2009 Form 6744

2009 Form 6744
Volunteer
Volunteer Assistor’s
Tax Return Preparation Test/Retest
Programs
For Use in Preparing Tax Year 2009 Returns
• Volunteer Income Tax Assistance (VITA)
• Tax Counseling for the Elderly (TCE)
Visit www.irs.gov
for the most up-to-date
tax products and
information.
Form 6744 (Rev. 2009) Catalog Number 43560V Department of the Treasury Internal Revenue Service www.irs.gov
Form 6744 (Rev. 2009) Catalog Number 43560V Department of the Treasury Internal Revenue Service www.irs.gov
Technical Updates
Publication 4491-X conveys tax law updates and other revisions to the VITA/TCE training
products that occur after the products are published. The publication is normally available for
downloading in mid-December via IRS.gov.
Volunteer Tax Alerts are issued during filing season (as needed) and may include additional
technical updates. They are accessible via IRS.gov (keyword: Community Network). Also,
consult your course instructor and/or site coordinator for guidance.
Department of the Treasury – Internal Revenue Service

Volunteer Agreement
Standards of Conduct – VITA/TCE Programs
The mission of the VITA/TCE Program is to provide free basic tax return preparation for
eligible taxpayers. Volunteers are the program's most valuable resource. To establish the
greatest degree of public trust, Volunteers have a responsibility to provide high quality
service and uphold the highest of ethical standards.
As a participant in the VITA/TCE Program, I agree to the following standards of conduct:
• I will treat all taxpayers professionally, with courtesy and respect.
• I will safeguard the confidentiality of taxpayer information.
• I will apply the tax laws equitably and accurately to the best of my ability.
• I will only prepare returns for which I am certified. (Basic, Advanced, etc.)
• I will exercise reasonable care in the use and protection of equipment and supplies.
• I will not solicit business from taxpayers I assist or use the knowledge I have gained
about them for any direct or indirect personal benefit for me or any other specific
individual.
• I will not accept payment from taxpayers for the services I provide. I may receive
compensation as an employee of a program sponsor.
• I will ensure the returns I prepare, follow the Intake/Interview and Quality Review
Processes.
Confidentiality Statement
All tax information received from taxpayers in your volunteer capacity is strictly confidential
and should not, under any circumstances, be disclosed to unauthorized individuals and should
be properly safeguarded.
All persons, scenarios and addresses appearing in this product are fictitious. Any resemblance
to persons living or dead is purely coincidental.
Form 6744 – 2009 VITA/TCE Test
Table of Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ii
Test Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Test Answer Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
Volunteer Agreement Form 13615 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Test Scenarios and Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
Basic Scenarios
Scenario 1 – Janice Simpson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
Scenario 2 – John Gordon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2
Scenario 3 – Peggy Jackson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
Scenario 4 – Rebecca Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4
Scenario 5 – Victor and Maria Olivet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5
Scenario 6 – Darius and Matilde Howard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-6
Scenario 7 – Gladys Berry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-13
Scenario 8 – Allison Mankato . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-20
Intermediate Scenarios
Scenario 1 – Joe Cooke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
Scenario 2 – Sarah Ashland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
Scenario 3 – Paul Harvard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3
Scenario 4 – George and Alberta Farmer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-13
Advanced Scenarios
Scenario 1 – Larry Fairfield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
Scenario 2 – Fred Marshall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2
Scenario 3 – Lucy Phillips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3
Scenario 4 – Mark and Valerie Palmer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4
Military Scenarios
Scenario 1 – Robert and Amy Bridgewater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
Scenario 2 – Daniel and Donna Hendrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2
Scenario 3 – Diana Stewart and Henri Dumont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3
Scenario 4 – Peter and Beth Anderson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13
International Scenarios
Scenario 1 – Doug and Claire Emerson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1
Scenario 2 – Don and Barbara Chabot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3
Scenario 3 – Jason and Ella Barnes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4
Blank Forms Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

Blank Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Retest Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-1
Introduction & Instructions i

Preface
Quality Return Process

The IRS has an ongoing initiative to improve and/or enhance the quality of returns
prepared at VITA/TCE sites. The Volunteer Return Preparation Program – Quality
Improvement Process continues to focus on improving the return preparation process.
An accurate return is the most important aspect of providing quality service to the
taxpayer; it establishes credibility and integrity in the program and the volunteer who
prepared the return. Throughout the training material you were introduced to the major
components of the VITA/TCE return preparation process including:
• Understanding and applying tax law
• Screening and interviewing taxpayers (Intake/Interview & Quality Review Sheet)
• Using references, resources, and tools
• Conducting quality reviews
During your training you were given an opportunity to apply the tax law knowledge you
gained. You also learned how to properly verify and apply the information provided by
the taxpayer on the Intake and Interview Sheet in order to prepare a correct tax return.
You also learned how to use your references, resources, and tools; and conduct a qual-
ity review of the returns that you have prepared.
Now comes the time to test the knowledge and competencies you have acquired and
apply them to specific scenarios. All of these steps help you in achieving the goal of
preparing accurate tax returns within your scope of training.
We welcome your comments for improving these materials and the VITA/TCE
programs. You may follow the evaluation procedures in this kit or e-mail your comments
to partner@irs.gov.
Thank you for being a part of this valuable public service for your neighbors and
community.
ii Introduction & Instructions

Test Instructions
Special Accommodations
If you require special accommodations to complete the test, please advise your
Instructor immediately.
Reference Materials
Use 2009 values for deductions, exemptions, tax, or credits for all answers on the
test. Remember to round to dollars. Test answers have been rounded up or down as
directed in the specific instructions on the form. The EIC and Tax Tables for 2009
are located in Publication 4491-W, Comprehensive Problems and Exercises
Workbook.
This is an open book test. You may use your course book and any other reference
material you will use as a volunteer. The revised Form 13614-C, Intake/Interview &
Quality Review Sheet, is included in each return preparation scenario. Use this form to
help you complete the tax returns and answer the test questions. Blank forms for the
test are located in the back of the test booklet. If extra forms are needed they may be
photocopied.
Please complete this test on your own. Taking the test in groups or with outside assis-
tance is a disservice to the customers you have volunteered to help.
Income amounts for these test scenarios may exceed the income limits for VITA sites.
Using Software
This is the second year for the Practice Lab. The Practice Lab is tax year 2009 tax
preparation software developed as a training tool to help in the certification process
for VITA/TCE volunteers. Go to www.irs.gov and type a keyword search “Link & Learn
Taxes” in the keyword search field. Go to a specific course level and click the “start
course” link to display the course menu. Click on the Practice Lab icon to the right
of the page. A universal password will be needed to access the Practice Lab. Your
Instructor or Site Coordinator will be able to provide you with the universal pass-
word. Once you access the Practice Lab you will need to create a unique UserID.
Important: You will need to create a UserID again this year, even if you used
the Practice Lab last year.
Only the 2009 version of the software will generate the correct answers for 2009 returns.
All social security numbers, employer identification numbers, and account numbers
provided in the scenarios are fictitious.
Volunteers using tax preparation software to complete the test should replace the
X’s as directed by the software. If you are using the Link & Learn Taxes Practice Lab
replace the X’s in the SSNs and EINs with your unique User ID. Use your city, state,
and zip code when completing any of the forms, unless otherwise indicated.
Test Answer Sheet

