basic, Advanced, Military, or International) for becoming a qualified volunteer to teach tax law, correct tax
returns, conduct quality reviews, prepare tax returns, or address tax law related questions as a volunteer in
the VITA/TCE Programs.
Use your training and reference tools to answer the questions. You must answer eight of the following ten
questions correctly to pass the Volunteer Standards of Conduct test.
Test Questions
Directions
Using your resource materials, answer the following questions:
1. Prior to working at a VITA/TCE site, ALL VITA/TCE volunteers (greeters, client
facilitators, tax preparers, quality reviewers, etc.) must:
a. Annually pass the Volunteer Standards of Conduct (VSC) certification test with
a score of 80% or higher.
b. Sign and date the Form 13615, Volunteer Standards of Conduct Agreement,
agreeing to comply with the VSC by upholding the highest ethical standards.
c.
Pass the Advanced tax law certification.
d. All of the above.
e. A and B
2. Can a volunteer be removed and barred from the VITA/TCE Programs for violating
the Volunteer Standards of Conduct?
a. Yes
b. No
Standards of Conduct (Ethics)
11
3. If a taxpayer offers you a $20 bill because they were so happy about the quality
service they received, what would be the appropriate action to take?
a. Take the $20 and thank the taxpayer for the tip.
b. Tell the taxpayer it would be better to have the $20 deposited directly into your
bank account from his refund.
c. Thank the taxpayer, and explain that you cannot accept any payment for your
services.
d. Refer the taxpayer to the tip jar located on the quality review and print station.
4. Jake is an IRS tax law-certified volunteer preparer at a VITA/TCE site. When
preparing a return for Jill, Jake learns that Jill does not have a bank account to
receive a direct deposit of her refund. Jill is distraught when Jake tells her the
paper refund check will take three or four weeks longer than the refund being direct
deposited. Jill asks Jake if he can deposit her refund in his bank account and then
turn the money over to her when he gets it. What should Jake do?
a. Jake can offer to use his account to receive the direct deposit, and turn the
money over to Jill once the refund is deposited.
b. Jake should explain that a taxpayer’s federal or state refund cannot be deposited into a VITA/TCE volunteer’s bank account and she will have to open an
account in her own name to have the refund direct deposited.
c. Jake can suggest she borrow a bank account number from a friend because
the taxpayer’s name does not need to be on the bank account.
5. Max prepares a tax return for Ali at a VITA/TCE site. He finds out during the interview that Ali has no health insurance. After Ali leaves the site, Max writes her name
and contact information down to take home to his wife who sells health insurance
for profit. Which of the following statements is true?
a. There is no violation to the Volunteer Standards of Conduct (VSC) unless
Max’s wife makes a big commission on the sale of health insurance to Ali.
b. Max has violated the VSC because he is using confidential information to
engage in a financial transaction to further his own or another’s personal interest.
c. Max is doing Ali a favor by using her personal information to secure business
for his wife.
d. Information a taxpayer provides at a VITA/TCE site can be used for the volunteer’s personal gain.
12
Standards of Conduct (Ethics)
6. Bob, an IRS tax law-certified volunteer preparer, told the taxpayer that cash income
does not need to be reported because the IRS does not know about it. Bob indicated NO cash income on Form 13614-C. Bob prepared a tax return excluding the
cash income. Jim, the designated quality reviewer, was unaware of the conversation and therefore unaware of the cash income and the return was printed, signed,
and e-filed. Who has violated the Volunteer Standards of Conduct?
a. Bob, the tax law-certified volunteer who prepared the return.
b. Jim, the designated quality reviewer who was unaware of the cash income
when he reviewed the return.
c. Betty, the site coordinator.
d. No one has violated the Volunteer Standards of Conduct.
7. Sue, a VITA/TCE site coordinator, was watching the local news when she saw
Aaron, a new tax law-certified volunteer, in a story about several bank employees
being arrested for suspicion of embezzlement. She saw Aaron being led out of the
bank in handcuffs. Three days later, Sue is shocked when she sees Aaron show
up at the site ready to volunteer, apparently out on bond. She pulls Aaron aside
and explains that his arrest on suspicion of embezzlement could have a negative
effect on the site and therefore she must ask him to leave the site. Sue uses the
external referral process to report the details to IRS-SPEC by sending an email to
WI.Voltax@irs.gov. Did Sue take appropriate actions as the site coordinator?
a. Yes
b. No
8. Heidi, a VSC-certified volunteer, is working at the intake station. As part of her
duties, she is required to explain to the taxpayer what they are expected to do
today as part of the return preparation process. What should Heidi tell them?
a. Form 13614-C, Intake/Interview & Quality Review Sheet, must be completed
prior to having the return prepared.
b. You will be interviewed by the return preparer and asked additional questions
as needed.
c. You need to participate in a quality review of your tax return by someone other
than the return preparer.
d. All of the above.
9. During the intake process, the volunteer should verify the taxpayer and spouse, if
applicable, have photo identification. Additionally, taxpayers must provide verification of taxpayer identification number (SSN or ITIN) for everyone who will be on the
tax return.
a. True
b. False
Standards of Conduct (Ethics)
13
10. Mary, a VSC-certified greeter, reviews the taxpayer’s completed Form 13614-C,
page 2, to identify what potential volunteer certification level is needed for this tax
return. Mary sees the taxpayer has checked the “yes” box indicating he has selfemployment income and the certification level next to the question is (A). All other
questions answered “yes” have a (B) certification. When Mary assigns the return to
a tax preparer, what tax law certification level should the tax preparer have?
a. Advanced
b. Basic
c.
It doesn’t matter, any level is fine
d. No tax law certification is necessary
14
Standards of Conduct (Ethics)
Volunteer Standards of Conduct Retest Questions
Directions
Using your resource materials, answer the following questions:
1. Which volunteers must pass the Volunteer Standards of Conduct (VSC) certification test?
a. Site coordinators/local coordinators
b. Quality reviewers and tax return preparers
c. Greeters or client facilitators
d. All VITA/TCE site volunteers must pass the VSC certification test
2. Failure of a VITA/TCE volunteer to comply with the Volunteer Standards of Conduct
could result in which of the following?
a. The volunteer’s removal from the VITA/TCE Programs.
b. Inclusion in the IRS Volunteer Registry to bar future VITA/TCE activity indefinitely.
c. Termination of the sponsoring organization’s partnership with the IRS.
d. All of the above may be considered an appropriate action depending on the
type of violation and the sponsoring partner’s corrective actions.
3. Is having a donation/tip jar at the quality review station within the VITA/TCE site a
violation of the Volunteer Standards of Conduct?
a. Yes
b. No
4. Maggie wants her tax refund quickly; however, she doesn’t have a bank account for
direct deposit. She asks Josh, the tax law-certified preparer, to deposit her refund
into his checking account and turn the funds over to her when received. If Josh
agrees to do this, has he violated any of the Volunteer Standards of Conduct?
a. Yes
b. No
Standards of Conduct (Ethics)
15
5. Pat is a paid tax preparer in the community; he also gives back to the community
by serving as an IRS tax law-certified volunteer tax preparer at a VITA/TCE site.
While conducting the interview with the taxpayer, Pat discovers the taxpayer’s
small business will generate a loss, making the return out of scope for the VITA/
TCE Programs. Pat explains to the taxpayer that the tax return cannot be prepared
at the VITA/TCE site, but he will offer the taxpayer a discount at his paid tax
preparation business down the road. Has Pat violated the Volunteer Standards of
Conduct (VSC)?
a. Yes, it is a violation of the VSC for Pat to solicit business from any taxpayer at
the VITA/TCE site.
b. No, it is not a violation since the return cannot be prepared at the site.
c. No, none of the VSC addresses soliciting business while volunteering at the
VITA/TCE site.
6. Ann, an IRS tax law-certified tax preparer, told the taxpayer that cash income does
not need to be reported because the IRS will never know about it. Ann indicated
NO cash income on Form 13614-C. Ann prepared the return without the cash
income. The designated quality reviewer was unaware of the conversation and
therefore unaware of the cash income and the return was printed, signed, and
e-filed. Did the designated quality reviewer violate the Volunteer Standards of
Conduct?
a. Yes
b. No
7. Jan, a greeter, overheard an IRS tax law-certified volunteer, Jim, trying to sell
insurance to a taxpayer he was helping. Jim is an insurance agent in the community. Jan feels like Jim was pushy, made the taxpayer uncomfortable, and violated
Volunteer Standard of Conduct #3. What should Jan do?
a. Make an announcement to the taxpayers in the waiting room to ignore Jim if he
tries to sell them insurance.
b. Tell the site coordinator what she heard, so he can immediately remove Jim
from the site and report the incident using the external referral process by
sending an email to WI.Voltax@irs.gov.
c. Mind her own business and do nothing.
