Question 1

Which of the following is correct for Qualified Tuition Programs?

Accepted Answer

Contributions made to a Qualified Tuition Program (also known as a 529 plan) are not deductible on federal income tax returns, but qualified educational expense distributions from the plan are tax-free.

Question 2

Pat has a dependent daughter and files as head of household.She has AGI of $376,000.What percentage of the $4,050 personal exemption and $4,050 dependency exemption may she deduct on her 2017 income tax return?

Accepted Answer

The answer of Pat has a dependent daughter and files...

Question 3

Geoffrey receives $20,000 from a qualified tuition program created by his grandmother.The program had accumulated $6,000 in earnings.He used the full $20,000 to pay for qualified higher education expenses.Calculate the amount of earnings subject to taxation.

Accepted Answer

The answer of Geoffrey receives $20,000 from a qualified tuition...

Question 4

Which of the following employees may deduct the cost of a uniform? ​

Accepted Answer

The cost of uniforms can be deducted if they are required for work and not suitable for everyday wear. Ornate robes for clergy fit this criterion.

Question 5

Melissa took a $1,500 distribution from her educational savings account and used $1,200 to pay for qualified education expenses.Before the distribution,Melissa's account balance was $4,000,of which $1,000 was earnings.Calculate the following:

Accepted Answer

The answer of Melissa took a $1,500 distribution from her...

Question 6

Which of the following is true with respect to an education incentive?

Accepted Answer

Contributions to Qualified Tuition Programs (529 plans) are not deductible on federal income tax returns, but earnings grow tax-free if used for qualified education expenses. There are no income limits for contributing to a 529 plan, making it accessible to married taxpayers at any income level.

Question 7

Rob's employer has an accountable plan for employee expenses.His employer reimburses him for $1,000 of professional dues and subscriptions.
a.How much of the reimbursement must Rob include in income?
b.How much can Rob claim as a miscellaneous itemized deduction subject to the 2 percent floor?

Accepted Answer

The answer of Rob's employer has an accountable plan for...

Question 8

Jennie receives $12,000 (of which $2,000 is earnings)from a Qualified Tuition Program.She uses the funds to pay for new furniture for her apartment.What amount is taxable to Jennie?

Accepted Answer

The $2,000 earnings portion of the distribution from the Qualified Tuition Program is taxable to Jennie because she used the funds for non-qualified expenses (new furniture for her apartment instead of education-related expenses). The principal amount of $10,000 is not taxable.

Question 9

Lourdes is a paralegal.Since she often deals with legal matters,she feels a law degree would be beneficial to her.May Lourdes deduct her educational expenses for law school as a miscellaneous itemized deduction? Explain.

Accepted Answer

The answer of Lourdes is a paralegal.Since she often deals...

Question 10

Rachel's employer does not have an accountable plan for employee expenses.Her employer reimburses her for $3,000 of business travel expenses.
a.How much of the reimbursement must Rachel include in income?
b.How much can Rachel take as a miscellaneous itemized deduction subject to the 2 percent floor?

Accepted Answer

The answer of Rachel's employer does not have an accountable...

Question 11

Charles,a corporate executive,incurred business related,unreimbursed expenses in the current year as follows: Assuming that Charles itemizes his deductions,how much of these expenses should he deduct on his current year Schedule A,before considering the 2 percent of adjusted gross income limitation?

Accepted Answer

The answer of Charles,a corporate executive,incurred business related,unreimbursed expenses in...

Question 12

Tom is employed by a large consulting firm.His employer has an accountable expense reimbursement plan.Tom paid for $3,000 of travel expenses which were directly reimbursed under the plan.How will the travel expenses be treated in Tom's tax return?

Accepted Answer

The answer of Tom is employed by a large consulting...

Question 13

Mary Lou took an $8,000 distribution from her educational savings account and used $6,000 to pay for qualified higher education expenses.The remaining balance of $2,000 was used to purchase clothes.On the date of the distribution,her educational savings account had a $25,000 balance including the $20,000 she had contributed.How much of the $8,000 distribution is tax-free?

Accepted Answer

The amount of the distribution that is tax-free is equal to the amount of qualified higher education expenses or the proportion of the distribution spent on qualified expenses. In this case, $6,000 of the $8,000 distribution was spent on qualified higher education expenses, so $6,000 of the distribution is tax-free. However, any portion of the remaining $2,000 that was not spent on qualified expenses is subject to taxes and penalties.

To calculate the taxable portion of the distribution, we can use the following formula:
Taxable amount = (Non-qualified expenses / Distribution) x Earnings

Since we know that Mary Lou's educational savings account had a $25,000 balance on the date of the distribution and she contributed $20,000, we can assume that the remaining $5,000 is earnings.

