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Study Guide-Preparing the 1040

The study guide is provided to guide you through the course material in a step by step format.

Course material is a PDF document.

Chapter 1 – New Tax Law/Recent Updates 

Assignment: Chapter 1 <<>> Review Questions  Group #1: # 1-3

When you have completed the Chapter 1 text, you should be able to:

  • Identify the 2016 standard deductions, exemptions and tax filing thresholds;

  • Understand the changes in the repair regulation safe harbor amount;

  • List the individual tax extenders that are permanent and temporary under the PATH Act of 2015; and

  • Recognize the federal income tax return due dates and the extensions of time available for filing.

Chapter 2 – The Income Tax Return

Assignment: Chapter 2 <<>> Review Questions Group #2: #1-2

When you have completed the Chapter 2 text, you should be able to:

  • List the five federal income tax filing statuses and the conditions applicable to their use;

  • Understand the fundamental risks involving tax-related identity theft;

  • Recognize the best practices to ensure obtaining correct names and Social Security numbers of taxpayers and dependents; and

  • Identify the rules applicable to claiming a dependent.


Chapter 3 – Taxability of Wages, Salaries, Tips and Other Earnings

Assignment: Chapter 3 <<>> Review Questions Group #3: #1-2

When you have completed the Chapter 3 text, you should be able to:

  • Identify the tax treatment of various types of earnings, including –
    • Allowances and reimbursements,
    • Bonuses and various awards,
    • Differential wage payments,
    • Severance pay, and
    • Sick pay;
  • Recognize the tax treatment applicable to interest received under the Education Savings Bond program and local/state government obligations;
  • Compare the tax treatment of qualified dividends and dividends that are not qualified; and
  • Recognize the required holding period for qualified dividends.


Chapter 4 – Foreign Accounts, Refunds, Unemployment Compensation, Self-Employment Income and Social Security Benefits

Assignment: Chapter 4 <<>> Review Questions Group #4: #1-2

When you have completed the Chapter 4 text, you should be able to:

  • Determine when Form 1040 Schedule B must be filed;
  • Define “financial account” as used in tax law;
  • Understand the nature of signature authority;
  • Define “unemployment compensation” and recognize its tax treatment;
  • Identify the components of self-employed income;
  • Recognize the self-employed taxpayer’s expenses that may be deducted from gross income;
  • Determine the earnings and expense records that must be kept by a self-employed taxpayer; and
  • Calculate the taxability of Social Security benefits.


Chapter 5 – IRAs, Pensions, Annuities, Capital Gains and Losses

Assignment: Chapter 5 <<>> Review Questions Group #5: #1-4

When you have completed the Chapter 5 text, you should be able to:

  • Identify the income level at which a traditional IRA contribution by an active participant in an employer-sponsored retirement plan becomes non-deductible;
  • Determine the tax treatment of traditional IRA and Roth IRA distributions;
  • Calculate the tax penalty applicable to premature distributions from an IRA;
  • Recognize the rules that apply to lifetime and post-mortem IRA required minimum distributions;
  • Identify the tax rules that apply to distributions from an employer-sponsored retirement plan;
  • Calculate the taxable income received by a taxpayer under a nonqualified annuity; and
  • Recognize the tax rules applicable to capital gains and losses.


Chapter 6 – Adjustments and Deductions

Assignment: Chapter 6 <<>> Review Questions Group #6: #1-2

When you have completed the Chapter 6 text, you should be able to:

  • Calculate the amount of adjustment to a taxpayer’s income for student loan interest;

  • Compute the available deduction for tuition and fees;

  • Identify the items that may be deducted by a taxpayer itemizing deductions; and

  • Recognize the limits applicable to itemized deductions by high-income taxpayers.


Chapter 7 – Child and Dependent Care, Education, Retirement and Child Tax Credits

Assignment: Chapter 7 <<>> Review Questions Group #7: #1-4

When you have completed the Chapter 7 text, you should be able to:

  • Recognize the tax credits that may be available to a taxpayer;

  • Identify the rules applicable to a child tax credit;

  • Determine the availability of a retirement tax credit for a taxpayer; and

  • Calculate a taxpayer’s child and dependent care credit.


Chapter 8 – ACA Provisions

Assignment: Chapter 8 <<>> Review Questions Group #8: #1-6

When you have completed the Chapter 8 text, you should be able to:

  • Calculate the permitted contributions and distributions from tax-favored health plans;
  • Recognize the changes to –
    • The medical expense deduction threshold, and
    • Social Security taxes on high earners and on net investment income;
  • Understand the requirements under the ACA for taxpayers to maintain healthcare coverage;
  • Identify the reasons a taxpayer may be considered exempt from the penalty for failing to maintain required health insurance; and
  • Calculate the penalty applicable to a non-exempt taxpayer for failing to maintain required health insurance.

Chapter 9 – Earned Income Tax Credit

Assignment: Chapter 9 <<>> Review Questions Group #9: #1-3

When you have completed the Chapter 9 text, you should be able to:

  • Recognize the rules concerning eligibility for an earned income tax credit;
  • Identify the earned income, adjusted gross income and investment income limits that apply to a taxpayer’s eligibility for an earned income tax credit;  and
  • Calculate the amount of the earned income credit.


Chapter 10 – Tax Payments and Refunds

Assignment: Chapter 10 <<>> Review Questions Group #10: #1-2

When you have completed the Chapter 10 text, you should be able to:

  • Understand the tax withholding and estimated tax rules;
  • Recognize the penalties that may apply for insufficient tax withholding;
  • Understand the criteria that must be met to be exempt from tax withholding;
  • Identify the options available to a taxpayer to pay taxes due; and
  • Recognize the rules applicable to obtaining a tax refund.

Chapter 11 – Ethics, Practices & Procedures

Assignment: Chapter 11 <<>> Review Questions Group #11 #1-8

When you have completed the Chapter 11 text, you should be able to:

  • Recognize the penalties applicable to a tax return preparer’s negligent or intentional disregard of rules and regulations;
  • Apply the rules related to negotiating client refunds;
  • Identify the due diligence requirements imposed on tax return preparers;
  • Understand the e-file requirements; and
  • Recognize the requirements related to signing and furnishing identifying numbers on client returns and the penalties for failing to do so.

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