When you complete the test, please transfer all answers to the tear-out Test Answer
Sheet.
Make sure your name is at the top of the page.
Introduction & Instructions iii

Forward the completed Test Answer Sheet and the completed Form 13615, Volunteer
Agreement, as directed for grading. Do not submit your entire test booklet unless
otherwise directed. If you are required to take the retest, your Test Answer Sheet will
be retained. If you are using Link & Learn Taxes to grade your test, do not use the test
answer sheet.
Test Score
You will be advised of your test results. Your Volunteer Agreement will be maintained by
your Site Coordinator.
Certification
Each course must be passed with a minimum score of 80% for certification. If you
do not achieve a score of at least 80%, you should discuss it with your Instructor or
Training/Site Coordinator. After the discussion, you may choose to take a certification
retest. The retest questions are included in this test booklet after the blank forms.
VITA/TCE Courses
There are five courses. They are Basic, Intermediate, Advanced, Military, and
International. Each course is summarized below.
• Basic: This course covers the completion of wage earner type returns. Effective for
tax year 2009, social security income and penalty on early withdrawal of savings is
part of the Basic course.
• Intermediate: This course covers completion of returns from wage earners, those
who receive pension income, and more complex Forms 1040. Itemized deductions
and Schedule C-EZ are included in this course.
• Advanced: This course covers the completion of the full scope of returns. It
requires certification in Basic and Intermediate. Capital gains/losses, more
complex pension issues, and mortgage forgiveness on a principal residence are
included in this course.
• Military: This course covers the full scope of returns presented by members of the
Armed Forces, Reserve and National Guard. It requires certification in Basic
and Intermediate. This course covers domestic military topics. Therefore, military
representatives or instructors going overseas to provide assistance or teach must be
certified in both Military and International courses.
• International: This course covers the completion of returns for taxpayers, both
military and non-military, living outside the United States and assisted by volunteers
working at U.S. Embassies and Consulates or military installations. This requires
certification in Basic and Intermediate. This course includes topics of Foreign
Income Exclusion and Foreign Tax Credit applicable to taxpayers living and working
overseas.
All volunteers must complete the Basic course. Volunteers who are certified in
Basic can prepare returns within the scope of the Basic course. Volunteers can stop
with Basic or proceed with other courses. Volunteers can only prepare returns for the
level for which they have been certified. Quality Reviewers and Instructors must be
certified at the Intermediate level or above.
iv Introduction & Instructions

Volunteers who wish to take Advanced, Military or International must complete
Basic and Intermediate before proceeding with these additional courses. Remember
each course for which you wish to be certified must be passed with a minimum score of
80% accuracy.
Certification in Link & Learn Taxes

You may take this volunteer certification test online using the Link & Learn Taxes
e-learning application at http://www.irs.gov/app/vita/index.jsp
or
at www.irs.gov, using keyword
search: Link and Learn.
Caution: It is very important to
understand the following infor-
mation. You can complete the test
by answering the questions in this
booklet and certify using Link & Learn Taxes.
The test scenarios on Link & Learn Taxes are the same as this booklet. However,
questions in the online test can be from either the test or the retest. You must
read each question carefully before entering your answers online.
VITA/TCE Certification Requirements

Basic certification is required for all volunteers who prepare tax returns in the VITA/
TCE programs. Volunteers serving as Quality Reviewers must be certified at the
Intermediate level or above. Volunteers may certify at increasing levels of complexity
based on their training and experience. Each level of certification builds on the previous
level.
After completing the Basic certification (7 Scenarios and 1 Quality Review), volunteers
may proceed to the Intermediate certification (4 Scenarios) followed by the Advanced
(4 Scenarios) or Military (4 Scenarios) or International (3 Scenarios) certification as
their training and experience warrants.
BASIC
Minimum Proficiency Required
24 Correct out of 30
ALL VOLUNTEERS
INTERMEDIATE
Minimum Proficiency Required
16 Correct out of 20
Requires Successful Completion of BASIC
MILITARY ADVANCED international

Minimum Proficiency Required Minimum Proficiency Required Minimum Proficiency Required
16 Correct out of 20 12 Correct out of 15 12 Correct out of 15
Plus Successful Completion Plus Successful Completion Plus Successful Completion
of BASIC & Intermediate of BASIC & Intermediate of BASIC & Intermediate
Introduction & Instructions v