8. Explaining the intake/interview and quality review process is important so the
taxpayer understands they are expected to:
a. Have a completed Form 13614-C, Intake/Interview & Quality Review Sheet,
prior to having the return prepared.
b. Answer the tax preparer’s additional questions during the interview.
c. Participate in the quality review of their tax return.
d. All of the above.
16
Standards of Conduct (Ethics)
9. During the intake process, which of the following should the volunteer verify that
the taxpayer and spouse, if applicable, have with them to ensure the taxpayers can
be served that day?
a. Photo identification for both
b. Social Security or taxpayer identification number verification documents for
everyone listed on the return
c. All tax statement documents, including Forms W-2, 1099-R, etc.
d. All of the above
10. To ensure quality service and accurate return preparation, every site is required to
have a process for assigning taxpayers to IRS tax law-certified preparers who are
certified at or above the level required to prepare their tax return.
a. True
b. False
Standards of Conduct (Ethics)
17
20
Standards of Conduct (Ethics)
Intake / Interview and Quality Review Test Questions
Directions
Review the Intake/Interview and Quality Review training and answer the following
questions.
1. All IRS-certified volunteer preparers participating in the VITA/TCE Programs must
use Form 13614-C along with an effective interview for every return prepared at
the site.
a. True
b. False
2. What should the certified volunteer preparer do before starting the tax return?
a. Make sure all questions on Form 13614-C are answered.
b. Change “Unsure” answers to “Yes” or “No” based on a conversation with the
taxpayer.
c.
Complete all applicable Certified Volunteer Preparer shaded-area questions on
Form 13614-C.
d. All of the above.
3. When reviewing Form 13614-C, you see the “Interest” question is marked “Yes”
and the taxpayer gives you a Form 1099-INT. You should ask the taxpayer if they
had any other interest income.
a. True
b. False
4. VITA/TCE sites are required to conduct quality reviews:
a. Of all the returns prepared by volunteers who have less than two years of
experience preparing returns.
b. Of every return prepared at the site.
c. Only when there is a Quality Reviewer available.
d. Of all returns prepared by volunteers with certification levels below Advanced,
Military, or International.
5. You do not need to see proof of cash donations made by a taxpayer if you feel that
the information is not unusual or questionable.
a. True
b. False
6. In most cases, a volunteer must review photo identification for every taxpayer to
deter the possibility of identity theft.
a. True
b. False
Intake / Interview Test
21
7. When does the taxpayer sign the tax return?
a. Before quality review and before being advised of their responsibility for the
accuracy of the information on the return.
b. Before quality review and after being advised of their responsibility for the
accuracy of the information on the return.
c. After quality review and before being advised of their responsibility for the
accuracy of the information on the return.
d. After quality review and after being advised of their responsibility for the accuracy of the information on the return.
8. The site is busy with many taxpayers waiting for assistance. All volunteers are busy
preparing tax returns. Can you quality review the return you just prepared instead
of waiting for someone else to quality review the return?
a. Yes, if it is a returning taxpayer.
b. Yes, with approval of the Site Coordinator.
c. No, self review is never an acceptable quality review method.
d. No, unless you are certified at the Advanced level.
9. Which of the following is true?
a. Quality review can be conducted by a volunteer preparer certified at Basic
when the tax return required an Advanced certification to prepare.
b. Quality review is conducted after the taxpayer signs the tax return.
c. Quality review is an effective tool for preparing an accurate tax return.
d. Taxpayers do not need to be involved in the quality review process.
10. As part of the intake process, each site must:
a. Have a process to ensure a return is within the scope of the VITA/TCE
Programs.
b. Identify the certification level needed to prepare a return.
c.
Have a process to ensure volunteers have the certification needed for the
returns they prepare.
d. All of the above.
22
Intake / Interview Test
Intake / Interview and Quality Review Retest Questions
Directions
Review the Intake/Interview and Quality Review training and answer the following
questions.
1. When should an IRS-certified volunteer preparer participating in the VITA/TCE
Programs perform a complete interview of a taxpayer?
a. Only when the taxpayer has questions.
b. Only if the taxpayer has never visited your site.
c. Only when the site is not busy.
d. For every return prepared at the site.
2. The certified volunteer preparer should verify the return is within their certification
level as part of the Intake/Interview process.
a. True
b. False
3. When reviewing Form 13614-C, you see the “Interest” question is marked “Yes”
and the taxpayer gives you a Form 1099-INT. What should you do next?
a. Input Form 1099-INT into tax software.
b. Go to the next question on Form 13614-C.
c. Ask the taxpayer if they had any other interest income.
4. VITA/TCE sites are required to conduct quality reviews of every return prepared at
the site.
a. True
b. False
5. A taxpayer tells you that they donated $50 to their church, but they did not bring
proof of the donation. This information along with all other information gathered
during your interview does not seem unusual or questionable. As a tax preparer,
you should:
a. Send the taxpayer home to get proof of their donation.
b. Prepare the return giving credit for the donation without seeing proof.
c. Prepare their return without giving them credit for the donation.
Intake / Interview Retest
23
6. What information must a volunteer review to deter the possibility of identity theft?
a. Form W-2
b. Photo identification
c. Last year’s tax return
d. Medicaid card
7. The taxpayer signs the tax return after quality review and after being advised of
their responsibility for the accuracy of the information on the return.
a. True
b. False
8. You can quality review a tax return you just prepared instead of waiting for someone else to quality review the return.
a. True
b. False
9. Which of the following four critical processes for quality review is not correct:
a. Engaging the taxpayer in the review process.
b. Using Google as a main reference for tax law determinations.
c. Using the Quality Review Checklist located in Publication 4012 as a guide
while conducting the quality review.
d. Comparing source documents provided by the taxpayer.
10. Completing a thorough interview before entering taxpayer information into the software helps avoid which of the following potential problems?
a. The volunteer may not have the required certifications to prepare the return.
b. The return may be out of scope.
c. The taxpayer may not have all the information needed to prepare the return.
d. All of the above.
24
Intake / Interview Retest
Basic Course Scenarios and Test Questions
Directions
The first five scenarios do not require you to prepare a tax return. Read the interview
notes for each scenario carefully and use your training and resource materials to
answer the questions after the scenarios.
Basic Scenario 1: Olivia Otis
Interview Notes
• Olivia is single, 66 years old, and not blind.
• She paid all the cost of keeping up her home. She earned $55,000 in wages for
2019.
• Olivia provided all the support for her two grandchildren who lived with her all year.
Cora is 11 years old and Jack is 15 years old.
• She does not have enough deductions to itemize.
• Olivia, Cora, and Jack are all U.S. citizens with valid Social Security numbers.
Basic Scenario 1: Test Questions
1. What is the amount of Olivia’s standard deduction?
a. $18,350
b. $20,000
c. $24,400
d. $25,700
2. The maximum amount of child tax credit that Olivia is able to claim per qualifying
child for 2019 is:
a. $500
b. $1,000
c. $1,400
d. $2,000
Basic Scenarios
25
Basic Scenario 2: Felix and Isabella Franklin
Interview Notes
• Felix and Isabella Franklin have been married since 2016. Felix is a U.S. citizen
with a valid Social Security number. Isabella is a resident alien with an Individual
Taxpayer Identification Number (ITIN). They elect to file Married Filing Jointly.
• Felix worked in 2019 and earned wages of $40,000. Isabella worked part-time and
earned $10,000.
• They have two children: Rose, who is 3 years old, and Iris, who is 8 years old. Both
children were supported by their parents all year. Rose is a U.S. citizen and has a
valid Social Security number. Iris is a resident alien and has an ITIN.
• Felix and Isabella paid $5,000 in daycare for Rose and Iris. The statement from
the daycare provider includes the provider’s name, address, valid Employer
Identification Number, and the amount paid for Rose and Iris’s care.
• Felix, Isabella, Rose, and Iris lived together in the U.S. all year.
Basic Scenario 2: Test Questions
3. Are the Franklins eligible to claim the earned income credit?
a. Yes, because everyone has a taxpayer identification number.
b. Yes, because Felix has a Social Security number.
c. No, because Isabella has an ITIN.
d. No, because their income is too high.
4. Which credit(s) can the Franklins claim on their 2019 tax return?
a. Child and dependent care credit for both Rose and Iris
b. Child tax credit for Rose
c. Credit for other dependents for Iris
d. All of the above
26
Basic Scenarios
Basic Scenario 3: Henry Howard and Charlotte Criswell
Interview Notes
• Henry and Charlotte are both 28 years old.
• Henry and Charlotte separated in 2018 and their divorce was finalized in January
2019. During 2019, Charlotte paid Henry alimony payments of $12,000.
• Charlotte earned $85,000 in wages during 2019. Henry earned $13,000 in wages.
• Henry has two children from a previous relationship. Ethan is 9 and James is 6
years old and they lived with Henry for all of 2019. Ethan and James did not provide
over half of their own support.
