Deck 4: Adjustments for Adjusted Gross Income

Question 1

For the interest on a student loan to qualify for the student loan interest deduction,the student must be enrolled full-time.

Answer 1

False

Question 2

Self-employed persons are allowed a for AGI deduction equal to one-half of the self-employment tax imposed.

Answer 2

True

Question 3

Tuition,fees,books,supplies,room,board,and other necessary expenses of attendance are qualified education expenses for purposes of the student loan interest deduction.

Answer 3

True

Question 4

The student loan interest deduction may be limited based on the modified AGI of the taxpayer.

Question 5

Self-employment tax is calculated on the gross earnings of the business.

Question 6

There is an employment test,a distance test,and a time test that must be met in order to deduct qualifying moving expenses.

Question 7

Roberto files his tax return as married filing separately.He has not lived with his wife for over three years.In the current year,by order of the court,he paid her $500 per month for 12 months as separate maintenance.He will be able to deduct $6,000 as alimony for the year.

Question 8

For the moving expense distance test,the new job location must be at least 100 miles farther from the taxpayer's old residence than was the old job location.

Question 9

Qualified self-employed taxpayers can deduct,as a for AGI deduction,80% of health insurance payments for 2017.

Question 10

If a taxpayer incurs an early withdrawal of savings penalty,the taxpayer is entitled to report the penalty as a for AGI deduction on Form 1040.

Question 11

To be eligible to fund a Health Savings Account (HSA),a taxpayer must be self-employed,or an employee (or spouse)of an employer who maintains a high deductible health plan,or an employee of a company that offers no health coverage and the employee has purchased a high deductible health plan on his or her own.

Question 12

For 2017,unreimbursed qualifying moving expenses are an itemized deduction.

Question 13

A Health Savings Account (HSA)is a tax-exempt savings account to be used for qualified medical expenses.

Question 14

Deductible moving expenses may include moving household goods and personal effects from the old residence to the new residence.

Question 15

Distributions from Health Savings Accounts (HSAs)are subject to tax,if they are used to pay for qualified medical expenses.

Question 16

The self-employed health insurance deduction is also available to a partner in a partnership and to a shareholder in a Subchapter S corporation who owns more than 2% of the stock in the corporation.

Question 17

The payment of alimony has tax ramifications.These tax ramifications only affect the payor of the alimony.

Question 18

Under a divorce agreement executed in 2017,periodic payments of either cash or property must be made at regular intervals to be deductible as alimony.

Question 19

In lieu of making cash payments of alimony directly to a former spouse,payments to a third party on behalf of the former spouse can qualify as alimony.

Question 20

For 2017,the amount of the student loan interest deduction is limited to $3,500.

Question 21

Qualifying moving expenses are treated as an itemized deduction for 2017.

Question 22

Unreimbursed qualifying moving expenses are an above-the-line deduction for 2017.

Question 23

Rodrigo graduated from the University of Maryland in 2015.In 2017,to take advantage of lower interest rates,he refinanced his qualified education loans with another qualified student loan.He is not a dependent on another person's tax return.Before AGI limits,what is the maximum deduction available to him for the $3,200 he paid for educational student loan interest in 2017?

A)$2,000.
B)$3,000.
C)$0.
D)$2,500.

Question 24

With a Health Savings Account (HSA),contributions grow tax free,but distributions used for to pay for medical expenses are taxed.

Question 25

Under a divorce agreement executed in 2017,periodic payments of either cash or property must be made at regular intervals to be deductible as alimony.

Question 26

For 2017,eligible educators can deduct up to $250 of qualified educational expenses as an above-the-line deduction.

Question 27

Madison is a teacher at a parochial elementary school.If she spends $600 on art supplies for her classes,$250 of this amount can be claimed as a deduction for AGI.

Question 28

Expenses for home schooling or for non-athletic supplies for health or physical education courses qualify for the education expense deduction.

Question 29

Professional development expenses related to the curriculum are eligible for the Educator Expenses deduction.

Question 30

The deduction for self-employment taxes in 2017 is deductible as an above-the-line deduction at a rate of 7.65% based on the employer's portion of the taxes.