Test Answer Sheet Question Answer Question Answer
Intermediate Scenario 1 Military Scenario 1
Name
9.1 17.1
Record all your answers on this tear-out page. 9.2 17.2
Your Instructor will tell you where to send your Intermediate Scenario 2 Military Scenario 2
Test Answer Sheet for grading. Be sure to complete 10.1 18.1
and sign the Form 13615, Volunteer Agreement. 10.2 Military Scenario 3
Intermediate Scenario 3 19.1
11.1 19.2
Privacy Act Notice
11.2 19.3
Question Answer
The Privacy Act of 1974 requires that 11.3 19.4
Basic Scenario 1
when we ask for information we tell you 11.4 19.5
our legal right to ask for the information, 1.1
why we are asking for it, and how it will 11.5 19.6
1.2
be used. We must also tell you what
11.6 19.7
could happen if we do not receive it, Basic Scenario 2
and whether your response is voluntary, 11.7 19.8
required to obtain a benefit, or mandatory. 2.1
11.8 19.9
Our legal right to ask for information is 2.2
5 U.S.C. 301. 11.9 19.10
Basic Scenario 3
We are asking for this information to assist Intermediate Scenario 4 Military Scenario 4
us in contacting you relative to your inter-
3.1
12.1 20.1
est and/or participation in the IRS volun- 3.2
teer income tax preparation and outreach 12.2 20.2
programs. The information you provide Basic Scenario 4
may be furnished to others who coordi-
12.3 20.3
4.1
nate activities and staffing at volunteer 12.4 20.4
return preparation sites or outreach activi- 4.2
ties. The information may also be used to 12.5 20.5
establish effective controls, send corre-
Basic Scenario 5
12.6 20.6
spondence and recognize volunteers. 5.1
12.7 20.7
Your response is voluntary. However, if 5.2
you do not provide the requested informa- Total Answers Correct: Total Answers Correct:
tion, the IRS may not be able to use your Basic Scenario 6
assistance in these programs.
Total Questions: 20 Total Questions: 20
6.1
Passing Score: 16 of 20 Passing Score: 16 of 20
6.2
6.3 Question Answer Question Answer
6.4 Advanced Scenario 1 International Scenario 1
6.5 13.1 21.1
6.6 13.2 21.2
6.7 Advanced Scenario 2 21.3
Basic Scenario 7 14.1 21.4
7.1 14.2 International Scenario 2
7.3 15.1 22.2
7.4 15.2 International Scenario 3
7.6 16.1 23.2
7.7 16.2 23.3
7.8 16.3 23.4
Basic Scenario 8 16.4 23.5
8.1 16.5 23.6
8.2 16.6 23.7
8.3 16.7 23.8
8.4 16.8 23.9
8.5 16.9 Total Answers Correct:
Total Answers Correct: Total Answers Correct: Total Questions: 15
Total Questions: 30 Total Questions: 15 Passing Score: 12 of 15
Passing Score: 24 of 30 Passing Score: 12 of 15
vi Introduction & Instructions

Introduction & Instructions vii
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viii Introduction & Instructions

2009 6744 Test – Basic Course
The first five short scenarios are designed to measure key competencies related to
dependency exemptions and related tax benefits. These first five scenarios do not
require you to prepare a tax return. Read each scenario carefully and use your training
and reference tools to answer the questions after the scenario.
Basic Scenario 1: Janice Simpson
Interview Notes
• Janice is 19 years old, single, and a full-time student.

• Janice lived with her parents all year. She did not pay rent or household bills.
• Janice did not provide over half of her own support.
• In 2009, Janice worked at a department store and earned $4,700, which was her
total income for the year.
• Janice’s federal income tax withholding was $250.
• Janice and her parents are U.S. citizens and have valid social security numbers.
Basic Scenario 1: Test Questions
Directions
Using your resource materials and the above interview notes, answer the following
questions.
1.1 What amount can Janice claim for her own personal exemption?
a. $0
b. $3,650
c. $4,700
d. Janice can choose either $0 or $3,650
1.2 Is Janice eligible for the making work pay credit on her tax return?
a. Yes
b. No
Basic Scenarios 1-1

Basic Scenario 2: John Gordon
Interview Notes
• John is single and lives with his girlfriend, Theresa, and her three-year-old son
Timmy. The three of them have lived together since October 2007. They lived
together for the entire year of 2009.
• John is not Timmy’s father.
• Timmy’s father does not contribute to Timmy’s support; he left shortly after Timmy
was born. Theresa has not had any contact with Timmy’s father since he left.
• John and Theresa provided all of Timmy’s support during 2009.
• John earned $42,000 in 2009. He had no other income.
• Theresa worked part-time and earned $15,000.
• John, Theresa, and Timmy are U.S. citizens and have valid social security numbers.
Directions
questions.
2.1 Does John qualify for Head of Household filing status?

a. Yes
b. No
2.2 Can John claim Timmy as a dependent?

a. Yes, because Timmy is John’s qualifying child.
b. No, because Timmy is Theresa’s qualifying child.
c. Yes, because Timmy is John’s dependent under the rules for qualifying
relative.
d. Yes, because John provided most of Timmy’s support.
1-2 Basic Scenarios

Basic Scenario 3: Peggy Jackson
Interview Notes
• Peggy Jackson and Michael Martin were divorced in October 2009. They have not
lived together for three years.
• They have one child, Lizzie, age 4.
• In 2009, Lizzie lived with Peggy the entire year.
• Peggy and Michael provided all of Lizzie’s support.
• In 2009, Peggy worked and earned $18,000. Michael worked and earned $33,000.
• Since Michael pays child support, Peggy told Michael to claim Lizzie for everything
on his tax return.
• The divorce decree states that Michael can claim Lizzie as a dependent.
• Peggy, Michael, and Lizzie are U.S. citizens and have valid social security numbers.

Directions
questions.
3.1 Who can claim Lizzie as a dependent?

a. Michael can claim Lizzie because he has the higher income.
b. Peggy can claim Lizzie unless she signs Form 8332, Release of Claim to
Exemption for Child of Divorced or Separated Parents, to allow Michael to
claim Lizzie as a dependent.
c. Michael can claim Lizzie if he attaches a copy of the divorce decree to his
return.
d. No one can claim Lizzie as a dependent.
3.2 Who can claim Lizzie as a qualifying child for the earned income credit (EIC)?
a. Michael is the only one who can claim Lizzie for the EIC.
b. Either Michael or Peggy can claim Lizzie for the EIC.
c. Peggy is the only one who can claim Lizzie for the EIC.
d. No one can claim Lizzie for the EIC.
Basic Scenarios 1-3

Basic Scenario 4: Rebecca Grant
Interview Notes
• Rebecca Grant is 46 years old.

• Roger is Rebecca’s 26-year-old son. Roger is totally and permanently disabled.
• Roger’s father died in 2006.
• In 2009, Rebecca and Roger lived with Samuel Grant in his home. Samuel Grant is
Rebecca’s father and Roger’s grandfather.
• In 2009, Roger received Form SSA-1099 showing social security disability benefits
of $12,000, his only income. Roger provided all of his own support with this income.
• Rebecca worked as a clerk and earned $25,000.
• Samuel Grant worked part-time and earned $15,000 to supplement his social secu-
rity retirement income of $6,000.
• Rebecca, Roger, and Samuel Grant are U.S. citizens and have valid social security
numbers.
Directions
questions.
4.1 Who can claim Roger as a dependent?

a. Only Rebecca can claim Roger because he is her qualifying child, and
Rebecca’s AGI is higher than Samuel’s AGI.
b. Only Samuel can claim Roger because he lived in Samuel’s home.
c. Neither Rebecca nor Samuel can claim Roger as a dependent.
d. Either Rebecca or Samuel can claim Roger as a dependent under the rules
for qualifying child.
4.2 Rebecca can claim Roger as a qualifying child for EIC.

