Tax Consulting Registered Tax Return Preparer 2

Question 1

Which IRS competency exam was historically required to become a Registered Tax Return Preparer (RTRP)?

Accepted Answer

The RTRP test covering Form 1040 series and ethics

Answer

The RTRP program required passing a competency test focused on the Form 1040 series and tax ethics.

Question 2

A taxpayer's filing status is 'Married Filing Jointly.' What is the standard deduction concept a preparer must apply?

Accepted Answer

A fixed dollar amount that reduces taxable income

Answer

The standard deduction is a fixed amount that reduces taxable income based on filing status.

Question 3

Which form does a preparer use to report self-employment income and expenses for a sole proprietor?

Accepted Answer

Schedule C

Answer

Schedule C reports profit or loss from a sole proprietorship business.

Question 4

What is the purpose of a PTIN for a paid tax return preparer?

Accepted Answer

It identifies the preparer on returns they prepare for compensation

Answer

A Preparer Tax Identification Number must be used by anyone who prepares federal returns for pay.

Question 5

A client reports gambling winnings. How must a preparer treat them?

Accepted Answer

As taxable income reported in full, with losses deductible only if itemizing

Answer

Gambling winnings are fully taxable, and losses are deductible only up to winnings if the taxpayer itemizes.

Tax Consulting Practice Test