• Henry paid all the rent, utilities, and household expenses.
• Henry, Charlotte, Ethan, and James are all U.S. citizens with valid Social Security
numbers.
Basic Scenario 3: Test Questions
5. Which of the following statements is true?
a. Henry must report the $12,000 alimony received as income and Charlotte can
claim alimony paid as an adjustment to income.
b. Henry is not required to report the $12,000 alimony received as income and
Charlotte cannot claim alimony paid as an adjustment to income.
c. Henry must report the $12,000 alimony received as income and Charlotte
cannot claim alimony paid as an adjustment to income.
d. Henry is not required to report the $12,000 alimony received as income and
Charlotte can claim alimony paid as an adjustment to income.
6.
Who can claim Ethan and James as qualifying children for earned income credit?
a. Charlotte
b. Henry
c. Both Charlotte and Henry
d. Neither Charlotte or Henry
Basic Scenarios
27
Basic Scenario 4: Mark and Sue Malone
Interview Notes
• Mark and Sue are married and U.S. citizens with valid Social Security numbers.
• The Malones received wages and a large amount of taxable income not subject to
withholding.
• Mark did not have health insurance coverage for 2019 and Sue had health insurance coverage through her employer.
• The Malones have a $2,500 balance due on their joint return and want advice on
how to prevent a balance due next year. They do not anticipate a change in their
sources of income and amounts received next year.
Basic Scenario 4: Test Questions
7. One of the ways Mark and Sue can prevent having a balance due next year is to
use the Tax Withholding Estimator at IRS.gov and then adjust their withholding.
a. True
b. False
8. Mark and Sue should not file their tax return until they can pay the entire balance
due.
a. True
b. False
9. Mark is required to make a shared responsibility payment because he did not have
health insurance in 2019.
a. True
b. False
28
Basic Scenarios
Basic Scenario 5: Aurora Davis
Interview Notes
• Aurora and Oscar separated in 2017 and divorced in October 2019. She earned
$40,000 in wages and paid more than half the cost of keeping up her home in 2019.
• Aurora and Oscar have a son, Milo, who is 17 years old and unmarried.
• Aurora signed Form 8332 (Release/Revocation of Release of Claim to Exemption
for Child by Custodial Parent) allowing Oscar to claim Milo in 2019.
• Milo is a full-time student working towards a degree in computer information
systems. Milo lived on campus during the school year and spent the summer at
home with his mother.
• Milo does not a have a felony drug conviction and is not a qualifying child for anyone
except Aurora.
• Aurora paid $5,000 of Milo’s tuition that was not covered by his scholarship.
• Aurora provided more than half of her son’s support and all the cost of his room and
board on campus.
• Milo’s only income was $3,800 in wages and $400 of dividend income. He had no
federal or state tax withholding.
• Aurora and Milo are U.S. citizens and have valid Social Security numbers.
Basic Scenario 5: Test Questions
10. Is Milo required to file a federal tax return?
a. Yes, because Milo’s gross income was more than the gross income limit
required to file a federal tax return.
b. Yes, because Milo had unearned income over the unearned income limit of
$1,100 required to file a federal income tax return.
c. No, because Milo had earned income that was under the earnings limit that
requires him to file a tax return.
d. No, because Milo didn’t have any federal or state income tax withholding.
Basic Scenarios
29
11. Aurora’s most advantageous filing status for 2019 is Single.
a. True
b. False
12. Aurora cannot claim her son for the earned income credit because he did not live
with her for more than half the year and does not meet the residency test.
a. True. Milo only lived with his mother during the summer, which was less than
six months.
b. False. Attendance at school is considered a temporary absence and those
months are counted as time that Milo lived with her for the earned income
credit.
13. Milo is Oscar’s qualifying person for which of the following?
a. Head of Household filing status
b. Earned income credit
c. Credit for other dependents
d. Child tax credit
30
Basic Scenarios
Basic Scenario 6: Noah and Ella Neumann
Directions
Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario.
Note: When entering Social Security numbers (SSNs) or Employer Identification
Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.
Interview Notes
• Noah, age 65, and Ella, age 54, are married. They elect to file Married Filing Jointly.
• Their son Leo is 23 years old and a full-time college student in his third year of study.
He is pursuing a degree in Business Administration and does not have a felony drug
conviction. His 2018 Form 1098-T did not have an amount entered in box 2.
• Their son Freddie is 26 years old and graduated from college in June 2019. He had
a part-time job where he earned $7,000 in 2019.
• Noah and Ella paid more than half the cost of maintaining a home and provided over
half the support for both Leo and Freddie.
• Noah retired in 2019 and received interest income, Social Security benefits, and
wages from a part-time job.
• Ella received disability pension benefits. She has not reached minimum retirement
age.
• Noah and Ella made estimated tax payments of $500 for 2019.
• Noah and Ella do not have enough deductions to itemize.
• Leo received a scholarship and the terms require that it be used to pay tuition. Noah
and Ella paid the cost of Leo’s tuition and course-related books in 2019 not covered
by scholarship. They paid $75 for a school sweatshirt for homecoming and $4,500 for
a meal plan.
• If Noah and Ella receive a refund, they would like to deposit half into their checking
account and half into their savings account. Documents from County Bank show that
the routing number for both accounts is: 111000025. Their checking account number
is 987654321 and their savings account number is 234567890.
Basic Scenarios
31
32
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33
34
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35
36
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37
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Basic Scenarios
Basic Scenario 6: Test Questions
14. Ella’s disability pension is reported as wages and considered earned income for the
purposes of the earned income tax credit.
a. True
b. False
15. Amounts paid for room and board and meal plan are qualified education expenses
for claiming the American opportunity credit.
a. True
b. False
16. How much of Noah’s Social Security is taxable?
a. $0
b. $6,851
c. $2,175
d. $31,000
17. What is the amount of Noah and Ella’s standard deduction? $________.
18. Which of the following items are included in the total payments on Noah and Ella’s
tax return?
a. Federal income tax withheld from Forms W-2 and 1099
b. $500 estimated tax payment
c. Refundable credits
d. All of the above
19. Leo and Freddie are dependents on Noah and Ella’s 2019 tax return.
a. True
b. False
Basic Scenarios
39
Basic Scenario 7: Evie Adams
Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario.
Note: When entering Social Security numbers (SSNs) or Employer Identification
Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.
Interview Notes
• Evie is single and has two young girls, Poppy and Lily, who lived with her all year.
• Evie paid more than half of the support for her daughters and all the cost of keeping
up the home.
• Evie was unemployed for two months (March and April). She cashed in her 401(k)
and used the money to pay for living expenses.
• Evie is paying off a student loan that she took out when she attended college for her
bachelor’s degree.
• She took some courses this year at Southwest College to improve her job skills as
an educator. She did not receive a Form 1098-T for 2018.
• Evie was an elementary school teacher from May to December and paid $550 out of
pocket for classroom supplies.
• She went to the local casino and won some money in 2019. During the interview she
mentions that she had gambling losses of $700.
40
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41
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43
44
Basic Scenarios
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45
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47
Basic Scenario 7: Test Questions
20. What is the total amount of adjustments on Evie’s tax return?
a. $250
b. $600
c. $850
d. $1,550
21. What is the lifetime learning education credit amount on Evie’s tax return?
$________.
22. What is the total federal income tax withheld on Evie’s tax return? $_______.
23. What is the amount of gambling winnings reported on her 2019 return?
a. $0
b. $1,300
c. $2,000
d. $3,200
24. Evie is eligible to claim which of the following credits on her 2019 tax return?
a. Child and dependent care credit
b. Child tax credit
c. Earned income tax credit
d. All of the above
25. Evie must pay an additional tax on the early distribution from her 401(k) of:
a. 0%
b. 5%
c.
10%
d. 15%
48
Basic Scenarios
Basic Course Retest Questions
Directions
The first five scenarios do not require you to prepare a tax return. Read the interview
notes for each scenario carefully and use your training and resource materials to
answer the questions after the scenarios.
Basic Scenario 1: Olivia Otis
Interview Notes
• Olivia is single, 66 years old, and not blind.
• She paid all the cost of keeping up her home. She earned $55,000 in wages for
2019.
• Olivia provided all the support for her two grandchildren who lived with her all year.
Cora is 11 years old and Jack is 15 years old.
• She does not have enough deductions to itemize.
• Olivia, Cora, and Jack are all U.S. citizens with valid Social Security numbers.
Basic Scenario 1: Retest Questions
1. Olivia’s standard deduction is $20,000.
a. True
b. False
2. The maximum amount of child tax credit Olivia is able to claim per qualifying child
is $1,000.
a. True
b. False
Basic Scenarios Retest Questions
49
Basic Scenario 2: Felix and Isabella Franklin
Interview Notes
• Felix and Isabella Franklin have been married since 2016. Felix is a U.S. citizen
with a valid Social Security number. Isabella is a resident alien with an Individual
Taxpayer Identification Number (ITIN). They elect to file Married Filing Jointly.