a. True
b. False
1-4 Basic Scenarios

Basic Scenario 5: Victor and Maria Olivet
Interview Notes
• Victor and Maria are married and lived together in the U.S. all of 2009 with their two
sons, Peter, age 2, and Julian, age 4.
• Victor and Maria have lived in the U.S. for 5 years.
• Together, Victor and Maria earned $36,500, which was their only income.
• Victor and Maria provided all the support for Peter and Julian.
• Victor and Maria have Individual Taxpayer Identification Numbers (ITINs).
• Peter and Julian are both U.S. citizens and have valid social security numbers
(SSNs).
Directions
questions.
5.1 Victor and Maria are going to file a joint return. Whom can they claim as
dependents?
a. Because Victor and Maria have ITINs, they cannot claim any dependents.
b. Victor and Maria can claim both Peter and Julian as dependents.
c. Based on Victor and Maria’s income, they can only claim one dependent.
d. Victor and Maria cannot claim any dependents because some family
members do not have SSNs.
5.2 Can Victor and Maria claim Peter and Julian as qualifying children for the EIC
on their joint return?
a. Victor and Maria’s income is too high to qualify for the EIC.
b. Since Victor and Maria have ITINs, they do not qualify for the EIC.
c. Victor and Maria can claim both Peter and Julian as qualifying children for
the EIC because the children lived with them in the U.S. all year.
d. Victor and Maria can claim Peter and Julian as qualifying children for the
EIC because Peter and Julian have social security numbers.
Basic Scenarios 1-5

Basic Scenario 6: Darius and Matilde Howard
Taxpayer Documents
• Social security cards for Darius and Matilde Howard

• Completed Intake and Interview Sheet
• Form W-2 for Matilde Howard
• Form W-2 for Darius Howard
• Form 1099-INT from U.S. Equity Bank
• Form SSA-1099
• Receipt for real estate taxes
Interview Notes
• Matilde and Darius are married and want to file a joint return.
• Matilde is a secretary
• Darius, is retired; he works as a sales clerk and receives social security benefits.
• Matilde and Darius will not itemize deductions for 2009.
• In 2009, they paid $1,200 in real estate taxes.
• Matilde and Darius both want to designate $3 to the Presidential Election Campaign
Fund.
• Matilde and Darius did not take a distribution from any retirement account.
1-6 Basic Scenarios

Basic Scenarios 1-7
1-8 Basic Scenarios
Basic Scenarios 1-9
1-10 Basic Scenarios
Basic Scenarios 1-11
Directions
Please complete Form 1040 and the appropriate forms, schedules, or worksheets to
answer the following questions. You are a volunteer at site S21014444.
Note: When using the Link and Learn Taxes Practice Lab, complete the social security
numbers and employer identification numbers by replacing the Xs with your User ID.
In classroom situations, replace the Xs with the EFIN provided by your instructor.
6.1 What is the taxable amount of social security benefits? $_______
6.2 What is the total amount of adjustments in determining adjusted gross income
on Form 1040, page 1?
a. $0
b. $20
c. $600
d. $1,000
6.3 What is the Howards’ standard deduction amount? $_______
6.4 What is the amount of the retirement savings contributions credit on Form 1040,
page 2? $_______
6.5 What is the amount of the making work pay credit in the Payments section of
Form 1040.
a. $0
b. $400
c. $550
d. $800
6.6 Darius and Matilde have an amount due on their Form 1040. They will not
have enough money in their checking account to pay this by April 15.
What can they do?
a. Pay the balance due using their credit card.
b. Request a “Full Pay Within 60 to 120 Days” agreement.
c. File an Online Payment Agreement (OPA) request at www.irs.gov.
d. Any of the above.
6.7 The Howards can prevent having an amount owed on their income tax return
next year by submitting revised Forms W-4 to their employers to increase their
withholding.
a. True
b. False

Basic Scenario 7: Gladys Berry
Taxpayer Documents
• Social security cards for Gladys, Kevin, Justin, and Maria Berry
• Two Forms W-2 for Gladys Berry
• Form 1099-G, Unemployment Compensation, for Gladys Berry
• Statement from Extended Learning Center
• Voided personal check
Interview Notes
• Gladys is married. Her husband, Sam, moved out of the house and left the family in
December 2006. Gladys has not seen Sam since.
• Gladys provides the entire cost of maintaining the household and all the support for
the family.
• Gladys tells you that she does not want to file with her husband.
• Gladys has never itemized her deductions and will not itemize for 2009.
• She purchased a new car for $12,600 and paid $650 in sales and excise taxes.
• Gladys was laid off in September and received unemployment compensation for
two months.
• If she is due a refund, Gladys wants half placed in her checking account and half
in her savings account. The savings account routing number is 322070239 and the
savings account number is 98765432.
• Gladys wants to designate $3 to go to the Presidential Election Campaign Fund.
• Gladys is a medical secretary.
• The youngest child, Maria, attends an after-school daycare program while Gladys
works.

Directions
7.1 Using the Determination of Filing Status flowchart in Publication 4012,
Volunteer Resource Guide, what is Gladys’ filing status?
a. Single
b. Married Filing Jointly
c. Married Filing Separately
d. Head of Household
7.2 How much unemployment compensation from Form 1099-G is included in

Gladys’ total income?
a. $ 0
b. $ 600
c. $ 2,400
d. $ 3,000
7.3 What is Gladys’ standard deduction amount? $__________
7.4 What is the credit for child and dependent care expenses on Form 2441?
a. $0
b. $224
c. $400
d. $800
7.5 Whom can Gladys claim for the child tax credit?
a. Maria
b. Maria and Kevin
c. Maria, Kevin, and Justin
d. None of the children qualify Gladys for the child tax credit
7.6 What is the amount of Gladys’ earned income credit in the Payments section
on Form 1040? $_______.
7.7 What is the amount of the additional child tax credit in the Payments section of
Form 1040?
a. $0
b. $1,821
c. $2,821
d. $3,000
7.8 Gladys wants to direct deposit her refund into two different accounts. Which
form needs to be completed? Form _______
Basic Scenario 8: Allison Mankato
Taxpayer Documents
• Social security cards for Allison Mankato, Kyle Upton, Tina Marie Lane
• Two Forms W-2 for Allison
• Form 1099-INT from First National Bank and Trust
Interview Notes
• Another volunteer has completed the tax return for Allison Mankato. You have been
asked to perform the quality review.
• Use Form 13614-C, Section C, as a tool in this review.
• Allison Mankato is not married and lives with her two children, Kyle and Tina Marie.
The children lived with her the entire year of 2009. Allison and her children have not
had any contact with Kyle’s father nor Tina Marie’s father since 1995.
• Allison provides the entire cost of maintaining the household and all the support for
the family.
• Tina Marie and Kyle are both high school students and have no income.
• Allison has never itemized her deductions and will not itemize for 2009.
• Allison did not pay any real estate taxes in 2009.
• Allison does not want to designate $3 to go to the Presidential Election Campaign
Fund.
• If Allison is due a refund, she wants the check mailed to her.
• Allison is an office clerk.

