CTA Tax Credits and Deductions 2

Question 1

Which tax credit provides a dollar-for-dollar reduction in tax liability for contributions to retirement savings plans by lower-income taxpayers?

Accepted Answer

Saver's Credit (Retirement Savings Contributions Credit)

Answer

The Saver's Credit provides a credit of 10-50% of eligible contributions to retirement plans for taxpayers with income below specified limits.

Question 2

Which of the following medical expenses is deductible on Schedule A?

Accepted Answer

Prescription medications

Answer

Prescription medications qualify as deductible medical expenses on Schedule A, subject to the 7.5% AGI floor.

Question 3

The state and local tax (SALT) deduction is currently capped at what amount for most taxpayers?

Accepted Answer

$10,000

Answer

The TCJA limited the SALT deduction to $10,000 ($5,000 for married filing separately) through at least 2025.

Question 4

The Business Energy Investment Tax Credit (ITC) under Section 48 incentivizes investment in which type of property?

Accepted Answer

Qualifying renewable energy property like solar panels

Answer

Section 48 provides an investment tax credit for qualifying renewable energy property including solar, wind, and other clean energy installations.

Question 5

Which credit is available to employers who provide qualified family and medical leave to employees?

Accepted Answer

Employer Credit for Paid Family and Medical Leave (Section 45S)

Answer

IRC Section 45S provides a credit to employers who pay qualifying employees at least 50% of wages during family and medical leave.

CTA - Certified Tax Advisor Practice Test