• Felix worked in 2019 and earned wages of $40,000. Isabella worked part-time and
earned $10,000.
• They have two children: Rose, who is 3 years old, and Iris, who is 8 years old. Both
children were supported by their parents all year. Rose is a U.S. citizen and has a
valid Social Security number. Iris is a resident alien and has an ITIN.
• Felix and Isabella paid $5,000 in daycare for Rose and Iris. The statement from
the daycare provider includes the provider’s name, address, valid Employer
Identification Number, and the amount paid for Rose and Iris’s care.
• Felix, Isabella, Rose, and Iris lived together in the U.S. all year.
Basic Scenario 2: Retest Questions
3. The Franklins are eligible to claim the earned income credit.
a. True
b. False
4. Iris is a qualifying child for the child tax credit.
a. True
b. False
50
Basic Scenarios Retest Questions
Basic Scenario 3: Henry Howard and Charlotte Criswell
Interview Notes
• Henry and Charlotte are both 28 years old.
• Henry and Charlotte separated in 2018 and their divorce was finalized in January
2019. During 2019, Charlotte paid Henry alimony payments of $12,000.
• Charlotte earned $85,000 in wages during 2019. Henry earned $13,000 in wages.
• Henry has two children from a previous relationship. Ethan is 9 and James is 6
years old and they lived with Henry for all of 2019. Ethan and James did not provide
over half of their own support.
• Henry paid all the rent, utilities, and household expenses.
• Henry, Charlotte, Ethan, and James are all U.S. citizens with valid Social Security
numbers.
Basic Scenario 3: Retest Questions
5. Henry is not required to report the $12,000 alimony received as income and
Charlotte cannot claim alimony paid as an adjustment to income.
a. True
b. False
6. Neither Charlotte nor Henry can claim Ethan and James as qualifying children for
the earned income credit.
a. True
b. False
Basic Scenarios Retest Questions
51
Basic Scenario 4: Mark and Sue Malone
Interview Notes
• Mark and Sue are married and U.S. citizens with valid Social Security numbers.
• The Malones received wages and a large amount of taxable income not subject to
withholding.
• Mark did not have health insurance coverage for 2019 and Sue had health insurance coverage through her employer.
• The Malones have a $2,500 balance due on their joint return and want advice on
how to prevent a balance due next year. They do not anticipate a change in their
sources of income and amounts received next year.
Basic Scenario 4: Retest Questions
7. What actions should Mark and Sue take to prevent having a balance due next
year? (Choose the best answer.)
a. They should use the IRS Tax Withholding Estimator and adjust their withholding.
b. They should refer to Publication 505, Withholding and Estimated Tax, and
make estimated tax payments.
c. Both a and b.
d. None of the above.
8. What is the best option for Mark and Sue if they are not able to pay their entire
balance due by the due date of the return?
a. Wait to file their return until they have the money to pay the full amount owed.
b. File Form 4868, Application for Automatic Extension of Time to File U.S.
Individual Income Tax Return.
c. File their tax return, pay as much as they can by the due date of the return and
request a payment plan.
d. Both a and b.
9. The shared responsibility payment for 2019 is zero.
a. True
b. False
52
Basic Scenarios Retest Questions
Basic Scenario 5: Aurora Davis
Interview Notes
• Aurora and Oscar separated in 2017 and divorced in October 2019. She earned
$40,000 in wages and paid more than half the cost of keeping up her home in 2019.
• Aurora and Oscar have a son, Milo, who is 17 years old and unmarried.
• Aurora signed Form 8332 (Release/Revocation of Release of Claim to Exemption
for Child by Custodial Parent) allowing Oscar to claim Milo in 2019.
• Milo is a full-time student working towards a degree in computer information
systems. Milo lived on campus during the school year and spent the summer at
home with his mother.
• Milo does not a have a felony drug conviction and is not a qualifying child for anyone
except Aurora.
• Aurora paid $5,000 of Milo’s tuition that was not covered by his scholarship.
• Aurora provided more than half of her son’s support and all the cost of his room and
board on campus.
• Milo’s only income was $3,800 in wages and $400 of dividend income. He had no
federal or state tax withholding.
• Aurora and Milo are U.S. citizens and have valid Social Security numbers.
Basic Scenario 5: Retest Questions
10. Milo is required to file a federal tax return.
a. True
b. False
11. What is the most advantageous filing status allowable for Aurora?
a. Single
b. Married Filing Separately
c. Married Filing Jointly
d. Head of Household
Basic Scenarios Retest Questions
53
12. Milo is Aurora’s qualifying child for the earned income credit.
a. True
b. False
13. Milo is a qualifying person for Oscar to claim Head of Household filing status, credit
for other dependents, and the earned income credit.
a. True
b. False
54
Basic Scenarios Retest Questions
Basic Scenario 6: Retest Questions
Directions
Read the scenario information for Noah and Ella Neumann beginning on page 31.
14. Ella’s disability payments should be reported on the Pensions and Annuities line on
Form 1040.
a. True
b. False
15. Noah and Ella can claim $2,000 of qualified education expenses to calculate the
American opportunity credit.
a. True
b. False
16. The taxable amount of Noah’s Social Security income is $16,000.
a. True
b. False
17. Noah and Ella have an increased standard deduction because they are both 65
years old.
a. True
b. False
18. What is the amount of federal income tax withholding? $_______.
19. Who can Noah and Ella claim as a dependent on their 2019 tax return?
a. Leo
b. Freddie
c. Both Leo and Freddie
d. Neither Leo nor Freddie
Basic Scenarios Retest Questions
55
Basic Scenario 7: Retest Questions
Directions
Read the scenario information for Evie Adams beginning on page 40.
20. Evie can claim up to $250 of her classroom expenses as an adjustment to income
on her 2019 tax return.
a. True
b. False
21. Evie qualifies for the lifetime learning credit.
a. True
b. False
22. What is the total federal income tax withheld shown on Evie’s tax return?
a. $2,600
b. $2,950
c. $3,670
d. $3,970
23. What is total amount of gambling winnings reported on Evie’s tax return?
$________.
24. Evie is eligible to claim the earned income tax credit on her 2019 tax return.
a. True
b. False
25. Evie is subject to the 10% additional tax from her 401(k) distribution.
a. True
b. False
56
Basic Scenarios Retest Questions
Advanced Course Scenarios and Test Questions
Directions
The first five scenarios do not require you to prepare a tax return. Read the interview
notes for each scenario carefully and use your training and resource materials to
answer the questions after the scenarios.
Advanced Scenario 1: Tamara Dennison
Interview Notes
• Tamara is 52 years old and her divorce became final on September 20, 2014 and
has not been modified. The divorce decree stipulates she is required to pay alimony
of $500 a month to her ex-husband. She paid him a total of $6,000 in 2019.
• Tamara pays all the cost of keeping up her home in the United States. She earned
$40,500 in wages in 2019, her only income.
• Tamara’s daughter, Kimberly, lived with Tamara all year. Kimberly is 18 years old,
single, and earned $8,000 in wages.
• Kimberly’s son, Christian, was born on December 2, 2019. Christian lived in
Tamara’s home all year.
• Tamara provides more than half of the support for both Kimberly and Christian.
• Tamara, Kimberly, and Christian are all U.S. citizens with valid Social Security
numbers.
Advanced Scenario 1: Test Questions
1. Tamara and her ex-husband’s divorce was final before December 31, 2018. How
does this affect their 2019 tax returns?
a. Tamara is not eligible to deduct alimony paid as an adjustment to income.
Her ex-husband is not required to report alimony received as income.
b. Tamara is not eligible to deduct alimony paid as an adjustment to income.
Her ex-husband is required to report alimony received as income.
c. Tamara is allowed to deduct alimony paid as an adjustment to income.
Her ex-husband is not required to report alimony received as income.
d. Tamara is allowed to deduct the alimony paid as an adjustment to income.
Her ex-husband is required to include the alimony received as income.
Advanced Scenarios
57
2. What is the most beneficial filing status allowable for Tamara?
a. Married Filing Separately
b. Married Filing Jointly
c. Head of Household
d. Single
3. Who can Tamara claim as a qualifying child(ren) for the earned income credit?
a. Tamara has no qualifying children.
b. Tamara can claim Christian, but not Kimberly.
c. Tamara can claim Kimberly, but not Christian.
d. Tamara can claim both Kimberly and Christian.
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Advanced Scenarios
Advanced Scenario 2: Charlie and Samantha Collins
Interview Notes
• Charlie and Samantha are resident aliens, married, and want to file a joint return.
• They have three children. Harry is 8 years old and a resident alien. Sherry is 3 years
old and Maria is 1 year old and both are U.S. citizens. All three children lived with
their parents in the United States all year.
