Chapter 8 Study Questions Test_ Attempt review

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12/13/23, 11:03 PM Chapter 8 Study Questions Test: Attempt review https://elearning.theincometaxschool.com/mod/quiz/review.php?attempt=870115&cmid=35222 1/6 Started on Wednesday, December 13, 2023, 11:58 PM State Finished Completed on Thursday, December 14, 2023, 12:02 AM Time taken 4 mins 35 secs Points 14.00/15.00 Grade 9.33 out of 10.00 ( 93.33 %) Feedback Congratulations! Question 1 Correct 1.00 points out of 1.00 Question 2 Correct 1.00 points out of 1.00 Arnold has several adjustments to income he plans to claim on his tax return. Which of the following items will be decreased by the adjustments? Select one: a. Deductions b. Total income Correct. Adjustments decrease a taxpayer’s total income to arrive at the adjusted gross income (AGI). c. Taxable wages d. Federal tax withholding All the following are adjustments to income except: Select one: a. Student loan interest deduction b. Penalty on early withdrawal on an IRA Correct. An early withdrawal penalty on an IRA is an additional tax, not an adjustment to income. c. IRA deduction d. Moving expenses for members of the Armed Forces
12/13/23, 11:03 PM Chapter 8 Study Questions Test: Attempt review https://elearning.theincometaxschool.com/mod/quiz/review.php?attempt=870115&cmid=35222 2/6 Question 3 Correct 1.00 points out of 1.00 Question 4 Correct 1.00 points out of 1.00 Question 5 Correct 1.00 points out of 1.00 Each the following is a type of IRA except: Select one: a. Traditional IRA b. 403(b) plan Correct. The 403(b) plan is an elective deferral retirement plan, not an IRA. c. SIMPLE IRA d. Roth IRA All the following are considered taxable compensation for purposes of an IRA except: Select one: a. Self-employment income b. Wages c. Professional fees d. Interest income Correct. Interest income is not earned income, and therefore is not taxable compensation for purposes of an IRA. Alan (age 45) and Trisha (age 31) are Married Filing Jointly. Evaluate their income to determine how much they can contribute to an IRA Alan’s wages: $ 6,000 Joint interest income: $15,900 Stock proceeds: $36,000 Select one: a. $ 0 b. $12,000 – Jointly c. $12,000 – Each d. $ 6,000 – Jointly Correct. The taxpayer’s IRA contribution is limited to $6,000 per person or the total taxable compensation, whichever may be less. The taxable compensation of $6,000 is less than $6,000 per person.
12/13/23, 11:03 PM Chapter 8 Study Questions Test: Attempt review https://elearning.theincometaxschool.com/mod/quiz/review.php?attempt=870115&cmid=35222 3/6 Question 6 Correct 1.00 points out of 1.00 Question 7 Correct 1.00 points out of 1.00 Question 8 Incorrect 0.00 points out of 1.00 Billy (age 35) and LeeAnn (age 32) are MFJ and have decided to contribute $7,000 to their IRAs. LeeAnn’s wages are $50,000 per year. She is not covered by a pension plan at work. Billy is a stay-at-home dad. How much should they each contribute to their respective IRAs? Select one: a. They cannot contribute $7,000. LeeAnn is the only one with income; she can contribute $6,000. Billy is unable to contribute to his IRA because he is not employed. b. They must split it 50/50 between their respective IRA accounts. c. Since LeeAnn works, she must contribute a full $6,000 to her IRA, and Billy will contribute the remaining $1,000 to his IRA. d. They can split the contribution in any manner they choose as long as neither contributes more than $6,000 to their respective IRAs. Correct. The maximum amount a single taxpayer (under age 50) can contribute is the smaller of $6,000 or their taxable compensation. If the taxpayers are married, and only one spouse has taxable compensation, the maximum contribution the couple can make is $12,000 (if both under age 50). The maximum which can be contributed to one account is $6,000. Jack and Jane, Married Filing Jointly taxpayers, do not have a pension plan at work. At what modified adjusted gross income level is their income too high to be eligible to make a Roth IRA contribution in 2021? Select one: a. $140,000 b. $198,000 c. $ 10,000 d. $208,000 Correct. A Married Filing Jointly taxpayer cannot contribute to a Roth IRA in 2021 if their MAGI is $208,000 or more. Brett, age 50, took an early IRA distribution to buy a sailboat. He receives Form 1099-R with distribution code 1 in box 7. Where should Brett report the required early withdrawal penalty? Select one: a. The IRA deduction worksheet b. Form 1099-R c. Schedule 2 (Form 1040), line 8 d. Schedule 1 (Form 1040), line 18 This answer is incorrect. Schedule 1 (Form 1040), line 18 is used to report the penalty on early withdrawal of savings.
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