13. Assess the following situation to determine whether you need to report the income to the IRS on your tax return. A. You received $9 in interest from your bank. Your bank doesn't issue a 1099-int unless you received $10 in interest do you need to claim the me$9 and interest on income on your tax return. B. You are a bartender with your neighbor who is an attorney you babysat their children in the state called $1,000 in legal services do you need to report this and come on your tax return.

13. Assess the following situation to determine whether you need to report the income to the IRS on your tax return. A. You received $9 in interest from your bank. Your bank doesn't issue a 1099-int unless you received $10 in interest do you need to claim the me$9 and interest on income on your tax return. B. You are a bartender with your neighbor who is an attorney you babysat their children in the state called $1,000 in legal services do you need to report this and come on your tax return.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter6: Deductions And Losses: In General

Section: Chapter Questions

Problem 40P

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24. As a newly hired IRS trainee, you have been asked to calculate the amount of tax refund or tax owed for the taxpayer (in $). (Enter a positive value for the amount.) Name TaxLiability TaxCredits OtherTaxes Payments Refund/Owe(Select one) Amount Trent $5,798 $1,331 $875 $6,700 $
20.A taxpayer certificate of deposit that was set to mature the end of next year is needed for a down payment on their residence the taxpayer decided to cash out the certificate of deposit now is the following scenario accurate. A. The taxpayer must report their total amount of interest and can deduct the penalty on their tax return. B. The total interest income of $1,600 and a taxpayer early withdrawal penalty is $300 the taxpayer net the two amount together and report $1300 interest on a schedule B. C. Both the total interest amount in the early withdrawal penalties are reported to the taxpayer on form 1099-INT.
22. As a tax return preparer for The Fernando Rodriguez Tax & Accounting Service, you have been asked to calculate the missing information for one of the firm's tax clients. The following table gives the standard deduction for various filing statuses. Standard Deductions Single or married filing separately $12,000 Married filing jointly or surviving spouse $24,000 Head of household $18,000 65 or older and/or blindand/or someone else canclaim you (or your spouseif filing jointly) as a dependent: Varies(See www.irs.gov for information.) Using the standard deduction table above, complete the following table (in $). Name Filing Status Income Adjustments toIncome Adjusted GrossIncome StandardDeduction ItemizedDeductions TaxableIncome Lerner married filingjointly $ $1,266 $47,378 $ $5,429 $ When finding your client's taxable income, which deduction did you use? standard deduction itemized deductions
Interest and Penalties (LO 12.3) For each of the following situations, select the nature of the penalty and amount of the penalty that could be imposed. a. Larry is a tax protester and files his tax return in the name of "Mickey Mouse." b. Anne writes a check for $900 in payment of her taxes that she knows will not clear the bank due to insufficient funds in her C. account. Gerald understated his tax liability by $10,000. The total amount of tax that should have been shown on his return was $70,000. Description of the Penalty Filing a frivolous tax return Bad check ✓ Accuracy-related penalty, substantial understatement Penalty Amount
As a newly hired IRS trainee, you have been asked to calculate the amount of tax refund or tax owed for the following taxpayers. Name Tax Liability Tax Credits Other Taxes Payments Refund/Owe (circle one) Amount 15. Jackson $7,525 $1,670 $840 $5,300 Refund/Owe $1,395 16. Hayward $3,229 $750 0 $3,130 Refund/Owe blank 1 17. Lane $12,280 $2,453 $1,232 $9,540 Refund/Owe $1,519 18. Trent $6,498 $1,221 $885 $7,600 Refund/Owe blank 3
Mark for follow up Question 6 of 15. Maggie is a neighbor of yours who lives with her parents. She is 20 years old and has a one-year-old child. You know that Maggie was a full-time student until she quit college at the end of September of the tax year. Maggie gives you her tax documents and tells you that her mother said to claim herself and to claim her child for EITC. To meet the EITC due diligence knowledge requirement, you: Cannot ignore the facts about Maggie living with her mother for nine months of the year when she was a full-time student Can disregard information obtained through a personal relationship. Cannot complete Maggie's return under any circumstances. Can complete Maggie's return filing her as a single non-dependent with EITC for her child. Mark for follow up « Back Save/Return Later Summary Next »
T3.
Sarah owns a jewelry store and prepares her financial statements using the accrual method of accounting. However, she completes her Schedule C on her individual income tax return using the cash method. Given the following accrual method information from the income statement and balance sheet, determine her business net income under the cash method for tax reporting purposes. Accrual method net income $40,000 Beginning accounts receivable $60,000 Ending accounts receivable $37,000 Beginning accounts payable $24,000 Ending accounts payable $30,000 Sarah owns a jewelry store and prepares her financial statements using the accrual method of accounting. However, she completes her Schedule C on her individual income tax return using the cash method. Given the following accrual method information from the income statement and balance sheet, determine her business net income under the cash method for tax reporting purposes. Accrual method net income $40,000 Beginning accounts receivable…
For each of the following situations, indicate the nature and amount of the penalty that could be imposed. Description of the Penalty AND Penalty Amount $ a. Larry is a tax protester and files his tax return in the name of “Mickey Mouse.” b. Anne writes a check for $900 in payment of her taxes that she knows will not clear the bank due to insufficient funds in her account. c. Gerald understated his tax liability by $10,000. The total amount of tax that should have been shown on his return was $70,000.
11.A taxpayer is claiming tax preparation expense as a legal and professional fee. They paid $430 at your office last year. The forms breakdown by cost is as follows: Form 1040- $100 Form Sch. C- $125 Form SE- $55 Form 8867- $75 Form 8863- $75 What is the correct amount that can be deducted on their Schedule C for the current year? Choose one answer. a. $280 b. $180 c. $355 d. $430
Question 31 of 50. Review the following scenario, then choose the appropriate response describing steps a paid tax preparer must take to demonstrate due diligence. Charlie (21) comes in to your office to have his tax return prepared. He states that he is a full-tim college student with income from a part-time job, and his parents will not claim him as a dependent. He wants to claim the American Opportunity Tax Credit (AOTC). Which of the following describes an appropriate question to ask or action to take ooo Ask him if he has ever been convicted of a misdemeanor offense or had his driver's license revoked. Inform him that he may be assessed a penalty of $545 if he fails to provide all the information required. Inform him he must provide copies of all transcripts before you can prepare his retum. Request a copy of his Form 1098-T, Tuition Statement, and inquire into when and how his education and other were paid. Mark for follow up Question 32 of 50. Tee of these pro ambing systems.…
N1.