Directions
You are conducting a quality review of Allison’s tax return, which was prepared by
another volunteer tax preparer. Allison is sitting with you as you conduct the review. Using
Form 13614-C, your resource materials, and all of the taxpayer’s documents, conduct
a quality review of the tax return and answer the questions below. Section C of Form
13614-C should be completed for this review. You are a volunteer at site S21014444.
8.1 Select the name(s) entered incorrectly on Form 1040.

a. Allison’s name
b. Kyle’s name
c. Tina’s name
d. Both Kyle’s and Tina’s name
8.2 Which social security number is entered incorrectly on Form 1040?

a. Allison’s
b. Kyle’s
c. Tina’s
d. All are correct
8.3 Allison’s correct adjusted gross income is $21,250.

a. True
b. False
8.4 Which item from Form W-2 was not entered on Form 1040?
a. Withholding
b. Social security tips
c. Advance EIC payment
d. Wages
8.5 Which of the following credits does Allison qualify for, but was not included on
her return?
a. Earned income credit
b. Child tax credit
c. Making work pay credit
d. Additional child tax credit

2009 6744 Test – Intermediate Course
The first two scenarios do not require you to prepare a tax return. Read the scenario
carefully and use your training and reference tools to answer the questions after the
scenario.
Intermediate Scenario 1: Joe Cooke
Interview Notes
• Joe’s correct filing status is Single and he is 32 years old

• Joe’s adjusted gross income is $37,000
• Joe did not buy a new car this year
• Joe paid $1,500 in real estate taxes on his personal residence
• Joe paid the following medical expenses:
– Stop smoking program
– Unreimbursed doctor bills
– Unreimbursed dental bills
– Nonprescription medicines
• Joe is a U.S. citizen and has a valid social security number
Intermediate Scenario 1: Test Questions
Directions
questions.
9.1 Which of these medical expenses could be included on Schedule A?

a. Stop smoking program
b. Unreimbursed doctor and dental bills
c. Nonprescription medicine
d. a and b
9.2 Joe’s total itemized deductions are $6,050. He should use this figure rather
than his standard deduction.
a. True
b. False
Intermediate Scenarios 2-1

Intermediate Scenario 2: Sarah Ashland
Interview Notes
• Sarah is 53 years old.

• Sarah and her husband, Drew, have lived apart for two years, but have not yet filed
for divorce. Sarah does not want to file a tax return with him.
• Sarah’s 32-year-old unmarried son, Harlan, lost his job and moved into Sarah’s
house in November 2008.
• Harlan’s 2009 Form W-2 from a part-time job shows wages of $3,270 and his Form
1099-G shows unemployment compensation of $4,150.
• Sarah paid all the household expenses and provided over half of Harlan’s support.
• Sarah, Drew and Harlan are all U.S. citizens and have valid social security numbers.
Intermediate Scenario 2 Test Question

Directions
question.
10.1 What is Sarah’s correct filing status?

a. Single
b. Head of Household
d. Married Filing Jointly
10.2 Is Harlan eligible for the making work pay credit?

a. Yes, because he has earned income.
b. No, because his wages are less than $6,451.
c. No, because he has unemployment compensation.
d. No, because he has no tax liability.
2-2 Intermediate Scenarios

Intermediate Scenario 3: Paul Harvard
Taxpayer Documents
• Social security card for Paul Harvard

• Social security card for Joseph Harvard
• Forms W-2
• Form 1099-R
• Form 1098
• Form 1098-T
Interview Notes
• Paul Harvard is an electrician. He divorced in 2004 and has a son who lives with him
and a daughter who lives with her mother.
• Paul paid $4,800 in child support for his daughter, Cindy. Her mother will claim Cindy
as a dependent on her 2009 tax return.
• In 2009, Paul bought a $2 lottery ticket every week. Paul had no winnings.
• In 2009, Paul’s son, Joseph, was a third-year student at Brown College. Joseph
lived at home with Paul while attending classes. He is pursuing a degree in
Computer Science. Paul spent $643 on course-related books and paid tuition
reported on Form 1098-T. Brown College is not located in a Midwestern disaster
area. Joseph does not have a felony drug conviction.
• When Paul changed jobs in February 2009, he cashed out his 401(k). He received
Form 1099-R for that distribution and had taxes withheld. Paul does not qualify for
any of the exceptions to the additional tax on the early distribution.
• In September 2009, Paul contributed $500 to a traditional IRA. If possible, Paul
would like to deduct his IRA contribution.
• Paul purchased his first home on March 5, 2009, for $92,000. He purchased the
home from an unrelated person and it is located in the United States.
• Paul wants to know if he has enough deductions to itemize. He gives you receipts,
statements, and cancelled checks for the following items he would like to deduct:
– Cancelled check for a donation to the United Way for $100
– Receipt for a donation of $25 to the campaign of a candidate running for governor
– A statement received from his church showing donations made throughout the
year of $520
– A receipt from a Goodwill drop-off center for the donation of a table, refrigerator,
and stove; they were in good used condition and had a thrift shop value of $210

– Form 1098 showing qualified mortgage insurance premiums, interest, and real
estate taxes paid.
– Paul will take the deduction for state income tax rather than sales tax.
• Paul does not want to designate $3 to the Presidential Election Campaign.