Using the formula above, we get:
Taxable amount = ($2,000 / $8,000) x $5,000 
Taxable amount = 0.25 x $5,000 
Taxable amount = $1,250

Therefore, the total amount of the distribution that is tax-free is $6,000, and the taxable portion is $1,250. The answer is C, $7,600.

Question 14

For married taxpayers filing a joint return in 2017,at what AGI level does the phase-out limit for contributions to Qualified Tuition Programs (Section 529 plans)start?

Accepted Answer

There is no phase-out limit on contributions to Qualified Tuition Programs (Section 529 plans) for married taxpayers filing a joint return or any other filing status.

Question 15

Charlie is a single taxpayer with income of $107,000 which includes $22,500 of interest income.Contributions to educational savings accounts are phased out between $95,000 and $110,000.What is the maximum contribution Charlie can make to an educational savings account?

Accepted Answer

Contributions to educational savings accounts are phased out between $95,000 and $110,000. Charlie's income is $107,000, which is within the phase-out range. Therefore, the maximum contribution Charlie can make to an educational savings account is $2,000.

Question 16

Phillip,a single parent,would like to contribute $1,800 to an educational savings account for his 10-year-old son.His AGI is $98,000.Calculate the amount of the contribution he can make.

Accepted Answer

The answer of Phillip,a single parent,would like to contribute $1,800...

Question 17

All taxpayers may deduct up to $4,000 of higher education tuition expenses.

Accepted Answer

This statement is not entirely true. The deduction for higher education tuition expenses is subject to certain limitations and may also be affected by other factors such as income level and eligibility for certain education tax credits. Additionally, the availability of this deduction is subject to expiration and renewal by Congress. It is important to consult with a tax professional or refer to the IRS guidelines for specific details on deducting higher education expenses.

Question 18

Itemized deductions are subject to a phase-out based on AGI for certain high-income taxpayers.

Accepted Answer

Itemized deductions are subject to a phase-out based on AGI for taxpayers whose AGI exceeds a certain threshold. This phase-out begins at an AGI of $313,800 for married taxpayers filing jointly and $261,500 for single taxpayers in 2021. The total amount of itemized deductions a taxpayer can claim is reduced by 3% of the amount by which their AGI exceeds the threshold, up to a maximum reduction of 80% of their itemized deductions.

Question 19

April and Wilson are married and file a joint tax return.Wilson is a police officer,and in the current tax year he spends $400 on uniforms and $160 for dry cleaning the uniforms.April is in the National Guard and military regulations restrict her from wearing her uniforms when she is off duty.The cost of uniforms for the year was $220 and the cost of dry cleaning them amounted to $80.April was granted a uniform allowance of $180 for the year.She also purchased a pair of standard black shoes to wear while on duty that cost $75.How much may they deduct on Schedule A for special clothing and uniforms,before considering the 2 percent of adjusted gross income limitation? ​

Accepted Answer

Wilson can deduct $400 for the cost of uniforms and $160 for dry cleaning, for a total of $560.
April can deduct $220 for the cost of uniforms, $80 for dry cleaning, and $75 for the black shoes, for a total of $375. However, her uniform allowance of $180 reduces this amount to $195.
Therefore, the total deduction for special clothing and uniforms before considering the 2 percent of adjusted gross income limitation is $560 + $195 = $755. However, since the AGI of April and Wilson is not given, we cannot determine if there is any limitation on the deduction.

Question 20

Toni and Beyonze are married and file jointly.During 2017,they paid tuition for their daughter's college in the amount of $23,000.If their AGI was $142,000,what is the amount of tuition deduction they are eligible for?

Accepted Answer

For 2017, the tuition and fees deduction was not available for taxpayers with an AGI over $160,000 for married filing jointly, but the deduction was phased out starting at $130,000. Since their AGI is $142,000, they are not eligible for the deduction.

Quiz 5: Itemized Deductions and Other Incentives

Which of the following is correct for Qualified Tuition Programs?

Pat has a dependent daughter and files as head of household.She has AGI of $376,000.What percentage of the $4,050 personal exemption and $4,050 dependency exemption may she deduct on her 2017 income tax return?

Geoffrey receives $20,000 from a qualified tuition program created by his grandmother.The program had accumulated $6,000 in earnings.He used the full $20,000 to pay for qualified higher education expenses.Calculate the amount of earnings subject to taxation.

Which of the following employees may deduct the cost of a uniform?

Melissa took a $1,500 distribution from her educational savings account and used $1,200 to pay for qualified education expenses.Before the distribution,Melissa's account balance was $4,000,of which $1,000 was earnings.Calculate the following:

Which of the following is true with respect to an education incentive?

