Vita Basic Exam Answers 2016 – Fill Out and Use

2013 6744 Test – Basic Course

Directions

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notes for each scenario carefully and use your training and resource materials to answer the questions after the scenarios.

Basic Scenario 1: Wendy Gordon

Interview Notes

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–Wendy was a full-time student during 2013.

–Her only income was $8,000 in wages.

–She lived with her parents all year, but they told her they will not claim her.

–Wendy does not provide more than half of her own support.

Basic Scenario 1: Test Questions

a.Wendy can claim 0 exemptions, because her income is less than $10,000.

b.Wendy can claim 0 exemptions, because her parents can claim her as a dependent.

c.Wendy can claim 1 exemption, because she had earned income.

d.Wendy can claim 1 exemption, because her parents have decided not to claim her.

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a.No, because she is the qualifying child of her parents.

b.No, because her income is too high.

c.No, because she did not provide over half of her own support.

d.Yes, because she has earned income.

Basic Scenario 2: Joanne Parks

Interview Notes

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Basic Scenario 2: Test Questions

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a.No, because Agnes is over 65 years old.

b.No, because Agnes’ income is too high.

c.No, because Agnes did not live with her all year.

d.Yes, because Agnes is Joanne’s qualifying relative.

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a.Single

b.Married Filing Jointly

c.Head of Household

d.Qualifying Widow

Basic Scenario 3: Mike Hastings

Interview Notes

Basic Scenario 3: Test Questions

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a.Brittany can claim Hayden because she is his parent.

b.Mike can claim Hayden; Brittany cannot claim Hayden because Brittany is Mike’s dependent.

c.Mike cannot claim Hayden because Hayden is not Mike’s child.

d.Brittany can claim Hayden because she has earned income.

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a.Mike has no qualifying children.

b.Mike can claim Brittany, but not Hayden.

c.Mike can claim Hayden, but not Brittany.

d.Mike can claim both Brittany and Hayden.

Basic Scenario 4: George and Maria Newton

Interview Notes

Basic Scenario 4: Test Questions

7.Why are George and Maria not eligibleWRFO LPWKHH UQHGLQFRPHFUHGLW

a.Isabel is not a qualifying child.

b.Maria did not have earned income.

c.George and Maria’s income is too high.

d.George and Maria have ITINs.

8.George and Maria can claim Isabel for the child tax credit.

a.True

b.False

Basic Scenario 5: Jim Wells and Sally Fulton

Interview Notes

totaled $16,000. Sally used $1,000 of her income for clothing and entertainment expenses and put the remaining $4,000 in her personal savings account.

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Basic Scenario 5: Test Questions

10.Jim and Sally can both claim the earned income credit on their individual returns.

a.True

b.False

Basic Scenario 6: Melinda Armstrong

Interview Notes

$50 for a parking permit. Melinda paid all expenses from her savings. She did not receive any assistance or reimbursement. She received a Form 1098-T showing $900 in box 1.

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Basic Scenario 6: Test Questions

11. :KLFKHGXF WLRQ HQH¿WLV0HOLQG not eligibleWRW NH

a.American opportunity credit

b.Lifetime learning credit

c.Tuition and fees deduction

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a.$900 in tuition

b.$300 for course book

c.$50 parking permit

d.None of her expenses qualify

Basic Scenario 7: Warren and Shirley Graves

Interview Notes

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their savings account with no withholding and no early withdrawal penalty.

Basic Scenario 7: Test Questions

Directions

Please complete Form 1040 and the appropriate forms, schedules, or worksheets to answer each of the following questions.

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13.Warren and Shirley have an Identity Protection PIN. How does this affect return

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a.This return cannot be prepared at a volunteer site.

b.The Identity Protection PIN must be entered during return preparation.

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d.It doesn’t affect return preparation.

14.What is the correct amount of taxable interest shown on the Graves’ Form 1040,

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a.$0

b.$9

c.$180

d.$270

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a.No, because their total income is less than $50,000.

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c.Yes, a portion of the social security income is taxable.

d.Yes, all of the social security income is taxable.

a.They are itemizing their deductions.

b.Warren is over 65 years old.

c.Shirley is over 65 years old.

d.Either Warren or Shirley is blind.

17.Warren and Shirley want to avoid having a balance due next year. Shirley can submit a Form W4-P to have tax withheld on her pension.

a.True

b.False

Basic Scenario 8: Teresa Martin

Interview Notes

She has not remarried.

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her children, Audrey and Mackenzie, in 2013.

income and he provided more than half of his own support.

in 2013 until she found a new job.

employer and used the money for household expenses. She does not qualify for any exception to the additional tax on early distributions.

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Basic Scenario 8: Test Questions

Directions

Please complete Form 1040 and the appropriate forms, schedules, or worksheets to

answer each of the following questions.

Note: When using the Link and Learn Taxes Practice Lab, complete the social security QXP HUV. QG.HPSOR\HU.LGHQWL¿F WLRQ.QXP HUV. \.UHSO FLQ .W H.;V.ZLW .\RXU.8VHU.,'m.,Q. FO VVURRP.VLWX WLRQVi.UHSO FH.W H.;V.ZLW .W H.QXP HUV.SURYLGHG. \.\RXU.LQVWUXFWRUm.

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a.Single

b.Head of Household

c.Married Filing Separately

d.Qualifying Widow with Dependent Child

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a.Exemption for a dependent

b.Child tax credit

c.Earned income credit

d.All of the above

a.$294

b.$560

c.$588

d.$616

a.Audrey

b.Audrey and Mackenzie

24.The amount of earned income used to calculate Teresa’s earned income credit is $40,500.

a.True

b.False

Basic Scenario 9: Evan James Swift

Interview Notes

keeping up the home. He has never provided a Form 8332 to his ex-wife.

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–A statement received from his church showing donations made throughout the year totaling $1,500

–Evan paid $400 interest on a credit card bill

winnings.

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deduct state and local income tax instead of state sales tax.

Basic Scenario 9: Test Questions

Directions

Complete Form 1040 and the appropriate forms, schedules, and worksheets to answer each of the following questions.

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a.$146 should be reported on Form 1040, line 21.

b.He does not report his lottery activity because he did not receive a Form W-2G.

c.He reports $250 on Form 1040, line 21, and $104 in gambling losses on Schedule A.

d.The gambling losses are never reported and the winnings are reported on line 21, Form 1040.

28.To compute the American opportunity credit, which of Noah’s following expenses

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a.Tuition and fees paid by the scholarship

b.Room and board

c.Course-related books

d.All of the above

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a.Yes

b.No

30.What is the refundable amount of Evan’s American opportunity credit from the