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13 Dec 2019

When a taxpayer files for EITC based on earned income from Schedule C, their Tax Professional must:

a. Attach documentation of their income and expenses to the tax return

b. Prepare the return in a way which is disadvantageous to the taxpayer

c. Document all questions they asked the taxpayer, and all of the taxpayer's responses

d. Document the questions and the client's answers pertaining to the income that is advantageous for EITC

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Casey Durgan
Casey DurganLv2
17 Dec 2019
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Related questions

12. Individuals without children are eligible for the earned incomecredit if they meet all the
following conditions except
A) file married filing separately.
B) at tax year end are at least age 25 but not more than age64.
C) for the tax year are not a dependent of another taxpayer.
D) the United States is their principal place of residence for morethan one-half of the tax year.

13. A taxpayer will be ineligible for the earned income credit ifhe or she has disqualified investment income of more than $3,150.Disqualified income includes all the following except
A) net capital gains.
B) tax-exempt interest.
C) net rental income.
D) self-employment income.
14. Max and Alexandra are married and incur $5,500 of qualifyingexpenses to care for their two children, ages 2 and 5. Max's earnedincome is $35,000 and Alexandra's earnings from a part-time job are$5,000. What is the amount of the qualifying expenses for purposesof computing the child and dependent care credit?

Volunteer Standards of Conduct Retest Questions

Directions

Using your resource materials, answer the followingquestions:

1

.

Which volunteers must pass the Volunteer Standards of Conduct(VSC) certifica-tion test?

a.Site coordinators/local coordinators

b.Quality reviewers and tax return preparers

c.Greeters or client facilitators

d.All VITA/TCE site volunteers must pass the VSC certificationtest

2.Failure of a VITA/TCE volunteer to comply with the VolunteerStandards of Conduct

could result in which of the following?

a.The volunteer’s removal from the VITA/TCE Programs.

b.Inclusion in the IRS Volunteer Registry to bar future VITA/TCEactivity indefi-nitely.

c.Termination of the sponsoring organization’s partnership withthe IRS.

d.All of the above may be considered an appropriate actiondepending on thetype of violation and the sponsoring partner’scorrective actions.

3.Is having a donation/tip jar at the quality review stationwithin the VITA/TCE site aviolation of the Volunteer Standards ofConduct?

a.Yes

b.No

4.Maggie wants her tax refund quickly; however, she doesn’t havea bank account fordirect deposit. She asks Josh, the taxlaw-certified preparer, to deposit her refund

into his checking account and turn the funds over to her whenreceived.If Josh agrees to do this, has he violated any of theVolunteer Standards of Conduct?

a.Yes

b.No

5.Pat is a paid tax preparer in the community; he also givesback to the communityby serving as an IRS tax law-certifiedvolunteer tax preparer at a VITA/TCE site.While conducting theinterview with the taxpayer, Pat discovers the taxpayer’ssmallbusiness will generate a loss, making the return out of scope forthe VITA/TCE Programs.Pat explains to the taxpayer that the taxreturn cannot be prepared at the VITA/TCE site, but he will offerthe taxpayer a discount at his paid tax

preparation business down the road.Has Pat violated theVolunteer Standards ofConduct (VSC)?

a.Yes, it is a violation of the VSC for Pat to solicit businessfrom any taxpayer at the VITA/TCE site.

b.No, it is not a violation since the return cannot be preparedat the site.

c.No, none of the VSC addresses soliciting business whilevolunteering at the VITA/TCE site.

6.Ann, an IRS tax law-certified tax preparer, told the taxpayerthat cash income does not need to be reported because the IRS willnever know about it.Ann prepared the return without the cashincome.The designated quality reviewer simply missed this omissionand the return was printed, signed, and e-filed. Did the designatedquality reviewer violate the Volunteer Standards of Conduct?

a.Yes

b.No

7.Jan, a greeter, overheard an IRS tax law-certified volunteer,Jim, trying to sellinsurance to a taxpayer he was helping.Jim is aninsurance agent in the commu-nity. Jan feels like Jim was pushy,made the taxpayer uncomfortable, and violated Volunteer Standard ofConduct #3. What should Jan do?

a.Make an announcement to the taxpayers in the waiting room toignore Jim if he tries to sell them insurance.

b.Tell the site coordinator what she heard, so he canimmediately remove Jim from the site and report the incident usingthe external referral process by sending an email [email protected].

c.Mind her own business and do nothing.

8.Explaining the intake/interview and quality review process isimportant so thetaxpayer understands they are expected to:

a.Have a completed Form 13614-C, Intake/Interview & QualityReview Sheet,prior to having the return prepared.

b.Answer the tax preparer’s additional questions during theinterview.

c.Participate in the quality review of their tax return.

d.All of the above

9.During the intake process, which of the following should thevolunteer verify that the taxpayer and spouse, if applicable, havewith them to ensure the taxpayers can be served that day?

a.Photo identification for both

b.Social Security or taxpayer identification number verificationdocuments for everyone listed on the return

c.All tax statement documents, including Forms W-2, 1099-R,etc.

d.All of the above.

10.To ensure quality service and accurate return preparation,every site is required to have a process for assigning taxpayers toIRS tax law-certified preparers who are certified at or above thelevel required to prepare their tax return.

a.True

b.False

Matt is single, age 25 and has salary from his job as a sports announcer in the amount of $50,000. Matt also has the following income and expenses related to an activity:

Income- $23,000

Mortgage interest- from his home office- $8,000

Property taxes- from his home office- $2,000

Depreciation- $5,000

Supplies and fees- $8,000

Telephone- $2,000

1. Briefly define an activity classified as a hobby vs. a business?

2. List 4 factors might be used to assist a taxpayer in determining whether an activity is a hobby or a business?

3. If a hobby, answer the following questions:

a. Are hobby expenses deductions FOR AGI or FROM AGI?

b. What form/schedule and line is hobby income reported on?

c. What form/schedule and line are hobby expenses reported on?

d. Calculate Matt's AGI.

e. What is the rule regarding how hobby expenses are deducted, including the ordering of expenses and all limitations?

f. Apply the rule in (e) above and prepare a detailed schedule of your calculation of deductible hobby expenses are calculated.

4. If a business, answer the following questions:

a. Are business expense deductions FOR AGI or FROM AGI?

b. What form/schedule is business income reported on?

c. What form/schedule are business expenses reported on?

d. Prepare a tax return for Matt, assuming he uses the standard deduction and has no dependents.

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