Tax Consulting Registered Tax Return Preparer 3

Question 1

A taxpayer is 67 and single. How does age affect the standard deduction?

Accepted Answer

They qualify for an additional standard deduction amount

Answer

Taxpayers 65 or older receive an additional standard deduction amount.

Question 2

Which schedule reports capital gains and losses from selling stocks?

Accepted Answer

Schedule D

Answer

Schedule D is used to report capital gains and losses from the sale of investments.

Question 3

What distinguishes a tax credit from a tax deduction?

Accepted Answer

A credit reduces tax dollar-for-dollar; a deduction reduces taxable income

Answer

Credits directly reduce tax owed, while deductions reduce the income subject to tax.

Question 4

A dependent must generally meet which key test relating to support?

Accepted Answer

The dependent must not have provided more than half of their own support

Answer

A qualifying child generally cannot have provided more than half of their own support.

Question 5

Interest income of $1,800 from a savings account is reported on which schedule when over the threshold?

Accepted Answer

Schedule B

Answer

Schedule B reports interest and ordinary dividends exceeding $1,500.

Tax Consulting Practice Test