Question 31

An eligible educator for the educator expense deduction must work at least 600 hours during the school year.

Question 32

Student loan interest is deductible only by the person who actually attended the educational institution.

Question 33

For self-employed taxpayers,¾ of the amount of self-employment taxes are deductible as an above-the-line deduction.

Question 34

To qualify for the moving expense deduction,an employee must change job sites,move a required distance,and change employers.

Question 35

The educator expense deduction is available to community college and university professors.

Question 36

Sam is a freshman in the UC-Davis degree program in veterinary medicine.In 2017,Sam paid $3,000 in tuition,$500 for books,and $250 for supplies for class.Sam also paid room and board of $3,500.What is the total qualifying education expense for the student loan interest deduction for Sam in 2017?

A)$3,000.
B)$3,750.
C)$7,250.
D)$3,500.

Question 37

If a divorce agreement executed in 2017 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child,that portion is considered to be a child support payment.

Question 38

For 2017,the maximum amount of deductible student loan interest is $2,500.

Question 39

The cost of self-employed health insurance premiums are deductible above-the line at a rate of 80% of the cost.

Question 40

If a divorce agreement executed in 2017 specifies that a portion of the amount of an alimony payment is contingent upon the age or status of a child,that portion is considered to be a child support payment.

Question 41

The early withdrawal penalty is deductible as an:

A)itemized deduction on Schedule A.
B)above-the-line deduction for AGI.
C)adjustment on Schedule B.
D)none of these.

Question 42

Freya,who is single,had a student loan for qualified education expenses on which interest was due.For 2017,the total interest payments were $2,000.Assuming she has AGI under $65,000,how much may she deduct in arriving at adjusted gross income for 2017?

A)$2,000.
B)$2,500.
C)$1,700.
D)$0.

Question 43

The determination for the deduction of the self-employment tax is based upon the:

A)net earnings of the business.
B)gross earnings of the business.
C)total of 7.65% of FICA taxes.
D)total of itemized deductions.

Question 44

In 2013 through 2016,Shirin borrowed a total of $30,000 for higher education expenses on qualified education loans.In 2017,while still living at home and being claimed by her parents as a dependent,she began making payments on the loan.The first year interest on the loan was reported as $1,750.The amount that Shirin can claim on her tax return is:

A)$0.
B)$2,500.
C)$1,750.
D)$1,500.

Question 45

For the deduction of self-employment taxes,which of the following statements is correct?

A)They are 80% deductible as a for AGI deduction.
B)They are not deductible.
C)They are taken as an itemized deduction on Schedule A.
D)They are 50% deductible as a for AGI deduction.

Question 46

Terri,having moved from Washington State to South Carolina in the current year,met all the requirements to deduct moving expenses.Which of the following expenses that she incurred is not deductible as qualified moving expenses?

A)Shipping costs for her new Tesla Model S.
B)Temporary storage costs incurred while her furniture was in transit from Washington to South Carolina.
C)The cost of an oil change incurred in driving her other car from Washington to South Carolina.
D)Home improvements to sell her home in Oregon.

Question 47

In 2016,Carlos,who is single,received his Bachelor's degree and started working.In 2017,he began paying interest on qualified education loans and had modified AGI of $70,000.He paid interest of $1,200 in 2017.Which of the following statements is correct?

A)Due to the phase-out rules,only a portion of the $1,200 will be deductible.
B)Taxpayers are not allowed a deduction for education loan interest in 2017.
C)The full $1,200 is deductible in arriving at adjusted gross income.
D)If his modified AGI had been $75,000,the phase-out rules would have reduced his deductible interest to zero.

Question 48

All of the following are requirements for a payment to be considered alimony except,

A)Payments cannot be a transfer of services.
B)Payments are not required after the death of the recipient spouse.
C)Payments are required by a divorce or separation agreement.
D)Payments can either be in cash or property.

Question 49

Under a 2017 divorce decree,Antoine is required pay $800 of alimony and $400 of child support each month for the next 10 years.In addition,Antoine makes a voluntary payment of $200 per month.How much of the total monthly payments are deductible by Antoine?

