IRS Rules, Retirement, and Special Topics Flashcards

Which IRS program provides free tax preparation assistance to low-income and elderly taxpayers?

Answer: VITA (Volunteer Income Tax Assistance)

VITA (Volunteer Income Tax Assistance) offers free tax preparation by IRS-certified volunteers to taxpayers with income below $67,000, people with disabilities, and limited English speakers.

An Individual Taxpayer Identification Number (ITIN) is issued to:

Answer: Nonresident and resident aliens who are not eligible for an SSN

ITINs are issued by the IRS to foreign nationals and others who need a taxpayer ID for US tax purposes but are not eligible for a Social Security Number.

The exclusion of gain from the sale of a primary residence applies to gains up to:

Answer: $250,000 (single) / $500,000 (MFJ)

Under Section 121, taxpayers may exclude up to $250,000 ($500,000 for MFJ) of gain from the sale of a primary residence if ownership and use tests are met.

Passive activity losses can generally be deducted only against:

Answer: Passive income from other activities

Passive activity losses can only offset passive income; unused passive losses are suspended and carried forward until the activity is disposed of.

The $25,000 rental activity loss allowance for active participants phases out for AGI between:

Answer: $100,000 and $150,000

The $25,000 special allowance for rental real estate losses for active participants phases out for AGI between $100,000 and $150,000.

Which of the following best describes the Preparer Tax Identification Number (PTIN)?

Answer: A required identification number for all paid tax return preparers

All paid tax return preparers must obtain and renew a PTIN annually; using an expired or invalid PTIN can result in penalties.