Directions
Complete Form 1040 and the appropriate forms, schedules, and worksheets to answer
the following questions. You are a volunteer at site S21014444.
11.1 Which of the following qualifies as an adjustment to income for Paul?

a. Cost of the lottery tickets
b. Child support paid
c. Contribution to a traditional IRA
d. None of the above
11.2 What is Paul’s total taxes paid on Schedule A, line 9?

a. $681
b. $1,094
c. $1,217
d. $2,311
11.3 What is Paul’s total interest paid on Schedule A, line 15? $_______
11.4 The total allowable deduction in the Gifts to Charity section of Paul’s
Schedule A is:
a. $520
b. $620
c. $830
d. $855
11.5 What is not an eligible expense for the American opportunity credit (Hope credit
expanded)?
a. Tuition
b. Required course materials
c. Room and board
d. Qualified expenses paid with the proceeds of a student loan

11.6 What is the most advantageous education benefit on Paul’s Form 1040?
a. Tuition and fees deduction as an adjustment to income
b. American opportunity credit (Hope credit expanded)
c. Tuition and fees deduction for amount spent on tuition and American
opportunity credit (Hope credit expanded) for amount spent on books
d. Lifetime learning credit
11.7 What is the amount of refundable American opportunity credit on Paul’s Form
8863, Part IV?
a. $0
b. $1,000
c. $1,500
d. $2,500
11.8 What is the amount of additional tax on IRAs and other qualified retirement
plans in the Other Taxes section of Paul’s Form 1040, page 2? $______
11.9 What is the amount of Paul’s first-time homebuyer credit in the Payments
section of Form 1040, page 2?
a. $0
b. $7,500
c. $8,000
d. $9,200

Intermediate Scenario 4: George and Alberta Farmer
Taxpayer Documents
• Social security cards for George C. and
Alberta L. Farmer
• Completed Intake/Interview Sheet
• Form W-2 for Alberta Farmer
• Form 1099-DIV
• Form 1099-MISC
• Form 1099-R
• Form 1098-E
• Receipt for property taxes paid
Interview Notes
• George and Alberta Farmer are married and want to file together.
• George retired as a high-school teacher in 2007 and receives a pension from the
county government.
• George is not eligible for social security benefits.
• George began doing consulting work on a gardening book in June 2009. This
requires him to travel to public and private gardens. He received Form 1099-MISC
for 2009.
• As a gardening consultant, he also received cash payments totaling $1,000, that
were not reported on Form 1099-MISC.
• George has written records for all of his business expenses:
– On June 6, 2009, he purchased a used truck for business travel. He also has
a car for personal use. He logged 4,364 miles for business use, 211 miles for
personal use, and 350 miles for commuting.
– His office expenses (paper, postage, envelopes, etc.) were $300.
– His long distance telephone calls were $100.
• Alberta teaches creative writing classes part-time at a community college.
• Alberta is repaying a student loan she took out several years ago to finance her
Master of Fine Arts degree. The interest she paid is reported on Form 1098-E.
• The Farmers have not itemized their deductions since their home was paid off four
years ago, and they do not want to itemize this year.
• The Farmers improved their home by replacing some of their existing windows with
energy-efficient exterior windows. They spent $4,700 and have the manufacturer’s
certification that the windows meet the new energy-efficiency standards.
• The Farmers paid $1,050 in real estate taxes on their personal residence in 2009.

Directions
numbers and employer identification numbers by replacing the Xs with your User ID. In
classroom situations, replace the Xs with the EFIN provided by your instructor.
12.1 What is the amount of George’s gross receipts reported on Schedule C-EZ,
line 1? $_______
12.2 George’s total business expenses on Schedule C-EZ, line 2 are:

a. $300
b. $2,400
c. $2,700
d. $2,800
12.3 What is the taxable portion of George’s pension in the Income section of Form
1040, page 1? $______
12.4 How is George’s self-employment tax reported?

a. Enter one-half the amount of tax as a business expense on Schedule
C-EZ.
b. Enter the self-employment tax amount in the Other Taxes section of Form
1040 and deduct the full amount on Schedule A, Taxes You Paid.
c. Enter the self-employment tax amount in the Other Taxes section and enter
one-half of the amount in the Adjusted Gross Income section of Form 1040.
d. It is not necessary to report George’s self-employment tax.
12.5 What is the amount the Farmers can take as a student loan interest deduction?
a. $75
b. $373
c. $745
d. $2,500
12.6 What is the amount of the Farmers’ nonbusiness energy property credit?
$_______
12.7 The total for the Farmers’ making work pay and government retiree credits is
$800.
a. True
b. False

2009 6744 Test – Advanced Course
The first three scenarios do not require you to prepare a tax return. Read the scenario
scenario.
Advanced Scenario 1: Larry Fairfield
Interview Notes
• On June 11, 2009, Larry inherited 100 shares of PDQ stock from his Great-uncle Pete.
• Pete had purchased the stock for $5.00 per share in 1952.
• The fair market value on the date of Pete’s death was $20.00 per share.
• Larry sold the stock and received Form 1099-B reporting the following information:
– Date of sale: 12/1/2009
– Number of shares sold: 100 shares of PDQ Stock
– Sale price less commission: $1,800
• Larry is a U.S. citizen and has a valid social security number.
Advanced Scenario 1: Test Questions
Directions
questions.
13.1 What is the cost or other basis reported on Larry’s Form 1040, Schedule D?
a. $0
b. $500
c. $1,800
d. $2,000
13.2 Is the gain or loss on the sale of Larry’s stock long-term or short-term?
a. Short-term
b. Long-term
Advanced Scenarios 3-1

Advanced Scenario 2: Fred Marshall
Interview Notes
• Fred is single and purchased his first home in 2004 for $120,000.
• In 2005 Fred added a room at a cost of $20,000.
• In 2006 Fred had to repair the air conditioning system at a cost of $500.
• Fred lived in the home as his primary residence until he sold it on June 18, 2009.
• Fred sold the home for $275,000.
• Fred is a U.S. citizen and has a valid social security number
Directions
questions.
14.1 Does Fred qualify to exclude the gain on the sale of his home?
a. Yes
b. No
14.2 What is Fred’s cost basis in the home?

a. $120,000
b. $140,000
c. $140,500
d. $275,000
3-2 Advanced Scenarios

Advanced Scenario 3: Lucy Phillips
Interview Notes
• Lucy is single and a retired federal government employee. She is not eligible for and
did not receive any social security benefits.
• Lucy started receiving her pension in November 2006 and continues to receive
payments every month.
• The taxable amount of her pension for the year is $12,000.
• She worked part-time during 2009 and earned $8,000.
• She had no other income.
• Lucy’s AGI is $20,000
• Lucy is a U.S. citizen and has a valid social security number
Directions
questions.
15.1 What is the total amount of Lucy’s making work pay and government retiree
credits from Schedule M?
a. $0
b. $250
c. $400
d. $650
15.2 If Lucy did not work in 2009 and her only income was from her pension, what
would her making work pay and government retiree credits be?
a. $0
b. $250
c. $400
d. $650