A)$200.
B)$400.
C)$800.
D)$1000.

Question 50

For a taxpayer to be eligible to deduct moving expenses,in addition to the employment test,he or she:

A)Must meet either the time or distance test.
B)Must meet the distance test.
C)Must meet the time test.
D)Must meet both the time and distance test.

Question 51

Under a court-ordered decree of separate maintenance executed in 2017,Pillar is required to pay her ex-husband,Miguel,$4,750 a month until their youngest son turns age 18.At that time,the required payments are reduced to $2,100 per month.How much of each payment is deductible by Pillar as alimony for 2017?

A)$6,850.
B)$4,750.
C)$2,100.
D)$0.

Question 52

At the beginning of 2017,Makiba was permanently transferred from her office in New York City to New Jersey.Her office in NYC was 15 miles from her old NY home.For Makiba to meet the distance test for qualifying moving expense deductions,how many miles must the office in New Jersey be from her old home?

A)50.
B)40.
C)35.
D)65.

Question 53

Taxpayers who contribute to or withdraw from an HSA during the year must:

A)do nothing.
B)report it on Schedule A.
C)file a Form 8889 and attach it to their Form 1040.
D)attach a written note to their tax return.

Question 54

If an employer contributes to an employee's HSA,the payment will:

A)be deductible by the employee.
B)not be allowed as a contribution on behalf of the employee.
C)not be counted as income to the employee.
D)none of these.

Question 55

Shanika is a self-employed hair stylist and had net earnings from self-employment of $4,100.She paid $375 per month for health insurance over the last year.Shanika is entitled to a for AGI deduction for health insurance premiums of:

A)$0.
B)$4,100.
C)$375.
D)$4,500.

Question 56

Which of the following is not deductible as a moving expense?

A)The cost of a pre-move house hunting trip.
B)Travel expenses during the move.
C)Lodging for household members during the move.
D)The cost of moving household goods.

Question 57

For a taxpayer to be eligible to fund a Health Savings Account (HSA),he or she must be:

A)An employee of a company that offers no health coverage and the employee has purchased a high deductible health plan on their own.
B)A self-employed individual.
C)An employee (or spouse)who works for an employer with a high deductible health plan.
D)All of these.

Question 58

Rena had the following moving expenses during 2017: $\begin{array}{lr}\text { Cost of packing and transporting her household goods }&\$1,500\\\text {Lodging for travel between the old home and new home }&\$600\\\text { Meals incurred during the trip}&\$175\\\end{array}$
Rena moved to start a new job and met all the required tests for moving expense deductibility.What is the total amount of moving expenses that can be deducted on her 2017 return?

A)$2,275.
B)$1,675.
C)$2,100.
D)$600.

Question 59

The percentage of self-employed health insurance premiums that could be deductible as a for AGI deduction is:

A)100%.
B)80%.
C)70%.
D)50%.

Question 60

An early withdrawal penalty is reported on Form:

A)W-2.
B)1098.
C)1099-DIV.
D)1099-INT.

Question 61

For family coverage in 2017,the maximum deductible and out of pocket expense to a Health Savings Account is:

A)$2,600.
B)$12,900.
C)$13,100.
D)None of these.

Question 62

The self-employment tax is calculated on:

A)Form 1040.
B)Schedule C.
C)Form SE.
D)Schedule D.

Question 63

If a taxpayer withdraws his or her deposit on a CD before the instrument matures,the penalty for the early withdrawal on interest will be reported by the financial institution:

A)On Form EWIP.
B)In Box 2 of Form 1099-INT.
C)In a letter of notification.
D)None of these.

Question 64

Elena is required under a divorce agreement effective January 1,2017 to pay $800 of alimony and $250 of child support per month for 10 years.Elena also makes a voluntary payment of $150 per month.How much of each monthly payment can Elena deduct as alimony in 2017?

A)$0.
B)$800.
C)$950.
D)$1050.

Question 65

The amount of self-employed health insurance premiums that could be deductible as a for AGI deduction is:

A)100%.
B)80%.
C)70%.
D)50%.

