Tax Preparation Deductions and Credits 2

Question 1

Which of the following is NOT deductible as a mortgage interest deduction?

Accepted Answer

Interest on a mortgage for a vacation home above the $750,000 limit

Answer

Under the TCJA, mortgage interest is deductible on acquisition debt up to $750,000 combined for primary and secondary homes; amounts over this limit are not deductible.

Question 2

A taxpayer contributes $3,000 to a traditional IRA. They are covered by a workplace retirement plan and have an AGI that exceeds the phase-out range. What is the IRA deduction?

Accepted Answer

$0

Answer

If a taxpayer is covered by a workplace plan and their AGI exceeds the phase-out range, no deduction is allowed for traditional IRA contributions.

Question 3

What is the 2024 maximum contribution to a Health Savings Account (HSA) for self-only coverage?

Accepted Answer

$4,150

Answer

For 2024, the HSA contribution limit for self-only HDHP coverage is $4,150.

Question 4

The Child and Dependent Care Credit is calculated as a percentage of which amount?

Accepted Answer

The lesser of actual expenses or $3,000 ($6,000 for 2+)

Answer

The credit is based on qualifying expenses up to $3,000 for one dependent or $6,000 for two or more, multiplied by a credit percentage.

Question 5

Charitable cash contributions to qualified organizations are generally limited to what percentage of AGI?

Accepted Answer

60%

Answer

Cash contributions to public charities are generally limited to 60% of AGI; any excess can be carried forward for five years.

Tax Preparation Practice Test

Tax Preparation Practice Test

Tax Preparation Deductions and Credits 2