Comprehensive Test No. 9

1. CHECK ALL THAT APPLY: What is a "standard deduction"?

The standard deduction is a benefit that eliminates the need for many taxpayers to itemize actual deductions on Schedule A.

The standard deduction is a dollar amount that reduces your taxable income.

ALL OF THE ABOVE.

Publication 17; Page 139; Student Study Guide-Glossary

Explanation

Publication 17; Page 139; Student Study Guide-Glossary

2. True or False: I borrow $18,782 against the equity in my home in 2014. I used all of the money to have an in ground pool installed in my back yard. I can deduct the interest paid on this loan as fully deductible mortgage interest.

True

False

Publication 17; Page 153

Explanation

Publication 17; Page 153

3. Yes or No: Might a cash method taxpayer who made an improvement to his/her main home during 2014, and who paid traditionally-charged points on the loan obtained to finance it, be able to deduct in full the amount of the points paid for the year paid - namely 2014, if the loan is secured by the main home?

YES

NO

Publication 17; Page 155

Explanation

Publication 17; Page 155

4. True or False: For tax year 2014 a taxpayer cannot deduct mortgage interest paid to an individual that was not reported to him/her on Form 1098, Mortgage Interest Statement.

True

False

Publication 17; Page 159

Explanation

Publication 17; Page 159

5. Check the statement(s) below that correctly describe a "CHARITABLE CONTRIBUTION".

A charitable contribution is a donation or gift to a qualified organization.

A charitable contribution is voluntarily made.

A charitable contribution is a donation or gift made for the use of a qualified organization.

A charitable contribution is a deduction for the value of assets given to a qualifying organization during an accounting period.

ALL OF THE ABOVE.

Publication 17; Page 160; Glossary in Study Guide

Explanation

Publication 17; Page 160; Glossary in Study Guide

6. Not considering any specific situations, what is the maximum charitable contribution deduction for a taxpayer for 2014?

50% of AGI

30% of AGI

20% of AGI

10% of AGI

Publication 17; Page 166

Explanation

Publication 17; Page 166

7. True or False: A taxpayer filing a joint return with his/her spouse is entitled to a higher standard deduction if he/she is age 65 or older or blind, and, an even higher standard deduction if his/her spouse is age 65 or older or blind and they do not itemize deductions.

True

False

Publication 17; Page 139

Explanation

Publication 17; Page 139

8. What form must be used to file a 2014 federal income tax return if a taxpayer wants to deduct any of his/her charitable contributions?

Form 1040-EZ

Form 1040-A

Form 1040

Publication 17; Page 160

Explanation

Publication 17; Page 160

9. Yes or No: Might a cash method taxpayer who made an improvement to his/her second home during 2014, and who paid traditionally-charged points on the loan obtained to finance it, be able to deduct in full the amount of the points paid for the year paid - namely 2014, if the loan is secured by the second home?

YES

NO

Publication 17; Page 155

Explanation

Publication 17; Page 155

10. Sometimes a taxpayer may not be eligible for the standard deduction. Check the situation(s) below wherein a taxpayer's standard deduction would be "zero".

You are a nonresident or dual-status alien during the year.

Your filing status is married filing separately and your spouse itemizes deductions on his/her return.

An exemption for you can be claimed on another person's tax return.

You are filing a return for a short tax year because of a change in your annual accounting period.

ALL OF THE ABOVE.

Publication 17; Page 139

Explanation

Publication 17; Page 139

Submit

11. CHECK ALL THAT APPLY: If you are entitled to a standard deduction, why should you choose to itemize your deductions?

You should itemize your deductions if you paid large amounts of reimbursed medical and dental expenses during the year.

You should itemize your deductions if the amount of the standard deduction you an claim is limited.

You should itemize your deductions if you do not qualify for the standard deduction.

Publication 17; Page 140

Explanation

Publication 17; Page 140

Submit

12. True or False: For tax year 2014 there is a limit on certain itemized deductions if a taxpayer's adjusted gross income (AGI) is more than $254,200 if single ($279, 650 or more if head of household, more than $305,050 if married filing jointly or qualifying widow(er), or $152,525 or more if married filing separately.

True

False

Publication 17; Page 140-Caution in third column

Explanation

Publication 17; Page 140-Caution in third column

13. For 2014, if you use your car to do volunteer work for a qualified organization and you don't want to figure the actual cost of operating your vehicle, what amount may you deduct on your return for the standard mileage rate for this volunteer work?

23 1/2 cents per mile

56 cents per mile

14 cents per mile

22 cents per mile

Publication 17; Page 162

Explanation

Publication 17; Page 162

14. True or False: If someone pays you mortgage interest of $600 or more (including certain points), they should send you Form 1098, Mortgage Interest Statement.

True

False

Publication 17; Page 157

Explanation

Publication 17; Page 157

15. True or False: A taxpayer has a son or daughter that he /she will claim as a dependent on his/her tax return. The taxpayer is not married and will not file a joint return. The taxpayer will be entitled to higher standard deduction if the dependent is age 65 or older or blind and the taxpayer does not itemize deductions.