Advanced Scenario 4: Mark and Valerie Palmer
Taxpayer Documents
• Social Security cards for Mark Palmer, Valerie Palmer, and Susan Palmer
• Completed Intake/Interview Sheet
• Form W-2 for Valerie
• Form 1099-R for Mark
• Consolidated Form 1099
• Schedule K-1 from PHY Trust
• Form 1099-A for Mark and Valerie
• Form 1099-C for Mark and Valerie
Interview Notes
• Mark and Valerie completed the Intake/Interview Sheet and want to file a joint tax
return. Mark and Valerie have one daughter, Susan.
• Mark retired on January 15, 2009, and started receiving his pension of $2,000 per
month in March 2009.
• The pension plan is a qualified plan and he received benefits under a joint and survi-
vor annuity, to be paid over the joint lives of Mark and Valerie.
• Mark contributed $41,000 to the plan and did not receive any distributions before his
annuity starting date.
• Their mortgage company foreclosed on their principal residence in June 2009.
The mortgage was used to buy the home and there was no business or rental use
of the property. Their records show the following information:
– Fair market value: $225,000
– Purchase date: February 1, 1998
– Cost basis: $300,000
– Mortgage balance at the time of foreclosure was $250,000
• They want to exclude the debt canceled by the mortgage company under the quali-
fied principal residence exclusion.
• They sold some stock in 2009. They brought the broker’s statements.
• Stock information:
– XYZ stock - purchased 400 shares on 03/23/2000 for $2,000
– ABC stock - purchased 100 shares on 09/16/2008 for $3,500

• Mark and Valerie will not itemize for 2009.
• In 2009, Mark and Valerie paid $200 in real estate taxes before the foreclosure on
their personal residence.
• They made timely estimated tax payments of $200 on each due date for the 2009
tax year and did not apply any of last year’s overpayment to their 2009 tax.
• Mark and Valerie want to designate $3 to the Presidential Election Campaign Fund.

Directions
16.1 On which form is the interest income from Form 1041, Schedule K-1 reported?
a. Form 1040, Schedule B
b. Form 1040, Schedule A
c. Form 1040, Schedule C
d. Form 1040, Schedule L
16.2 Where are Mark and Valerie’s stock sales shown on Form 1040, Schedule D?
a. ABC stock on line 1, and the XYZ stock on line 8.
b. ABC stock and XYZ stock on line 1.
c. ABC stock and XYZ stock on line 8.
d. XYZ stock on line 1 and the ABC stock on line 8.
16.3 What is the cost or other basis of the XYZ stock shown in column (e) of
Schedule D?
a. $500
b. $1,000
c. $1,500
d. $2,000
16.4 What is the long-term capital gain or (loss) on Form 1040, Schedule D, line 15?
a. $50
b. $550
c. $1,000
d. $2,050
16.5 Which birth date(s) should be used to compute the taxable amount of the
pension income?
a. 12/11/1952
b. 02/17/1955
c. Both a and b

16.6 How much of the $20,000 gross distribution reported on Form 1099-R is
taxable in 2009?
a. $18,800
b. $18,861
c. $19,000
d. $20,000
16.7 Mark and Valerie received a Form 1099-A reporting the foreclosure of their
principal residence. How should this transaction be reported on their tax return?
a. Report the foreclosure on Form 1040, line 21
b. Report the foreclosure on Form 1040, Schedule D
c. Report the foreclosure on Form 1040, Schedule A
d. They do not need to report the foreclosure on their tax return.
16.8 Mark and Valerie’s canceled debt should be reported on which of the following
forms or schedules?
a. Schedule A
b. Schedule D
c. Form 982
16.9 What are the total payments in the Payments section of Form 1040?
$________

2009 6744 Test – Military Course
scenario.
Military Scenario 1: Robert and Amy Bridgewater
Interview Notes
• Robert and Amy have been married for 40 years.

• Robert’s birth date is May 9, 1944.
• Amy’s birth date is August 2, 1946.
• Amy retired on December 31, 2008 and began drawing a monthly pension in
January 2009.
• Robert is still employed.
• The pension plan is a qualified plan and will be paid as a single annuity over Amy’s
lifetime.
• The gross distribution reported on Form 1099-R for 2009 was $20,943.
• The total employee contribution to the plan was $60,060.
• Robert and Amy are U.S. citizens and have valid social security numbers.
Military Scenario 1: Test Questions
Directions
questions.
17.1 How much of the $20,943 distribution reported on Form 1099-R is taxable?
a. $0
b. $18,171
c. $18,618
d. $20,943
17.2 Whose age(s) must be used to compute the taxable pension income for the
annuity?
a. Robert’s
b. Amy’s
c. Both
d. Neither; age is not a computation factor
Military Scenarios 4-1

Military Scenario 2: Daniel and Donna Hendrix
Interview Notes
• Daniel and Donna live in Houston, Texas, where Daniel joined the Navy. He finished
his training and will be stationed in San Diego for two years. This is a permanent
change of station (PCS).
• Donna and their two children traveled separately from Daniel and drove the family
van with their pets. They stopped in El Paso to see Donna’s parents for a long week-
end and then traveled on to San Diego. Their trip took a total of six days instead of
the authorized two days and one night.
• They decided to make a Do It Yourself (DITY) move and save money.
• Their move was estimated to cost $5,263 and the Navy provided $5,000 in advance.
• Their cost for moving household goods was $3,500, a hotel in Phoenix was $150,
Daniel’s airfare was $200, and gas and food for the family was $150.
• All expenses are considered reasonable; they are correctly documented and totaled
$4,000.
• Daniel, Donna and their children are U.S. citizens and have valid social security
numbers.
Military Scenario 2: Test Question
Directions
question.
18.1 Which of the following statements is true?

a. The family can include receipts for meals, lodging, sightseeing, etc., for all
expenses they incur while traveling from Houston to San Diego, to offset
the $5,000 provided by the Navy.
b. There is no substantiation policy with the government as long as the move
cost less than the $5,000 advanced by the Navy.
c. Daniel and Donna can claim an adjustment for moving expenses.
d. A separate Form W-2 will be issued to Daniel for the difference between
allowable costs incurred and the amount advanced.
4-2 Military Scenarios

Military Scenario 3: Diana Stewart and Henri Dumont
Taxpayer Documents
• Social security cards for Diana and Lily, and an IRS ITIN letter for Henri
• 3 Forms W-2
• Form 1099-INT
Interview Notes
• Diana is a nurse and a member of the Army Reserve

