IRS - Internal Revenue Service Certified Deductions and Credits Questions and Answers

Question 1

A taxpayer donates a painting, for which they have a qualified appraisal, to a museum.
The painting is valued at $6,000.
Which form must the taxpayer file with their tax return to claim this noncash charitable contribution?

Accepted Answer

Form 8283, Noncash Charitable Contributions

Answer

Form 8282, Donee Information Return

Answer

Schedule A (Form 1040), Itemized Deductions

Answer

Form 4684, Casualties and Thefts

Question 2

Which of the following taxpayers is most likely eligible for the Earned Income Tax Credit (EITC) without a qualifying child?

Accepted Answer

A 30-year-old single individual with $15,000 of earned income, who lived in the U.S. all year and is not claimed as a dependent.

Answer

A 22-year-old single individual who is a full-time student with $10,000 of earned income.

Answer

A 68-year-old married couple filing jointly with $20,000 of investment income.

Answer

A 45-year-old individual filing as Married Filing Separately with $12,000 of earned income.

Question 3

A single taxpayer has a Modified Adjusted Gross Income (MAGI) of $80,000. They paid $3,000 in qualified student loan interest. What is the maximum amount of student loan interest they can deduct?

Accepted Answer

$2,500

Answer

$1,500

Answer

$3,000

Answer

$0

Question 4

A taxpayer pays for childcare for their 10-year-old child so they can work. Which of the following is a requirement for the care provider to allow the taxpayer to claim the Child and Dependent Care Credit?

Accepted Answer

The provider cannot be the taxpayer's 17-year-old child.

Answer

The provider must be a licensed daycare facility.

Answer

The provider must be the taxpayer's spouse if they are not working.

Answer

The provider can be the child's non-custodial parent.

Question 5

Which of the following statements correctly distinguishes the American Opportunity Tax Credit (AOTC) from the Lifetime Learning Credit (LLC)?

Accepted Answer

The LLC is available for an unlimited number of years, while the AOTC is limited to the first four years of postsecondary education.

Answer

The AOTC is a nonrefundable credit, whereas the LLC is partially refundable.

Answer

The maximum credit amount for the LLC is higher than the maximum credit for the AOTC.

Answer

The LLC can be claimed for expenses for courses taken to acquire job skills, but the AOTC cannot.

Question 6

A single individual operates a small consulting business as a sole proprietorship. Their taxable income before the QBI deduction is $150,000, and their qualified business income (QBI) is $80,000. The business paid no W-2 wages and has no qualified property. What is their Qualified Business Income (QBI) deduction?

Accepted Answer

$16,000

Answer

$30,000

Answer

$20,000

Answer

$0

A taxpayer donates a painting, for which they have a qualified appraisal, to a museum.The painting is valued at $6,000.Which form must the taxpayer file with their tax return to claim this noncash charitable contribution?

A taxpayer donates a painting, for which they have a qualified appraisal, to a museum.
The painting is valued at $6,000.
Which form must the taxpayer file with their tax return to claim this noncash charitable contribution?