• Charlie, Samantha, and Harry have Individual Taxpayer Identification Numbers
(ITINs). Sherry and Maria have Social Security numbers.
• Charlie earned $38,000 in wages and Samantha earned $11,000 in wages. They
had no other income.
• Charlie and Samantha provided all the support for their three children.
• Maria and Sherry attended daycare while Charlie and Samantha were at work.
• Charlie and Samantha did not receive benefits from a dependent care benefits plan
or flexible spending account.
• The daycare center provided the Collins with a statement indicating the amount of
$5,150 paid during 2019. The statement included the provider’s name, address,
Employer Identification Number, and phone number.
Advanced Scenario 2: Test Questions
4. Who can Charlie and Samantha claim as a qualifying dependent(s) for the credit for
other dependents?
a. Harry
b. Sherry and Maria
c. Harry, Sherry, and Maria
d. Since Charlie and Samantha have ITINS, they cannot claim the credit for other
dependents.
5. Which credit(s) are Charlie and Samantha eligible to claim?
a. Credit for other dependents and earned income credit.
b. Child tax credit and earned income credit.
c. Child tax credit, child and dependent care credit, and credit for other dependents.
d. They don’t qualify for any credits.
Advanced Scenarios
59
Advanced Scenario 3: Gail Baker
Interview Notes
• Gail is single and earned $28,000 as a cashier, her only income.
• Gail’s son Tony is 17 years old and a full-time student in high school.
• Tony received Social Security survivor benefits of $5,000 in 2019. None of those
benefits were taxable. He earned $10,000 during the summer working as a website
developer. Tony had no withholding in box 2 of his Form W-2.
• He used his Social Security survivor benefits and wages to provide over half of his
own support.
• Gail and Tony lived together all of 2019 and are U.S. citizens with valid Social
Security numbers.
Advanced Scenario 3: Test Questions
6. Which of the following statements is true?
a. Tony is not required to file a tax return because his gross income is below the
filing requirement.
b. Tony is required to file because his total income is over $12,200.
c.
Tony is required to file because Gail can claim him as a dependent and his
income is over $4,200.
d. Tony is not required to file because his Social Security benefits are reported on
Gail’s return.
7. Gail can claim Tony on her tax return as a qualifying child for the earned income
credit.
a. True
b. False
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Advanced Scenario 4: Sandra Clark
Interview Notes
• Sandra Clark is 45 years old.
• Sandra works as a clerk and earned $27,500 in 2019.
• Sandra’s daughter, Debbie, is 26 years old and she is not disabled.
• Debbie lived with Sandra as a member of her household for all of 2019.
• Debbie works as a receptionist and earned $18,250 in 2019.
• Sandra purchased health insurance coverage for herself and Debbie on the same
policy from the Marketplace for all of 2019.
• Sandra received Form 1095-A from the Marketplace showing that she and Debbie
are both covered individuals for all of 2019.
Advanced Scenario 4: Test Questions
8. Can Sandra claim Debbie as a qualifying relative on her 2019 return?
a. Yes, because Debbie lived with Sandra as a member of her household for all of
2019.
b. No, because Debbie had gross income of more than $4,200 during the tax
year.
9. Which of the following statements is true regarding the Form 1095-A?
a. Both Sandra and Debbie can claim the entire amount of the premium tax credit
since both of their names are shown on Form 1095-A as covered individuals.
b. Sandra should reconcile the entire premium tax credit information from her
Form 1095-A on her tax return.
c. Debbie should reconcile the entire premium tax credit information from
Sandra’s Form 1095-A on her tax return.
d. Sandra and Debbie have a shared policy. Information on the Form 1095-A
must be allocated between their two tax returns. Both of their returns are out of
scope.
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Advanced Scenario 5: Archie Hamilton
Interview Notes
• Archie Hamilton is 45 years old and single.
• Archie had wage income of $55,000. He also had gambling winnings of $1,000.
• He is not sure if he should itemize or take the standard deduction.
• Archie paid the following:
–– $5,200 qualifying home mortgage interest.
–– $9,507 for real estate taxes.
–– $5,040 for state income taxes withheld in 2019.
–– Unreimbursed doctor and dentist bills in the amount of $7,000.
–– Unreimbursed prescription drugs for $14.
–– Vitamins for $120.
–– A statement received from his church showing donations made throughout the
year totaling $1,200.
–– Receipts for donations of furniture and clothing in good, used condition to
Goodwill. The total estimated fair market value is $100.
–– Tax preparation fee of $315 for his 2018 tax return.
–– $50 paid in 2019 on his 2018 balance due state income tax return.
–– $45 investment expense
–– $250 in gambling losses
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Advanced Scenario 5: Test Questions
10. Archie can claim total deductible medical expenses that exceed 7.5% of his
adjusted gross income.
a. True
b. False
11. What is the total amount of state income and real estate taxes deductible on
Archie’s Form 1040, Schedule A?
a. $14,597
b. $14,547
c. $10,000
d. $9,507
12. Which of the following is Archie able to claim as a deduction on his Form 1040,
Schedule A?
a. Investment expense
b. Tax preparation fee
c. Gambling losses
d. None of the above
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Advanced Scenario 6: Jennifer Morrison
Directions
Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario.
Note: When entering Social Security numbers (SSNs) or Employer Identification
Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.
Interview Notes
64
•
Jennifer was divorced from her husband in 2014 and has not remarried.
•
Jennifer provided the entire cost of maintaining the household and over half of the support
for her children, Carla and Ollie, in 2019.
•
Jennifer claimed earned income credit (EIC) for Ollie and Carla in 2016, but they lived with
their father for 8 months that year. Jennifer received a letter from Internal Revenue Service
disallowing EIC for tax years 2017 and 2018.
•
Jennifer is a full-time kindergarten teacher and spent $350 to buy books and supplies for
her class.
•
Ollie attended daycare while Jennifer worked.
•
In August 2019, Jennifer’s daughter, Carla, enrolled in college to pursue a bachelor’s
degree. She had no previous post-secondary education. Yuma College is a qualified
educational institution.
•
Carla does not have a felony drug conviction.
•
Jennifer brought a Form 1098-T and an account statement from the college. Carla’s
purchases at the college bookstore were for course-related books.
•
The terms of Carla’s scholarship require that it be used to pay for tuition.
•
Jennifer received a Form 1099-C for canceled credit card debt. Using the insolvency
determination worksheet in Publication 4012, Jennifer determined the value of her assets
exceeded her liabilities and that she was solvent at the time the credit card debt was
canceled.
•
Jennifer purchased her own health insurance through the Marketplace. She received Form
1095-A. Carla and Ollie were on their father’s health insurance plan through his employer
all year.
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Advanced Scenario 6: Test Questions
13. Jennifer wants to have her refund directly deposited into her checking account.
What is her bank routing number?
a. 123456789
b. 123456789 1234
c. 111000025
d. The bank routing number is not needed for direct deposit.
14. How do Jennifer’s educator expenses affect her tax return?
a. Jennifer can claim these expenses as a miscellaneous itemized deduction on
her Schedule A.
b. These expenses do not affect her tax return.
c. $250 is deducted as an adjustment to income on Form 1040, Schedule 1.
d. Jennifer is entitled to deduct the full $350 as an adjustment to income on Form
1040, Schedule 1.
15. What is the amount of Jennifer’s child and dependent care credit shown on Form
2441, Child and Dependent Care Expenses?
a. $0
b. $525
c. $650
d. $2,500
16. The total amount of qualified education expenses used in the calculation of
Jennifer’s 2019 American opportunity credit is:
a. $3,000
b. $3,650
c. $3,970
d. $4,000
17. How does the Form 1095-A, Health Insurance Marketplace Statement, affect
Jennifer’s tax return?
a. Jennifer can claim an affordability exemption.
b. Jennifer must pay an individual shared responsibility payment.
c. It does not affect the tax return.
d. Jennifer must file Form 8962, Premium Tax Credit (PTC), to reconcile the
advanced premium tax credit.
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18. Jennifer’s income is too high to qualify for the credit on Form 8880, Credit for
Qualified Retirement Savings Contributions.
a. True
b. False
19. Jennifer’s canceled debt on Form 1099-C, Cancellation of Debt, does not need to
be reported on her tax return.
a. True
b. False
20. In order to claim EIC for 2019, Jennifer must file Form 8862, Information To Claim
Certain Credits After Disallowance, with her tax return.
a. True
b. False
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Advanced Scenario 7: Mark and Barbara Matthews
Directions
Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario.
Note: When entering Social Security numbers (SSNs) or Employer Identification
Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.
Interview Notes
• Mark and Barbara are married and want to file a joint return.
• Mark retired and began receiving retirement income on March 1, 2017. No distributions were received prior to his retirement. Mark selected a joint survivor annuity for
these payments. The plan cost at annuity start date was $14,500. Mark has already
recovered $1,029 of his cost in the plan.
