Final Exam

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Welcome to the Final Exam. This exam is a cumulative review of all the sections available in the Volunteer Reference Manual. This exam is graded at the end of the exam and you must pass the exam with a score of 70% or greater to be approved as a VITA volunteer. We urge you to please review all of your answers before submitting the test for grading. If you do not pass this exam, you may take it again at any time. All questions are random so you will not receive the same exact test the next time, so please be sure to review all the section material before attempting the final exam again.
Upon successfully completing the VITA online certification, you will be presented with the option to print a certificate of completion for you to provide to the volunteer site coordinator.

1.	TaxWise Tip: On the Federal Schedule B interest statement, a "-" in the state adjustment column will subtract the amont to state return
	True False
2.	Some of the adjustments to federal gross income that California does not allow include:
	Tuition and fees deduction. Moving expenses. Alimony paid.
3.	Volunteer site coordinators may use local newspapers, television and radio shows to publicize the program.
	True Only after calling the Volunteer Hotline. False
4.	California Lottery winnings are:
	Taxable but can be reduced by the amount of CA Lottery losses. Non-taxable for the first $600. Non-taxable
5.	Whether or not a taxpayer itemizes deductions is based on:
	Whether or not the taxpayer owns property. The method that gives the taxpayer the most advantage. The filing status of the taxpayer.
6.	A head of household 5402EZ filer, with one dependent, and taxable income of $33,182 would enter what amount on line 17?
	$8 $112 $0
7.	If a taxpayer has no filing requirement but is eligible for the child and dependent care credit, should a return be filed?
	Yes, when in doubt, file a return. When in doubt, do not file a return. Only if the refund is more than $25 no
8.	An adjustment for IRA distributions may be necessary if:
	Your client was self-employed the year they retired. Your client participated in an employer sponsored retirement plan. Your client or their spouse made IRA contributions in 1975, or 1982 through 1986.
9.	Interest income from US Savings bonds and treasury bills are:
	Taxable only if the bonds or bills are cashed. Taxable all of the time. Non-taxable
10.	If you have a difference in federal and state taxability of dividend income you cannot file form 5402EZ.
	True False
11.	A taxpayer may claim up to four dependents on a 5402EZ:
	When they are filing Head of Household. Only if the dependents are the taxpayer's children. Never; up to three dependents may be claimed on 5402EZ.
12.	Unemployment, social security, railroad retirement, US Savings Bonds, state tax refunds and CA Lottery winnings are:
	Taxable to the state, no subtractions to CA (540). Partially taxable to the state by a ratio comparison with federal taxability. Non-taxable to the state, Column B subtractions on CA (540). Always taxable to the state; no adjustment necessary.
13.	IRA distributions are generally taxed the same by federal and state unless:
	The taxpayer has an employer sponsored retirement plan. The taxpayer has a stepped up basis due to non-residency. The taxpayer contributed to the IRA during 1975 or 1982 through 1986.
14.	Income limits for the 5402EZ are:
	There are no limits for the 5402EZ. $50,000 or less for single or head of household filers and $100,000 or less for married filing joint or qualifying widower. $100,000 or less for single or head of household filers and $200,000 or less for married filing joint or qualifying widower.
15.	If line 36, Column B, on CA (540) is a negative number you must:
	Transfer the number as a positive number to line 16 of form 540. Transfer the number as a negative number to line 14 of form 540. Rework the CA (540); it is not possible to create a negative number on line 36.
16.	There are how many sources of income, listed in the volunteer manual, which may be filed using a 5402EZ?
	Ten Six Nine
17.	Check the California credit that is refundable:
	Solar Energy Credit. Renters Credit. Credit for Joint Custody Head of Household. Child and Dependent Care Expense.
18.	Form 540A must be filed if there are any of the following:
	Student loan interest deduction in excess of 60 months. Interest on state and municipal bonds from a state other than California. Claimed educator expense or tution and fees. All of the answers are correct.
19.	VITA/TCE assistance is limited to:
	There is no residency requirement. California residents. California residents and non-residents.
20.	If a taxpayer can be claimed on another return:
	They have no filing requirement. They are not entitled to the personal exemption. They are entitled to half of the personal exemption.
21.	The difference between the amount of student loan interest that may be deducted for federal and state should be calculated using:
	The student loan deduction worksheet. Federal guidelines. Any method and enter the difference on CA (540), Column C. Any method and enter the difference on CA (540), Column B.
22.	Interest from state or municipal bonds issued outside of California create:
	No adjustment necessary. A CA (540), Column C addition to AGI. A CA (540), Column B, adjustment.
