IRS Individual Taxpayer Data 2

Question 1

A taxpayer who is legally blind can claim an additional standard deduction. For 2023, how much is this additional amount for a single filer who is both blind and age 65+?

Accepted Answer

$3,700 total additional

Answer

$1,850 total additional

Answer

$1,500 total additional

Answer

$2,800 total additional

Question 2

A taxpayer receives a Form 1099-G reporting a state tax refund of $800. Under what circumstance must this refund be included in federal gross income?

Accepted Answer

Only if the taxpayer itemized deductions in the prior year and received a tax benefit

Answer

Always, regardless of prior-year deductions

Answer

Never, since state refunds are not federally taxable

Answer

Only if the refund exceeds $600

Question 3

Which of the following correctly describes a taxpayer's basis in inherited property received from a decedent who died in 2023?

Accepted Answer

Fair market value on the date of death

Answer

Carryover basis equal to the decedent's original cost

Answer

Lesser of FMV or decedent's adjusted basis

Answer

Zero basis, since no consideration was paid

Question 4

A taxpayer paid $12,000 in mortgage interest and $4,000 in property taxes in 2023. The standard deduction for their filing status is $13,850. What should they do?

Accepted Answer

Take the standard deduction since it exceeds their itemized amount

Answer

Itemize deductions since they have qualifying expenses

Answer

Split deductions between standard and itemized

Answer

Deduct $16,000 regardless of the standard deduction

Question 5

For purposes of the Earned Income Tax Credit, which type of income is NOT considered earned income?

Accepted Answer

Alimony received under a pre-2019 divorce decree

Answer

W-2 wages from part-time employment

Answer

Net profit from self-employment

Answer

Taxable scholarship used for living expenses

Question 6

A taxpayer converts a traditional IRA to a Roth IRA. Which of the following best describes the federal tax consequence in the year of conversion?

Accepted Answer

The converted amount is included in gross income in the year of conversion

Answer

No tax consequence if the taxpayer reinvests within 60 days

Answer

A 10% early withdrawal penalty always applies

Answer

The conversion is tax-free if the taxpayer is under age 59½

Question 7

A taxpayer files as Head of Household. Which of the following is a requirement to qualify for this filing status?

Accepted Answer

The taxpayer must be unmarried and pay more than half the cost of maintaining a home for a qualifying person

Answer

The taxpayer must be divorced or legally separated

Answer

The taxpayer must have earned income exceeding $25,000

Answer

The qualifying person must be a child under age 13