CTP CTP Tax Credits, Deductions & Exemptions 1 — Questions and Answers
Question 1: The Earned Income Tax Credit (EITC) is a refundable credit designed primarily to benefit:
- Low-to-moderate income workers and families (Correct answer)
- High-income earners with investment losses
- Retirees with pension income
- Self-employed individuals with home offices
Correct answer: Low-to-moderate income workers and families
The EITC is a federal refundable tax credit for low-to-moderate income workers, phasing out as income increases, intended to reduce the tax burden on working families.
Question 2: A taxpayer who pays mortgage interest on a loan secured by their primary residence may deduct that interest on:
- Schedule A as an itemized deduction (Correct answer)
- Schedule C as a business expense
- Form 8829 as a home office expense
- Schedule E as a rental expense
Correct answer: Schedule A as an itemized deduction
Qualified residence interest on a primary home mortgage is deducted as an itemized deduction on Schedule A, subject to the loan balance limitations under IRC §163(h).
Question 3: The Child Tax Credit for tax year 2024 is worth up to how much per qualifying child under age 17?
- $2,000 (Correct answer)
- $3,600
- $1,500
- $1,000
Correct answer: $2,000
For tax year 2024, the Child Tax Credit is worth up to $2,000 per qualifying child under age 17, with up to $1,700 refundable as the Additional Child Tax Credit.
Question 4: Which of the following expenses qualifies as a miscellaneous itemized deduction subject to the 2% AGI floor prior to the Tax Cuts and Jobs Act (TCJA)?
- Unreimbursed employee business expenses (Correct answer)
- Medical expenses
- State and local taxes
- Charitable contributions
Correct answer: Unreimbursed employee business expenses
Before TCJA, unreimbursed employee business expenses were a miscellaneous itemized deduction deductible only to the extent they exceeded 2% of AGI.
Question 5: The standard deduction for a single filer for tax year 2024 is approximately:
- $14,600 (Correct answer)
- $12,950
- $27,700
- $21,900
Correct answer: $14,600
For tax year 2024, the standard deduction for a single filer is $14,600, adjusted annually for inflation under IRC §63.
Question 6: A taxpayer's deduction for state and local taxes (SALT) is currently limited to how much per year under TCJA?
- $10,000 (Correct answer)
- $5,000
- $15,000
- No limit
Correct answer: $10,000
The TCJA capped the SALT deduction at $10,000 per year ($5,000 for married filing separately) for the combined total of state/local income taxes and property taxes.
CTP CTP Tax Credits, Deductions & Exemptions 1
The Earned Income Tax Credit (EITC) is a refundable credit designed primarily to benefit: