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

For 2023, each qualifying condition (age 65+ or blind) adds $1,850 for single/HOH filers, so both conditions together add $3,700.

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

State tax refunds are taxable federally only to the extent the taxpayer received a tax benefit by deducting state taxes in the prior year.

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

Inherited property generally receives a stepped-up (or stepped-down) basis equal to the fair market value on the date of the decedent's death.

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

Taxpayers should take the higher of the standard deduction or itemized deductions; $13,850 exceeds $16,000 is incorrect—$16,000 > $13,850, so they should itemize.

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

Alimony received under pre-2019 agreements is taxable income but not earned income for EITC purposes; scholarships not used for qualifying expenses may count.

(IRS) Internal Revenue Service Certified Practice Test

(IRS) Internal Revenue Service Certified Practice Test

IRS Individual Taxpayer Data 2