• The Matthews received a $125 state income tax refund from their 2018 state tax
return. The Matthews do not have enough deductions to itemize for 2019 and they
have never itemized deductions.
• Mark and Barbara stated if they are entitled to a refund, they want half of it deposited into their checking account and the other half deposited into their savings
account. The checking account number is 123456789 and the savings account
number is 987654321. Both accounts are from Adelphi Bank and Trust.
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ABC INVESTMENTS
2019 TAX REPORTING STATEMENT
456 Pima Plaza
Your City, YS ZIP
Mark and Barbara Matthews
742 Red Rooster Road
Your City, YS ZIP
Account No. 111-222
Recipient ID No. 317-00-XXXX
Payer’s Fed ID Number: 40-200XXXX
Form 1099-DIV* 2019 Dividends and Distributions
Copy B for Recipient (OMB NO. 1545-0110)
1aTotal Ordinary Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220.00
1b Qualified Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189.00
2a Total Capital Gain Distributions (Includes 2b- 2d). . . . . . . . . . . . . . . . 308.00
2b Capital Gains that represent Unrecaptured 1250 Gain. . . . . . . . . . . . . . 0.00
2c Capital Gains that represent Section 1202 Gain. . . . . . . . . . . . . . . . . . . 0.00
2d Capital Gains that represent Collectibles (28%) Gain. . . . . . . . . . . . . . . 0.00
3 Nondividend Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.00
4 Federal Income Tax Withheld. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
5 Section 199A Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
6 Investment Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
7 Foreign Tax Paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.00
8 Foreign Country or U.S. Possession. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
9 Cash Liquidation Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
10 Non-Cash Liquidation Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
11 Exempt Interest Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
12 Specified Private Activity Bond Interest Dividends. . . . . . . . . . . . . . . . . 0.00
13 State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14 State Identification No. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15 State Tax Withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Form 1099-MISC* 2019 Miscellaneous Income
Copy B for Recipient (OMB NO. 1545-0115)
2
4
8
16
17
18
Royalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Federal Income Tax Withheld. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Substitute Payments in Lieu of Dividends or Interest. . . . . . . . . . . . . . . 0.00
State Tax Withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
State/ Payer’s State No.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Form 1099-INT* 2019 Interest Income
Copy B for Recipient (OMB NO. 1545-0112)
1
2
3
4
5
6
7
8
9
14
Interest Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Early Withdrawal Penalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Interest on U.S. Savings Bonds and Treas. Obligations. . . . . . . . . . . . . 0.00
Federal Income Tax Withheld. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Investment Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Foreign Tax Paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Foreign Country or U.S. Possession. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-Exempt Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Specified Private Activity Bond Interest . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Tax-Exempt Bond CUSIP No.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary of 2019 Proceeds From Broker and
Barter Exchange Transactions
Sales Price of Stocks, Bonds, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,300.00
Federal Income Tax Withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Gross Proceeds from each of your security transactions are reported individually to the IRS. Refer to the Form 1099-B section of this statement.
Report gross proceeds individually for each security on the appropriate IRS tax return. Do not report gross proceeds in aggregate.
Page 1 of 2
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ABC INVESTMENTS
2019 TAX REPORTING STATEMENT
456 Pima Plaza
Your City, YS ZIP
Mark and Barbara Matthews
742 Red Rooster Road
Your City, YS ZIP
Account No. 111-222
Recipient ID No. 317-00-XXXX
Payer’s Fed ID Number: 40-200XXXX
FORM 1099-B* 2019 Proceeds from Broker and Barter Exchange Transactions
Copy B for Recipient OMB NO. 1545-0715
Short-term transactions for which basis is reported to the IRS
Report on Form 8949 with Box A checked and/or Schedule D, Part I
(This Label is a Substitute for Boxes 1c & 6)
8 Description, 1d Stock or Other Symbol, CUSIP
Action
1b Date
Acquired
1c Date sold
disposed
1a Quantity
Sold
(IRS Form 1099-B box numbers are shown below in bold type)
1d Proceeds
1e Cost or
Other Basis
Gain / Loss (-)
1g Wash Sale
Loss Disallowed
4 Federal Income
Tax Withheld
14
State
15 State Tax
Withheld
Idaho Co. Common Stock
Sale
02/01/2019 10/01/2019 250.000
TOTALS
1,700.00
2,189.00
1,700.00
2,189.00
(489.00)
FORM 1099-B* 2019 Proceeds from Broker and Barter Exchange Transactions
Copy B for Recipient OMB NO. 1545-0715
Long-term transactions for which basis is not reported to the IRS
Report on Form 8949 with Box E checked and/or Schedule D, Part II
(This Label is a Substitute for Boxes 1c & 6)
8 Description, 1d Stock or Other Symbol, CUSIP
Action
1b Date
Acquired
1c Date sold
disposed
1a Quantity
Sold
(IRS Form 1099-B box numbers are shown below in bold type)
1d Proceeds
1e Cost or
Other Basis
Gain / Loss (-)
1g Wash Sale
Loss Disallowed
4 Federal Income
Tax Withheld
14
State
15 State Tax
Withheld
Iowa Co. Common Stock
Sale
06/15/1999 03/01/2019 200.000
TOTALS
4,600.00
1,700.00
4,600.00
1,700.00
2,900.00
This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty
or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported.
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Advanced Scenario 7: Test Questions
21. Since the Matthews did not itemize for 2018, their state refund is not reported on
Form 1040.
a. True
b. False
22. What is the amount of taxable interest reported on the Matthews’ Form 1040?
a. $50
b. $250
c. $300
d. $350
23. What is the total net amount of capital gain reported on Form 1040?
a. $308
b. $2,411
c. $2,719
d. $2,900
24. What is the taxable portion of Mark’s pension from Pine Corporation using the
simplified method? $________.
25. Is Mark’s Social Security income taxable?
a. Yes, a portion of the Social Security income is taxable.
b. Yes, all of the Social Security income is taxable.
c. No, because their total income is less than $32,000.
d. No, Social Security benefits are never taxable.
26. The Matthews want to split their refund between savings and checking accounts.
How is this accomplished, if possible?
a. Complete Form 8888, Allocation of Refund (Including Savings Bond
Purchases).
b. Splitting a refund is not possible.
c.
This can only be accomplished if filing a paper return.
d. The Matthews do not have an overpayment on their return.
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27. What is the total federal income tax withholding reported on the Matthews’ Form
1040?
a. $2,803
b. $3,974
c. $5,056
d. $6,778
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Advanced Scenario 8: Ramon Torrez
Directions
Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario.
Note: When entering Social Security numbers (SSNs) or Employer Identification
Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.
Interview Notes
• Ramon works as a self-employed ride share driver.
–– Ramon is a cash-basis taxpayer who materially participates in the operation of
his business. He did not make any payments that would require him to file Form
1099.
–– Ramon uses business code 485990.
–– Ramon had no prior year unallowed losses.
• He received Form 1099-MISC and Form 1099-K from the ride share company. He
had an additional $2,745 in cash tip income from individual customers NOT included
on the Forms 1099.
• Ramon provided a statement from the ride share company that indicated the amount
of mileage driven and fees paid for the year. These fees are considered ordinary and
necessary for the ride share business.
–– 30,200 miles driven while transporting
customers.
–– Ride share fee: $4,800
–– Safe driver fee: $140
–– Airport fee: $515
–– GPS device fee: $320
• Ramon’s recordkeeping application shows
he drove 5,830 miles between rides; 2,700
miles driven between his home and his first
and last customer of the day. He had the following miscellaneous expenses:
–– Snacks for customers: $280
–– Auto deodorizers: $15
–– Phone chargers for customer use only: $120
–– Meals eaten while waiting for customers: $1,200
• The total mileage on his car for 2019 was 44,730 miles, of that 6,000 was personal
miles. He placed his car, a 2016 sedan, in service on January 6, 2017. He always
takes the standard mileage rate. This is Ramon’s only car and it was available for
personal use.
• Ramon found his Form 1098-E online stating he paid $3,600 in student loan interest
in 2019.
• Ramon did not have any health insurance for the year.
• Ramon received a CP01-A Notice assigning him an identity protection personal
identification number (IP PIN). His IP PIN is 357900.
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Advanced Scenario 8: Test Questions
Directions
Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario.
Note: When entering Social Security numbers (SSNs) or Employer Identification
Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.
28. The only income Ramon needs to report on his Schedule C is his income from
Form 1099-K, Payment Card and Third Party Network Transactions.
a. True
b. False
29. Ramon’s mileage expense deduction (at the standard mileage rate) for his business as a ride share driver (rounded to the nearest dollar) is $17,516.
a. True
b. False
30. What is the amount of Ramon’s student loan interest deduction shown on Form
1040, Schedule 1? $________.
