Tax Preparation Self-Employment and Business Taxes 2

Question 1

Which method allows a self-employed taxpayer to calculate the home office deduction using $5 per square foot?

Accepted Answer

Simplified method

Answer

The simplified method allows a deduction of $5 per square foot of the home office, up to 300 square feet ($1,500 maximum).

Question 2

Business meals are generally deductible at what percentage for self-employed taxpayers?

Accepted Answer

50%

Answer

Business meals are generally only 50% deductible; the TCJA eliminated the deduction for entertainment expenses entirely.

Question 3

A self-employed individual buys a $20,000 vehicle used 60% for business. What is the maximum first-year depreciation deduction using Section 179?

Accepted Answer

$12,000

Answer

Section 179 deduction is limited to the business-use percentage: $20,000 × 60% = $12,000 (subject to annual limitations and luxury auto caps).

Question 4

Quarterly estimated tax payments are due on which dates?

Accepted Answer

Apr 15, Jun 15, Sep 15, Jan 15

Answer

Estimated tax due dates are April 15, June 15, September 15, and January 15 of the following year.

Question 5

A taxpayer can avoid the underpayment penalty by paying at least what percentage of the prior year's tax?

Accepted Answer

100% of prior year tax (or 110% if income over $150,000)

Answer

The safe harbor rule allows avoiding the underpayment penalty by paying 100% of the prior year's tax (or 110% if prior year AGI exceeded $150,000).

Tax Preparation Practice Test