CTP Tax Preparation & Filing 2 — Questions and Answers
Question 1: A taxpayer receives a corrected W-2 (W-2c) after already filing their return. What should they do?
- Ignore it since the original return was already accepted
- File Form 1040-X to amend the return (Correct answer)
- Call the IRS to verbally correct the information
- Wait until next year to include the corrected amounts
Correct answer: File Form 1040-X to amend the return
When a corrected W-2c changes tax liability, the taxpayer must file Form 1040-X (Amended U.S. Individual Income Tax Return) to correct the original filing.
Question 2: Which filing status generally results in the lowest tax rate for a single parent with a qualifying child?
- Single
- Married Filing Separately
- Head of Household (Correct answer)
- Qualifying Surviving Spouse
Correct answer: Head of Household
Head of Household filing status provides lower tax rates and a higher standard deduction than Single status for eligible single parents with qualifying dependents.
Question 3: A taxpayer who is self-employed must pay self-employment tax on net earnings above what threshold?
- $200
- $400 (Correct answer)
- $600
- $1,000
Correct answer: $400
Self-employment tax applies when net self-employment earnings are $400 or more, requiring the individual to file Schedule SE.
Question 4: What is the purpose of Form 4868?
- To request an installment payment agreement
- To report foreign income exclusion
- To request an automatic extension of time to file (Correct answer)
- To report additional Medicare tax
Correct answer: To request an automatic extension of time to file
Form 4868 grants an automatic 6-month extension of time to file the federal income tax return, though it does not extend the time to pay taxes owed.
Question 5: Which of the following income types is generally NOT subject to federal income tax?
- Gambling winnings
- Unemployment compensation
- Child support received (Correct answer)
- Alimony received under pre-2019 divorce agreements
Correct answer: Child support received
Child support payments received are not taxable income to the recipient, unlike alimony under pre-2019 agreements, gambling winnings, and unemployment compensation.
Question 6: A taxpayer uses their personal vehicle 60% for business. They drove 12,000 miles total. Using the standard mileage rate, how many business miles can be deducted?
- 7,200 miles (Correct answer)
- 12,000 miles
- 4,800 miles
- 6,000 miles
Correct answer: 7,200 miles
Business miles = 12,000 total miles × 60% business use = 7,200 miles eligible for the standard mileage rate deduction.
Question 7: Which form is used to report tip income that was not reported to the employer?
- Form 4137 (Correct answer)
- Form 4797
- Form 8919
- Form 8949
Correct answer: Form 4137
Form 4137 (Social Security and Medicare Tax on Unreported Tip Income) is used to calculate and report the taxes owed on tips not reported to an employer.
CTP Tax Preparation & Filing 2
A taxpayer receives a corrected W-2 (W-2c) after already filing their return.
What should they do?