Rob's employer has an accountable plan for employee expenses.His employer reimburses him for $1,000 of professional dues and subscriptions. a.How much of the reimbursement must Rob include in income? b.How much can Rob claim as a miscellaneous itemized deduction subject to the 2 percent floor?

Jennie receives $12,000 (of which $2,000 is earnings) from a Qualified Tuition Program.She uses the funds to pay for new furniture for her apartment.What amount is taxable to Jennie?

Lourdes is a paralegal.Since she often deals with legal matters,she feels a law degree would be beneficial to her.May Lourdes deduct her educational expenses for law school as a miscellaneous itemized deduction? Explain.

Charles,a corporate executive,incurred business related,unreimbursed expenses in the current year as follows: Assuming that Charles itemizes his deductions,how much of these expenses should he deduct on his current year Schedule A,before considering the 2 percent of adjusted gross income limitation?

Tom is employed by a large consulting firm.His employer has an accountable expense reimbursement plan.Tom paid for $3,000 of travel expenses which were directly reimbursed under the plan.How will the travel expenses be treated in Tom's tax return?

For married taxpayers filing a joint return in 2017,at what AGI level does the phase-out limit for contributions to Qualified Tuition Programs (Section 529 plans) start?

Charlie is a single taxpayer with income of $107,000 which includes $22,500 of interest income.Contributions to educational savings accounts are phased out between $95,000 and $110,000.What is the maximum contribution Charlie can make to an educational savings account?

Phillip,a single parent,would like to contribute $1,800 to an educational savings account for his 10-year-old son.His AGI is $98,000.Calculate the amount of the contribution he can make.

All taxpayers may deduct up to $4,000 of higher education tuition expenses.

Itemized deductions are subject to a phase-out based on AGI for certain high-income taxpayers.

Toni and Beyonze are married and file jointly.During 2017,they paid tuition for their daughter's college in the amount of $23,000.If their AGI was $142,000,what is the amount of tuition deduction they are eligible for?

Quiz 5: Itemized Deductions and Other Incentives

Which of the following is correct for Qualified Tuition Programs?

Pat has a dependent daughter and files as head of household.She has AGI of $376,000.What percentage of the $4,050 personal exemption and $4,050 dependency exemption may she deduct on her 2017 income tax return?

Geoffrey receives $20,000 from a qualified tuition program created by his grandmother.The program had accumulated $6,000 in earnings.He used the full $20,000 to pay for qualified higher education expenses.Calculate the amount of earnings subject to taxation.

Which of the following employees may deduct the cost of a uniform? ​

Melissa took a $1,500 distribution from her educational savings account and used $1,200 to pay for qualified education expenses.Before the distribution,Melissa's account balance was $4,000,of which $1,000 was earnings.Calculate the following:

Which of the following is true with respect to an education incentive?

Rob's employer has an accountable plan for employee expenses.His employer reimburses him for $1,000 of professional dues and subscriptions. a.How much of the reimbursement must Rob include in income? b.How much can Rob claim as a miscellaneous itemized deduction subject to the 2 percent floor?

Jennie receives $12,000 (of which $2,000 is earnings) from a Qualified Tuition Program.She uses the funds to pay for new furniture for her apartment.What amount is taxable to Jennie?

Lourdes is a paralegal.Since she often deals with legal matters,she feels a law degree would be beneficial to her.May Lourdes deduct her educational expenses for law school as a miscellaneous itemized deduction? Explain.

Tom is employed by a large consulting firm.His employer has an accountable expense reimbursement plan.Tom paid for $3,000 of travel expenses which were directly reimbursed under the plan.How will the travel expenses be treated in Tom's tax return?

For married taxpayers filing a joint return in 2017,at what AGI level does the phase-out limit for contributions to Qualified Tuition Programs (Section 529 plans) start?

Charlie is a single taxpayer with income of $107,000 which includes $22,500 of interest income.Contributions to educational savings accounts are phased out between $95,000 and $110,000.What is the maximum contribution Charlie can make to an educational savings account?

Phillip,a single parent,would like to contribute $1,800 to an educational savings account for his 10-year-old son.His AGI is $98,000.Calculate the amount of the contribution he can make.

All taxpayers may deduct up to $4,000 of higher education tuition expenses.

Itemized deductions are subject to a phase-out based on AGI for certain high-income taxpayers.

Toni and Beyonze are married and file jointly.During 2017,they paid tuition for their daughter's college in the amount of $23,000.If their AGI was $142,000,what is the amount of tuition deduction they are eligible for?

Which of the following employees may deduct the cost of a uniform?