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Individual Taxpayer Data Flashcards

7 cards from real IRS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Individual Taxpayer Data flashcards as text

  1. A taxpayer sells their primary residence for a $300,000 gain. They are married filing jointly and have lived in the home for 3 of the last 5 years. How much gain is excluded from income?

    Answer: $300,000

    Married filing jointly taxpayers can exclude up to $500,000 of gain on a primary residence sale if the ownership and use tests are met, so the entire $300,000 gain is excluded.

  2. Which form does an employer use to report wages paid and taxes withheld for employees?

    Answer: Form W-2

    Employers report wages, tips, and withheld taxes to each employee and the IRS on Form W-2.

  3. A taxpayer has a net operating loss (NOL) in 2023. Under current law, how many years can the NOL be carried forward?

    Answer: Indefinitely, subject to an 80% of taxable income limitation

    Under the Tax Cuts and Jobs Act, NOLs arising after 2017 can be carried forward indefinitely but are limited to offsetting 80% of taxable income in the carryforward year.

  4. A taxpayer receives a prize of $5,000 from a radio contest. How is this amount treated for federal income tax purposes?

    Answer: Includable in gross income as ordinary income

    Prizes and awards are generally includable in gross income as ordinary income under IRC §74.

  5. Which of the following taxpayers may NOT use the single filing status?

    Answer: A taxpayer who is legally married as of December 31

    Filing status is determined on the last day of the tax year; a taxpayer who is legally married on December 31 must file as married (MFJ or MFS), not single.

  6. A taxpayer contributes $6,500 to a traditional IRA in 2023 and is covered by an employer retirement plan. Their AGI is $80,000 (single filer). What is the deductibility of this contribution?

    Answer: Partially deductible based on the phase-out range

    For 2023, single filers covered by a workplace plan face a phase-out range of $73,000–$83,000; at $80,000 AGI, only a partial deduction is allowed.

  7. A taxpayer who is self-employed pays $8,400 in self-employment tax. What deduction may they claim on their federal return?

    Answer: One-half of SE tax ($4,200) as an above-the-line deduction

    Self-employed taxpayers may deduct one-half of self-employment tax as an above-the-line adjustment to income on Schedule 1.