True

False

Publication 17; Page 140

Explanation

Publication 17; Page 140

16. Interest is the amount you pay for the use of borrowed money. Of the different types of interest listed below, choose the item(s) that could be deducted as itemized deductions on Schedule A (Form 1040).

Home Mortgage Interest

Interest paid on loans used for personal purposes

Investment Interest

Student Loan Interest

Points

Mortgage Insurance Premiums

Publication 17; Pages 152-159; Instructions for Schedule A

Explanation

Publication 17; Pages 152-159; Instructions for Schedule A

Submit

17. Home mortgage interest is generally any interest you pay on a loan secured by your main home or second home. Check the item(s) below that could be deducted as home mortgage interest on Schedule A of Form 1040.

Notary Fees

Points paid in connection with a loan secured by a second home

Qualified Mortgage Insurance Premiums

Prepaid Interest

Late Payment Penalty

Annual rental payments on redeemable ground rents

Mortgage Prepayment Penalty

Mortgage Interest Credit

Publication 17; Page 153

Explanation

Publication 17; Page 153

Submit

18. Check the medical and dental expenses below that would be includible in figuring a taxpayer's medical and dental expense deduction for tax year 2014.

Prescription Medication and insulin

Expenses of an organ donor

Artificial limbs

Premiums for a life insurance policy

Fees for nursing services

Toothpaste and other toiletries purchased at a drug store

Eyeglasses and contact lenses

Funeral expenses for deceased spouse

Insurance reimbursements

Publication 17; Pages 144-146

Explanation

Publication 17; Pages 144-146

Submit

19. Check the tax(s) below that could be deducted on Schedule A (Form 1040) it the taxpayer were able to itemize deductions.

State & Local Income Taxes

State & Local General Sales Taxes

Inheritance Taxes

Real Estate Taxes

Federal Income Taxes

Gift & Estate Taxes

Foreign Income Taxes

Personal Property Taxes

Publication 17; Pages 148-152; Instructions for Schedule A

Explanation

Publication 17; Pages 148-152; Instructions for Schedule A

Submit

20. "Points" are certain charges paid or treated as paid by a borrower to obtain a home mortgage, or certain charges paid by the home seller to the lender to arrange financing for the buyer. Check the item(s) below that could be considered points if paid in connection with obtaining a home mortgage.

Loan Origination Fees

Loan Discount

Funding Fees

Loan Placement Fees

Notary Fees

Appraisal Fees

Publication 17; Pages 155 & 157

Explanation

Publication 17; Pages 155 & 157

Submit

Comprehensive Test No. 9

1. CHECK ALL THAT APPLY: What is a "standard deduction"?

2.

What first name or nickname would you like us to use?

2. True or False: I borrow $18,782 against the equity in my home in 2014. I used all of the money to have an in ground pool installed in my back yard. I can deduct the interest paid on this loan as fully deductible mortgage interest.

4. True or False: For tax year 2014 a taxpayer cannot deduct mortgage interest paid to an individual that was not reported to him/her on Form 1098, Mortgage Interest Statement.

5. Check the statement(s) below that correctly describe a "CHARITABLE CONTRIBUTION".

6. Not considering any specific situations, what is the maximum charitable contribution deduction for a taxpayer for 2014?

7. True or False: A taxpayer filing a joint return with his/her spouse is entitled to a higher standard deduction if he/she is age 65 or older or blind, and, an even higher standard deduction if his/her spouse is age 65 or older or blind and they do not itemize deductions.

8. What form must be used to file a 2014 federal income tax return if a taxpayer wants to deduct any of his/her charitable contributions?

10. Sometimes a taxpayer may not be eligible for the standard deduction. Check the situation(s) below wherein a taxpayer's standard deduction would be "zero".

11. CHECK ALL THAT APPLY: If you are entitled to a standard deduction, why should you choose to itemize your deductions?

13. For 2014, if you use your car to do volunteer work for a qualified organization and you don't want to figure the actual cost of operating your vehicle, what amount may you deduct on your return for the standard mileage rate for this volunteer work?

14. True or False: If someone pays you mortgage interest of $600 or more (including certain points), they should send you Form 1098, Mortgage Interest Statement.

16. Interest is the amount you pay for the use of borrowed money. Of the different types of interest listed below, choose the item(s) that could be deducted as itemized deductions on Schedule A (Form 1040).

17. Home mortgage interest is generally any interest you pay on a loan secured by your main home or second home. Check the item(s) below that could be deducted as home mortgage interest on Schedule A of Form 1040.

18. Check the medical and dental expenses below that would be includible in figuring a taxpayer's medical and dental expense deduction for tax year 2014.

19. Check the tax(s) below that could be deducted on Schedule A (Form 1040) it the taxpayer were able to itemize deductions.