23.	The personal exemption credit amount for tax year 2007 is:
	$94 $91 $85
24.	Form 540A, line 13, is the same figure as:
	Total of all wages. Federal AGI. California adjusted gross income.
25.	How many dependents may be claimed on a 5402EZ?
	Three None Four Five
26.	If a taxpayer has no filing requirement but is eligible for the child and dependent care credit, should a return be filed?
	Yes, when in doubt, file a return. When in doubt, do not file a return. Only if the refund is more than $25. No
27.	To look up tax for the 5402EZ form you must use the 5402EZ tax table.
	True False
28.	The difference between the amount of student loan interest that may be deducted for federal and state should be calculated using:
	University Fee Waiver process. The student loan deduction worksheet. Federal guidelines. Any method and enter the difference on CA (540), Column B.
29.	The California Child Dependent Care Credit is allowed for care provided in California
	True False
30.	Individuals listed as dependents on the state return must:
	Meet all dependency tests. Be the same as the dependents on the federal return. All of the answers are correct.
31.	What would the tax on line 17, 5402EZ, be for a single filer and $23,500 California AGI?
	$5 $314 $20
32.	Change in site location or hours should be:
	Reported next season. Reported by changing the information on the posters and in the local newspaper. Reported as soon as possible to the Volunteer Program. All of the answers are correct.
33.	If there is a difference in federal and state taxability of pension income you cannot file form 5402EZ.
	True False
34.	Unemployment, social security, railroad retirement, US Savings Bonds, state tax refunds and CA Lottery winnings are:
	Partially taxable to the state by a ratio comparison with federal taxability. Non-taxable to the state, Column C additions to CA (540). Non-taxable to the state, Column B subtractions on CA (540). Always taxable to the state; no adjustment necessary.
35.	VITA/TCE volunteers are trained on non-resident tax law.
	True False
36.	Taxwise tip: When entering the Form 1099R place an X in the railroad box to indicate the income is not taxable to Califorina.
	True False
37.	California does not tax:
	Railroad Retirement Income, Tier I and Tier II. California Lottery Winnings. All of the answers are correct.
38.	A volunteer is responsible for:
	Using the correct form. Providing the taxpayer with correct information. Following the Volunteer Manual procedures and instructions. All of the answers are correct.
39.	How did California figure IRA basis for individuals moving into California prior to 2002?
	Taxpayer used current basis calculated by prior state of residence. California and federal law are the same. Basis was stepped up to include all contributions plus earnings up to the date of move into California.
40.	To claim a child care credit form 3506 must be attached to both the 540A and 540:
	True False
41.	Voluntary contributions affect a refund in what way?
	No affect. Increase the refund. Decrease the refund.
42.	Payment for completing a tax return in the volunteer program is:
	Never acceptable. Necessary to keep the program on budget. Acceptable if the payment is mailed, not handed to the volunteer.
43.	If both parents have physical custody for the same number of days, then neither parent is the custodial parent for claiming the CA Child Care Expense
	True False
44.	You should use a quality review process to help assure the accuracy of the returns prepared?
	True TaxWise does all the quality review necessary. Quality Review is not required with e-file. False
45.	You must attach form 1040 to the state return when:
	Never; California gets all needed information from the IRS. Any time a 540 with a CA (540) is filed. Any schedule except A or B is attached to the federal return.
46.	The estate of a deceased taxpayer must file a final return if:
	They would otherwise have a filing requirement. There is a capital loss carryover. There are beneficiaries to the estate.
47.	CA (540), line 8, includes $80 interest from US Savings Bonds for a total of $200 interest income. On the CA (540):
	$80 should be entered in Column B. $200 entered in Column A is enough; there is no adjustment necessary. $20 should be entered in Column C.
48.	What should a taxpayer do if they did not report or under report income on a tax return?
	Wait for the taxing agencies to contact them. Conform to current IRS amount allowed. Call the Franchise Tax Board. Amend the return.
49.	If your client filed form 540A and claims the child and dependent care expense credit they must:
	Complete an FTB 3506 to calculate the credit amount but do not attach it to the 540A. Claim the same credit amount as calculated for the federal return. Attach a copy of the federal Schedule A to the 540A. Attach a copy of FTB 3506 to the 540A.
50.	Non-refundable renter's credit has an income limitation of:
	The amount of taxes owed before personal exemptions are applied. No limitation; the credit applies to all California taxpayers regardless of income. $32,272 or $64,544 based on filing status.