Question 66

Qualification under the 900-hour working test for the educator's expense deduction is measured by:

A)The calendar year.
B)3 consecutive months.
C)5 consecutive months.
D)The academic year.

Question 67

The educator's expense deduction is taken:

A)On Form 2106.
B)On Schedule C.
C)Above the line on the Form 1040.
D)On the educator's expense form.

Question 68

A qualified education loan is one incurred by the taxpayer solely to pay qualified education expenses incurred on behalf of the:

A)taxpayer.
B)taxpayer's spouse.
C)a dependent of the taxpayer.
D)all of these.

Question 69

The goal of the alimony recapture rules is to properly define the substance of payments made to a former spouse in order to ensure proper tax treatment.These rules "lookback" to the following years for the calculation:

A)Years 1 and 2.
B)Years 3 and 4.
C)Years 1 through 3.
D)Years 4 through 6.

Question 70

Sumiko files her tax return married filing separately.She has not lived with her husband for over two years.Beginning in January 2017,by court ordered decree,she is to pay her husband $600 per month as separate maintenance.For 2017 how much will she be able to deduct as alimony?

A)$7,200.
B)$3,600.
C)$600.
D)$0.

Question 71

The maximum amount of the deduction for student loan interest for an eligible taxpayer is limited in the 2017 tax year to:

A)$1,500.
B)$2,000.
C)$2,350.
D)$2,500.

Question 72

In order to meet the distance test criteria for qualifying moving expenses,the new job location must be:

A)100 miles from the old residence.
B)100 miles from the old job location.
C)at least 50 miles farther than the old residence was from the old job location.
D)at least 50 miles farther than the new residence from the old job location.

Question 73

Which of the following types of income is subject to the self-employment tax?

A)Income from a sole proprietor's coffee shop.
B)Gain on the sale of a home.
C)W-2 income.
D)Interest earned on a bank account.

Question 74

Which of the following is not a deductible alimony payment?

A)Payments for child support required by the divorce decree.
B)Payments for life insurance premiums required by the divorce decree.
C)Half of the mortgage payment on a home jointly owned with the ex-spouse when required by the decree of divorce.
D)Payments for dental expenses of the ex-spouse under terms of the divorce agreement.

Question 75

In order to meet the time test for qualifying moving expenses,a taxpayer must:

A)Be a full-time employee for a period of 39 weeks during the 12 months following arrival in the new area.
B)Be a self-employed individual for at least 78 weeks during the 24 months immediately following arrival in the new area.At least 39 of the 78 weeks must be during the first 12-month period.
C)Remain employed only in the initial new job for the entire 39 or 78 week period.
D)Be a full-time employee for a period of 39 weeks during the 12 months following arrival in the new area or be a self-employed individual for at least 78 weeks during the 24 months immediately following arrival in the new area.At least 39 of the 78 weeks must be during the first 12-month period.

Question 76

Sade,who is single and self-employed as a graphic artist,had net earnings from self-employment of $7,250 for the year.She paid $285 a month for health insurance premiums over the last year.Sade is entitled to a for AGI deduction for health insurance of:

A)$0.
B)$285.
C)$3,420.
D)$3,830.

Question 77

In order to open a Health Savings Plan (HSA)account,a taxpayer must qualify under which category:

A)An employee (or spouse)who works for an employer with a high deductible health plan.
B)A self-employed individual.
C)An uninsured employee of a company that does not offer health coverage,who purchases high-deductible health coverage on his or her own.
D)Any one of these.

Question 78

An eligible educator,in the K through 12 educational system,for purposes of the educator's expense deduction is:

A)A teacher.
B)A counselor.
C)A principal.
D)All of these.

Question 79

Which of the following items are considered alimony?

A)Payments made to a third party on behalf of the former spouse for the former spouse's dental expenses.
B)Payments made for a six month period after the death of the recipient spouse.
C)Noncash property settlement.
D)Payments made on a piece of property transferred to the ex-spouse under the settlement agreement.

Question 80

Which of the following is deductible as a moving expense?

A)The cost of moving household goods.
B)Meal costs incurred during the move.
C)The cost of a pre-move house hunting trip.
D)All of these are deductible as moving expenses.