Income Types and Reporting 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 Income Types and Reporting flashcards as text
Which form reports wages, tips, and other compensation paid by an employer to an employee?
Answer: Form W-2
Form W-2, Wage and Tax Statement, is issued by employers to report employee wages and withheld taxes.
A freelancer receives $700 from a single client. Is the client required to issue a 1099-NEC?
Answer: No, the threshold is $600
Form 1099-NEC is required when payments to an independent contractor reach $600 or more during the tax year.
Social Security benefits become partially taxable when the taxpayer's combined income exceeds which threshold for single filers?
Answer: $25,000
Up to 50% of Social Security benefits may be taxable when combined income (AGI + nontaxable interest + half of SS benefits) exceeds $25,000 for single filers.
Which of the following is generally excluded from gross income under the IRC?
Answer: Gifts received
Gifts received are generally excluded from the recipient's gross income under IRC Section 102, though the donor may owe gift tax.
An employee receives $6,000 in employer-provided educational assistance. How much is excludable from income?
Answer: $5,250
Up to $5,250 of employer-provided educational assistance can be excluded from income under IRC Section 127.
Which type of income is reported on Schedule E of Form 1040?
Answer: Rental income
Schedule E is used to report supplemental income such as rental income, S-corporation income, partnership income, and royalties.
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