Tax Consulting Registered Tax Return Preparer 4

Question 1

A client has $3,000 in net capital losses for the year. How much can offset ordinary income?

Accepted Answer

Up to $3,000, with any excess carried forward

Answer

Net capital losses can offset up to $3,000 of ordinary income annually, with the rest carried forward.

Question 2

Which form reports wages and federal tax withheld from an employer?

Accepted Answer

Form W-2

Answer

Form W-2 reports an employee's wages and the taxes withheld by the employer.

Question 3

What filing status may a taxpayer use if their spouse died during the tax year and they have a dependent child, for two following years?

Accepted Answer

Qualifying Surviving Spouse

Answer

A widow(er) with a dependent child may use Qualifying Surviving Spouse status for up to two years after the spouse's death.

Question 4

Self-employment tax covers which programs?

Accepted Answer

Social Security and Medicare

Answer

Self-employment tax funds Social Security and Medicare for self-employed individuals.

Question 5

A taxpayer paid $4,000 in qualified college tuition. Which education credit might apply?

Accepted Answer

American Opportunity Tax Credit

Answer

The American Opportunity Tax Credit applies to qualified higher education expenses for eligible students.

Tax Consulting Practice Test