Jake, age 48, wants to roll over $50,000 from his qualified plan from his ex-employer to a rollover (non-Roth) IRA. He requests a check and receives $40,000, which he subsequently uses to open an IRA 7 weeks later. Which of the following is the best statement describing Jake”s situation? a. Incorrect. Even if Jake deposits the $40,000 check into an IRA, the $10,000 that was […]

The maximum amount of SE tax a taxpayer can pay in 2012 is: a. Incorrect. $106,800 was the maximum amount of earnings subject to Social Security tax in 2011. b. Incorrect. $110,100 is the maximum amount of earnings subject to Social Security tax in 2012. c. Incorrect. $11,450.40 is the maximum amount of Social Security tax a self-employed taxpayer paid in 2012. d. Correct. Because […]

An individual taxpayer in the United States who cannot file an income tax return by the due date can obtain an automatic filing extension for what period of time: a. Incorrect. Five days is the period in which to electronically resubmit a rejected e-filed individual tax return in order for it to be considered timely. b. Incorrect. The two-month extension applies for taxpayers who are […]

Which of the following situations requires the taxpayer to obtain a power of attorney to sign a return? a. Incorrect. A parent can sign a minor child”s return without any special authorization. b. Incorrect. The spouse of someone in the military who is stationed in a combat zone can sign on behalf of the other spouse without authorization but must attach an explanation to the […]

How long should tax return preparers retain Form 8879? a. Incorrect. The form should be retained three years from the later of the return due date or the date the IRS received the return. b. Incorrect. The form should be retained three years from the later of the return due date or the date the IRS received the return. c. Correct. The form should be […]

Which a preparer is not required to e-file returns? a. Incorrect. Because the preparer expects to file 11 or more income tax returns for individuals, the returns must be e-filed. b. Incorrect. The number of returns that an individual preparer anticipates filing does not control the e-file requirement as long as the preparer”s firm meets the requirement. c. Incorrect. The e-file requirements for a preparer […]

~ a. Incorrect. The form should be retained three years from the later of the return due date or the date the IRS received the return. b. Incorrect. The form should be retained three years from the later of the return due date or the date the IRS received the return. c. Correct. The form should be retained three years from the later of the […]

A taxpayer is likely to have a refundable minimum tax credit if she has: a. Incorrect. While having a large number of dependents can create or trigger AMT, it does not impact the refundable minimum tax credit. b. Correct. A taxpayer who had a large AMT liability in the past from the exercise of ISOs may qualify for a refundable minimum tax credit. c. Incorrect. […]

For violating e-file procedures, which level of infraction usually results in only a reprimand? a. Correct. Level One infractions, which do not have an adverse impact on the quality of an e-filed return, typically result in only a written reprimand. b. Incorrect. Level Two infractions typically result in suspension from the e-file program for one year. c. Incorrect. Level Three infractions usually result in suspension […]

Which of the following persons is not a child who may be subject to the kiddie tax? a. Incorrect. A child who is 15 years old with investment income is subject to the kiddie tax. b. Incorrect. The kiddie tax applies to a child who is 17 years old; the exception for children who have earned income that is more than half of his or […]