31. How does Ramon’s self-employment tax affect his tax return?
a. Ramon’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, Profit or Loss From Business.
c. The self-employment tax is added to his other taxes and the full amount is
deducted as an adjustment to income.
d. The self-employment tax is added to his other taxes and one half of the selfemployment tax is an adjustment to income.
32. What is the amount of Ramon’s qualified business income (QBI) deduction?
a. $1,800, 20% of Ramon’s net qualified business income.
b. $0 because ride share is considered a specified service business.
c. $0 because Ramon does not have taxable income before the QBI deduction.
d. $0 because Ramon has no qualified business income.
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33. Ramon did not have health insurance in 2019, how does that affect his return?
a. He must pay a $695 shared responsibility payment (SRP).
b. It has no effect on his Form 1040. The “Full-year health care coverage or
exempt” box is eliminated from Form 1040 because the shared responsibility
payment is reduced to zero for tax year 2019.
c. Ramon can claim a short coverage gap exemption to avoid the shared responsibility payment.
d. Ramon can claim the affordability exemption to avoid the shared responsibility
payment.
34. Ramon has been assigned an Identity Protection PIN by the IRS. How does this
affect preparation of Ramon’s tax return?
a. The PIN must be entered during tax return preparation.
b. The PIN will appear on Ramon’s Form 1040.
c. Failure to enter the PIN will delay processing of Ramon’s tax return.
d. All of the above.
35. What is the reason Ramon does not qualify for the earned income tax credit?
a. His income is too high.
b. His self employment income is not considered earned income.
c. His student loan interest was $3,600.
d. He had no qualifying children and he was under age 25.
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Advanced Course Retest Questions
Directions
The first five scenarios do not require you to prepare a tax return. Read the interview
notes for each scenario carefully and use your training and resource materials to
answer the questions after the scenarios.
Advanced Scenario 1: Tamara Dennison
Interview Notes
• Tamara is 52 years old and her divorce became final on September 20, 2014 and
has not been modified. The divorce decree stipulates she is required to pay alimony
of $500 a month to her ex-husband. She paid him a total of $6,000 in 2019.
• Tamara pays all the cost of keeping up her home in the United States. She earned
$40,500 in wages in 2019, her only income.
• Tamara’s daughter, Kimberly, lived with Tamara all year. Kimberly is 18 years old,
single, and earned $8,000 in wages.
• Kimberly’s son, Christian, was born on December 2, 2019. Christian lived in
Tamara’s home all year.
• Tamara provides more than half of the support for both Kimberly and Christian.
• Tamara, Kimberly, and Christian are all U.S. citizens with valid Social Security
numbers.
Advanced Scenario 1: Retest Questions
1. Tamara and her ex-husband’s divorce was final before December 31, 2018.
Tamara is allowed to deduct alimony paid as an adjustment to income on her tax
return. Her ex-husband is required to include the alimony received as income on
his 2019 tax return.
a. True
b. False
2.
Tamara’s most beneficial filing status allowable is Single.
a. True
b. False
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3. Tamara has two qualifying children for the earned income credit.
a. True
b. False
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Advanced Scenario 2: Charlie and Samantha Collins
Interview Notes
• Charlie and Samantha are resident aliens, married, and want to file a joint return.
• They have three children. Harry is 8 years old and a resident alien. Sherry is 3 years
old and Maria is 1 year old and both are U.S. citizens. All three children lived with
their parents in the United States all year.
• Charlie, Samantha, and Harry have Individual Taxpayer Identification Numbers
(ITINs). Sherry and Maria have Social Security numbers.
• Charlie earned $38,000 in wages and Samantha earned $11,000 in wages. They
had no other income.
• Charlie and Samantha provided all the support for their three children.
• Maria and Sherry attended daycare while Charlie and Samantha were at work.
• Charlie and Samantha did not receive benefits from a dependent care benefits plan
or flexible spending account.
• The daycare center provided the Collins with a statement indicating the amount of
$5,150 paid during 2019. The statement included the provider’s name, address,
Employer Identification Number, and phone number.
Advanced Scenario 2: Retest Questions
4. Who can Charlie and Samantha claim for the child tax credit?
a. Harry, Sherry, and Maria
b. Harry and Maria
c. Sherry and Maria
d. Since Charlie and Samantha have ITINS, they are not eligible to claim the child
tax credit.
5. Charlie and Samantha are eligible to claim the credit for other dependents, child
and dependent care credit, and child tax credit.
a. True
b. False
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Advanced Scenario 3: Gail Baker
Interview Notes
• Gail is single and earned $28,000 as a cashier, her only income.
• Gail’s son Tony is 17 years old and a full-time student in high school.
• Tony received Social Security survivor benefits of $5,000 in 2019. None of those
benefits were taxable. He earned $10,000 during the summer working as a website
developer. Tony had no withholding in box 2 of his Form W-2.
• He used his Social Security survivor benefits and wages to provide over half of his
own support.
• Gail and Tony lived together all of 2019 and are U.S. citizens with valid Social
Security numbers.
Advanced Scenario 3: Retest Questions
6. Tony is required to file a tax return.
a. True
b. False
7. Which of the following credits is Gail eligible to claim on her tax return?
a. Child tax credit
b. Credit for other dependents
c. Earned income credit
d. Gail is not eligible to claim any credits on her tax return
96
Advanced Scenarios
Advanced Scenario 4: Sandra Clark
Interview Notes
• Sandra Clark is 45 years old.
• Sandra works as a clerk and earned $27,500 in 2019.
• Sandra’s daughter, Debbie, is 26 years old and she is not disabled.
• Debbie lived with Sandra as a member of her household for all of 2019.
• Debbie works as a receptionist and earned $18,250 in 2019.
• Sandra purchased health insurance coverage for herself and Debbie on the same
policy from the Marketplace for all of 2019.
• Sandra received Form 1095-A from the Marketplace showing that she and Debbie
are both covered individuals for all of 2019.
Advanced Scenario 4: Retest Questions
8. Debbie qualifies as Sandra’s dependent.
a. True
b. False
9. Sandra and Debbie have a shared policy. Information on the Form 1095-A must be
allocated between their two tax returns. Both of their returns are out of scope.
a. True
b. False
Advanced Scenarios
97
Advanced Scenario 5: Archie Hamilton
Interview Notes
• Archie Hamilton is 45 years old and single.
• Archie had wage income of $55,000. He also had gambling winnings of $1,000.
• He is not sure if he should itemize or take the standard deduction.
• Archie paid the following:
–– $5,200 qualifying home mortgage interest.
–– $9,507 for real estate taxes.
–– $5,040 for state income taxes withheld in 2019.
–– Unreimbursed doctor and dentist bills in the amount of $7,000.
–– Unreimbursed prescription drugs for $14.
–– Vitamins for $120.
–– A statement received from his church showing donations made throughout the
year totaling $1,200.
–– Receipts for donations of furniture and clothing in good, used condition to
Goodwill. The total estimated fair market value is $100.
–– Tax preparation fee of $315 for his 2018 tax return.
–– $50 paid in 2019 on his 2018 balance due state income tax return.
–– $45 investment expense
–– $250 in gambling losses
. Advanced
Scenario 5: Retest Questions
10. Archie can claim total deductible medical expenses that exceed what percentage of
his adjusted gross income?
a. 2.0%
b. 7.5%
c.
10%
d. No limit
11. What is the total amount of state income and real estate taxes that Archie is
allowed to deduct on his Form 1040, Schedule A? $________.
12. Archie can claim his 2018 tax preparation fee as a miscellaneous deduction on
Form 1040, Schedule A.
a. True
b. False
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Advanced Scenarios
Advanced Scenario 6: Retest Questions
Directions
Refer to the scenario information for Jennifer Morrison, beginning on page 64.
13. Jennifer wants to have her refund directly deposited into her checking account.
What is her account number?
a. 123456789
b. 123456789 1234
c. 111000025
d. The account number is confidential information that is not entered on a tax
return.
14. Jennifer is eligible to deduct $350 as an adjustment to income on Form 1040,
Schedule 1 for qualified educator expenses.
a. True
b. False
15. What is the amount of the child and dependent care credit Jennifer can claim on
Form 2441, Child and Dependent Care Expenses? $________.
16. Jennifer’s total amount of qualified education expenses for the American opportunity credit is $4,000.
a. True
b. False
17. Jennifer must file Form 8962, Premium Tax Credit, to reconcile her advanced
premium tax credit.
a. True
b. False
18. What is the amount of Jennifer’s retirement savings contributions credit on Form
8880, Credit for Qualified Retirement Savings Contributions?
a. $2,000
b. $1,000
c. $200
d. $0
Advanced Scenarios Retest Questions
99
19. Canceled debt from Form 1099-C, Cancellation of Debt, is reported on Jennifer’s
tax return as:
a. Wages
b. Other income
c. Capital gain
d. It is not reported on the return
20. Jennifer’s earned income credit was disallowed for tax year 2016. How does that
affect the preparation of her 2019 tax return?
a. She is disallowed forever.
b. She must file Form 8862, Information to Claim Certain Credits After
Disallowance.
c. She is disallowed EIC for 10 years.
d. There is no impact.
