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Deductions and Credits Flashcards

6 cards from real Tax Preparation practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Deductions and Credits flashcards as text

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

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

    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.

  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?

    Answer: $0

    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.

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

    Answer: $4,150

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

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

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

    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.

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

    Answer: 60%

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

  6. The Lifetime Learning Credit (LLC) provides a maximum annual credit of:

    Answer: $2,000

    The LLC provides a credit of 20% of up to $10,000 in qualifying education expenses, for a maximum of $2,000 per return.

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