IRS - Internal Revenue Service Certified Taxation for Individuals Questions and Answers

Question 1

A single taxpayer, age 50, has an Adjusted Gross Income (AGI) of $80,000 for the year.
They incurred $7,500 in qualified medical expenses.
If they choose to itemize their deductions, how much of their medical expenses can they deduct on their Schedule A?

Accepted Answer

$1,500

Answer

$2,500

Answer

$7,500

Answer

$0

Question 2

Which of the following receipts is generally required to be included in a taxpayer's gross income for federal tax purposes?

Accepted Answer

A $10,000 prize won from a national sweepstakes.

Answer

A cash inheritance from a deceased parent.

Answer

Child support payments received from a former spouse.

Answer

Life insurance proceeds received due to the death of the insured.

Question 3

A freelance consultant expects to owe $4,000 in federal income tax for the year after all withholding and credits are accounted for. To avoid an underpayment penalty, what is the consultant generally required to do?

Accepted Answer

Make estimated tax payments throughout the year.

Answer

File Form 4868 for an automatic extension to pay the full amount with their tax return.

Answer

Nothing, as the amount is below the $5,000 penalty threshold.

Answer

Pay the full amount with their tax return by April 15 of the following year.

Question 4

How did the Tax Cuts and Jobs Act of 2017 (TCJA) change the federal tax treatment of alimony for divorce or separation agreements executed AFTER December 31, 2018?

Accepted Answer

Alimony payments are neither deductible by the payer nor included as taxable income by the recipient.

Answer

Alimony payments are deductible by the payer and included as taxable income by the recipient.

Answer

The tax treatment is elective and must be specified in the divorce agreement.

Answer

Alimony payments are considered a non-taxable property settlement.

Question 5

A 16-year-old dependent child has $800 of earned income from a part-time job and $3,500 of unearned income from a trust. For the 2025 tax year, what is the primary tax implication for this child's unearned income under the 'Kiddie Tax' rules?

Accepted Answer

A portion of the unearned income above a certain threshold will be taxed at the parents' highest marginal tax rate.

Answer

All $3,500 of unearned income is taxed at the child's lower tax rate.

Answer

The unearned income is tax-free because the child is a minor.

Answer

The earned and unearned income are combined and taxed at the parents' highest marginal tax rate.

Question 6

Which of the following statements is true regarding the itemized deduction for state and local taxes (SALT) for the 2025 tax year?

Accepted Answer

The deduction is limited to a total of $40,000 per household ($20,000 if married filing separately).

Answer

There is no limit on the amount of state and local taxes that can be deducted.

Answer

The deduction is only available for state and local property taxes, not income or sales taxes.

Answer

The deduction was permanently eliminated for all taxpayers.

A single taxpayer, age 50, has an Adjusted Gross Income (AGI) of $80,000 for the year.They incurred $7,500 in qualified medical expenses.If they choose to itemize their deductions, how much of their medical expenses can they deduct on their Schedule A?

A single taxpayer, age 50, has an Adjusted Gross Income (AGI) of $80,000 for the year.
They incurred $7,500 in qualified medical expenses.
If they choose to itemize their deductions, how much of their medical expenses can they deduct on their Schedule A?