100
Advanced Scenarios Retest Questions
Advanced Scenario 7: Retest Questions
Directions
Refer to the scenario information for Mark and Barbara Matthews, beginning on page
75.
21. What is the correct way to report the Matthews’ state income tax refund?
a. The state income tax refund is reported on Form 1040, Schedule 1.
b. One half of the state income tax refund is reported on Form 1040, Schedule 1.
c. State income tax refunds are never reported on a federal tax return.
d. Since the Matthews did not itemize for 2018, the state refund is not reported on
their Form 1040.
22. The correct amount of taxable interest on Form 1040 is $300.
a. True
b. False
23. What is the net capital gain or loss reported on Form 1040? $________.
24. What is the taxable portion of Mark’s pension from Pine Corporation using the
simplified method?
a. $561
b. $14,500
c. $21,971
d. $22,532
25. None of Mark’s Social Security income is taxable.
a. True
b. False
26. The Matthews can split their refund using Form 8888, Allocation of Refund
(Including Savings Bond Purchases).
a. True
b. False
27. What is the total federal income tax withholding reported on the Matthews’ Form
1040?
$________.
Advanced Scenarios Retest Questions
101
Advanced Scenario 8: Retest Questions
Directions
Refer to the scenario information for Ramon Torrez, beginning on page 86.
28. What income must Ramon report on Schedule C, Profit or Loss From Business?
a. Only income reported on Form 1099-MISC and Form 1099-K from the ride
share company.
b. Only cash tip income from individual customers.
c.
None. He must report all income from his ride share company as Other
Income.
d. His income reported on Form 1099-MISC, Form 1099-K, and the cash tip
income from his customers.
29. What is Ramon’s mileage expense deduction (at the standard mileage rate) for his
business as a ride share driver? (Round to the nearest dollar.)
a. $25,943
b. $22,463
c.
$20,897
d. $17,516
30. What is the amount that Ramon can deduct as student loan interest on Form 1040,
Schedule 1?
a. $0
b. $1,800
c.
$2,500
d. $3,600
31. Ramon’s self employment tax is added to his other taxes on Form 1040, Schedule
2, and one half of the self employment tax is shown as an adjustment to income on
Form 1040, Schedule 1.
a. True
b. False
32. Ramon’s Qualified Business Income (QBI) deduction is $0 because he has no
taxable income before the QBI deduction.
a. True
b. False
102
Advanced Scenarios Retest Questions
33. Ramon must pay a $695 shared responsibility payment since he did not have
health insurance for 2019.
a. True
b. False
34. Ramon has been assigned an IP PIN by the IRS. The PIN is confidential and
should never be entered on the tax return.
a. True
b. False
35. Ramon is too young to qualify for the earned income credit without having a
qualifying child.
a. True
b. False
Advanced Scenarios Retest Questions
103
104
Advanced Scenarios Retest Questions
Military Course Scenarios and Test Questions
Directions
The first four scenarios do not require you to prepare a tax return. Read the interview
notes for the scenario carefully and use your training and resource materials to
answer the questions.
Military Scenario 1: Dick and Jane Summers
Interview Notes
• Dick and Jane lived in San Diego, CA where Dick was stationed in the Marine Corps
for five years. He received new orders to move to Parris Island Marine Base in
Buford, SC. This is a permanent change of station (PCS).
• They decided to make a Personally Procured Move (PPM).
• Dick traveled to Buford in September to find a home to rent. They wanted to find a
place with a good school district for their three kids. He spent $1,000 on round-trip
airfare, hotel, food, and rental car.
• Dick and Jane spent $150 on boxes, tape, bubble wrap, and mattress bags. They
paid $550 for the rental truck.
• On December 15, 2019, Dick and Jane packed their belongings and began driving from San Diego to Buford. On the way, they made several side trips to national
parks. Their trip took them a total of eight days and seven nights instead of the
authorized four nights for travel.
• The Summers drove their rental truck a total of 3,000 miles. The shortest, most
direct route from San Diego to Buford is 2,425 miles.
• They spent a total of $200 for entrance fees to national parks. The allowable lodging
per diem was $89 per night.
• Dick and Jane spent $1,000 on food and $500 on souvenirs.
• They also spent $200 on storage fees in Buford for items that would not fit in their
new home because it was smaller.
• Their move was estimated to cost $2,400 and the Marine Corps provided $2,280 in
advance.
• Dick and Jane are U.S. citizens and have valid Social Security numbers.
Military Scenarios
105
Military Scenario 1: Test Questions
1. The Summers cannot deduct the cost of their side trip and house hunting trip as
qualified moving expenses.
a. True
b. False
2. How much can Dick and Jane claim as their total qualified lodging expenses?
a. $0
b. $89
c. $356
d. $623
3. The net financial gain from Dick and Jane’s move is included as wages on Form
1040, U.S. Individual Income Tax Return.
a. True
b. False
4. How many miles can Dick and Jane use to calculate their qualified moving
expenses? ________ miles.
106
Military Scenarios
Military Scenario 2: Alfred Booker
Interview Notes
• Alfred Booker is a retired member of the U.S. Armed Forces.
• He received Form 1099-R from the Defense Finance & Accounting Service.
• Form 1099-R indicates $22,000 in box 1 and box 2a.
• Alfred is considered 100% disabled and received a letter of determination from the
Department of Veterans Affairs (VA).
• He received a payment in the amount of $8,500 from the VA for disability.
Military Scenario 2: Test Questions
5. The VA issues Form 1099-R for disability payments.
a. True
b. False
6. The payment Alfred received from the VA is subject to which type of tax:
a. Federal tax
b. State tax
c. Federal and state taxes
d. None of the above
Military Scenarios
107
Military Scenario 3: Jacob and Anne Todd
Interview Notes
• Jacob and Anne Todd are married and have a five-year-old child who lived with Anne
all year. The entire family lives in the U.S.
• Jacob, Anne and their child are all U.S. citizens and have valid Social Security
numbers.
• Jacob was deployed to Afghanistan on June 5, 2019. His last day in the combat
zone is scheduled for May 10, 2020.
• Jacob’s Form W-2 shows:
–– Box 1 = $9,000
–– Box 12a = $27,000, Code Q
• Anne’s Form W-2 shows $15,300 in Box 1. This is her only income.
Military Scenario 3: Test Questions
7. What filing status would be the most advantageous for Jacob and Anne to use?
a. Jacob and Anne can both choose to file Single.
b. Married Filing Jointly.
c.
Anne can file Head of Household and claim the child, and Jacob has no filing
requirement.
d. Anne must file Married Filing Separately since Jacob was absent from the
home most of the year.
8. How many days do they have to file their 2019 tax return after Jacob returns from
the combat zone on May 10, 2020? ________.
108
Military Scenarios
Military Scenario 4: Jose Gonzalez
Interview Notes
• Jose Gonzalez is single.
• Jose is a supply specialist in the Reserves. He attended training drills one weekend
a month for 12 months in 2019.
• Jose only owns one vehicle. He placed his vehicle in service on September 3, 2016.
• Jose’s total mileage in 2019 was 18,500 miles. His average daily roundtrip commuting distance was 45 miles.
• Jose’s duty station is 153 miles away from his residence. He drove 3,672 miles to
and from his duty station based on his travel log.
• Jose paid $2,375 for lodging and $1,572 for meals while attending training drills.
Lodging and meals were within federal per diem rate for the area.
• Jose paid $215 for the cost and upkeep of his uniforms. He is permitted to perform
civilian activities while wearing his uniform.
• Jose did not receive reimbursement for any of his out-of-pocket expenses.
Military Scenario 4: Test Questions
9. Jose is able to take an adjustment to income for lodging, meals, and travel to/from
duty station.
a. True
b. False
10. What number of miles qualify as a deductible travel expense?
a. 18,500
b. 3,672
c. 384
d. 0
Military Scenarios
109
Military Scenario 5: Oscar and Patricia Hernandez
Directions
Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario.
Note: When entering Social Security numbers (SSNs) or Employer Identification
Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.
Interview Notes
• Oscar and Patricia are married and want to file a joint return. Patricia receives Social
Security disability benefits.
• Oscar and Patricia have eight-year-old twins, Guillermo and Maria, who lived with
them the entire year.
• Patricia is receiving a disability pension from her former employer. She has not
reached minimum retirement age.
• Oscar was deployed to Qatar and entered a combat zone on April 20, 2019 and is
scheduled to return to the U.S on April 15, 2020.
• Oscar has rental property, which he placed into service in 2016
• Rental property:
–– Oscar i…