• Deployed: in Iraq from 7/12/09 through 2/26/10
• Military training: attended weekend military training sessions over 100 miles away
from home each month for five months. The expenses were not reimbursed. Total
expenses for the five-month period were:
– Mileage: 1,800 (based on Internet map data, not written records)
– Vehicle: Diana owns two vehicles and both are available for personal use
– Lodging: $700 (within federal per diem rate for the area)
– Meals: $550 (within federal per diem rate for the area)
• Married: Diana married Henri Dumont in 2009, who was not employed during 2009
– Income: Henri had no income in 2009
– Citizenship: He is a Swiss citizen
– Individual tax identification number: 940-70-XXXX
– Henri has an ITIN letter from the IRS ITIN unit
– Wants to file jointly; he does not want to contribute to the Presidential Election
Campaign Fund
• One child: Diana has full custody of her daughter, Lily, from a previous marriage
– Care: Diana’s sister filled in with day care when needed, but at no cost
– Cost: Diana allotted some of her military pay to cover all household bills and
anything Lily and Henri needed while she was away
• Properties: When Diana was not deployed, she and her family lived in military hous-
ing on post. The rental property is her former residence.
– Rental property: Diane is an active participant.
- Townhouse, 600 Washington Ave, Your City,Your State
- Purchased property: 04/30/2003
- Rented: 01/01/2009 – 12/31/2009
- Rental income: $9,100
- Annual real estate taxes: $1,425
- Management company fees for the time the property was rented: $750
- Furnace repair: 02/15/09 – $290
- Depreciation (from prior year tax return): $2,325

Interview Notes (continued)
– Stock: A&B Stock:

- Inherited: 100 shares on 03/15/2009
- Fair market value on 3/15/2009: $4,000
- Sold: all shares on 04/30/2009
- Selling price: $6,000 (net of commission)
– Equity Index Mutual Fund
- Bought: 06/01/2008 through 04/15/2009
- Sold: 300 shares on 4/30/2009
- Total cost basis for the 300 shares: $2,000
- Selling price: $1,000 (net of commission)
• Additional information:
– Not enough deductions to itemize
– Diana wants to designate $3 for the Presidential Election Campaign Fund

Directions
19.1 If Henri did not elect to be treated as a resident alien, what filing status should
Diana use to minimize her taxes?
a. Single
b. Married Filing Separately
c. Head of Household
d. She could file jointly, and not claim Henri’s exemption
19.2 How many exemptions can Diana and Henri claim on their joint return? _____
19.3 Diana’s combat zone income from Form W-2 is reported on Form 1040, line 7.
a. True
b. False
19.4 What is the amount of short-term gain or loss on Form 1040, Schedule D, line 7?
a. $1,000 gain
b. $1,000 loss
c. $2,000 gain
d. $2,000 loss
19.5 What is Diana’s total rental real estate income or loss on Schedule E?
a. $3,785
b. $4,310
c. $6,310
d. $8,500

19.6 What standard mileage rate is used to calculate Diana’s Army Reserve mileage
on Form 2106-EZ, line 1?
a. 14 cents per mile
b. 50.5 cents per mile
c. 55 cents per mile
d. 58.5 cents per mile
19.7 The total adjustments to gross income on Form 1040 are: $ _______
19.8 Diana and Henri qualify for the earned income tax credit.
a. True, because Diana received combat zone income
b. False, because Henri has an ITIN
19.9 If taxpayers are eligible for the earned income credit, they may choose to use
combat zone pay to compute the earned income credit.
a. True
b. False
19.10 If Henri elects to be treated as a resident alien and files a joint return with
Diana, how much will their making work pay credit be?
a. $250
b. $400
c. $500
d. $800

Military Scenario 4: Peter and Beth Anderson
Taxpayer Documents
• Social security cards for Peter, Beth, and Kenneth

• Form W-2
• Form 1099-R
• Form 1099-INT
• Voided check
Interview Notes
• Peter was stationed in Italy on qualified extended duty for the entire tax year
• Properties:
– Sold home in U.S., where they lived for 2-½ years
- Purchased: 1/15/2003 for $250,000
- Sold: 3/30/2009 for $249,000
- Improvements: $5,000
- Use: house was never rented or used for business
- Form 1099-S was not issued for the sale of the home
• One child: Kenneth, lives with his parents and is a sophomore in high school
– He had a part-time job and earned $3,000, which he put into a college savings
account.
• Other:
– Presidential Election Campaign Fund: both Peter and Beth want to designate $3
– Refund: if they get a refund, they want to have it deposited into their checking
account
– Beth does not work while she and her husband are stationed abroad
– The Andersons did not itemize in 2008 and they do not have enough deductions
to itemize in 2009
– Peter and Beth paid $600 in real estate taxes before they sold their home
– Beth was the beneficiary of her father’s traditional IRA account

Directions
20.1 How much of the loss on the sale of the Andersons’ personal residence can be
taken on Schedule D?
a. $0
b. $1,000 loss
c. $5,000 loss
d. $6,000 loss
20.2 On Form 1099-R, box 7, code 4 indicates that the IRA distribution is subject to
an additional tax.
a. True
b. False
20.3 The Andersons’ total income reported in the Income section of Form 1040, is:
$________
20.4 The Andersons’ standard deduction for 2009 is:

a. $8,350
b. $8,950
c. $11,400
d. $12,000
20.5 The Andersons are not required to file Form 1116 because:
a. The tax was paid on passive category income
b. The amount of tax was less than $600
c. The income was reported on Form 1099-INT
d. All of the above

20.6 What is the total foreign tax credit in the Tax and Credits section of Form 1040?
a. $100
b. $200
c. $300
d. $400
20.7 The Anderson’s son, Kenneth, had a part-time job. His making work pay credit
is $400.
a. True
b. False

2009 6744 Test – International Course
scenario.
International Scenario 1: Doug and Claire Emerson
Interview Notes
• Doug is a U.S. citizen and has a valid social security number. Doug and Claire are
married and live in London.
• Claire is a British foreign national (citizen of Great Britain).
• Doug’s total income was $85,000.
• Claire has an ITIN, but had no income and has never lived in the U.S.
• Doug’s 17-year-old daughter, Edna, lives with him. Edna’s mother died in 2005.
Edna is a U.S. citizen and has a valid social security number.
• Doug provided all the financial support for Edna.
• Claire has 4-year-old twins, Jack and Tate, both British citizens, who lived with Doug
and Claire in London for all of 2009.
• Doug is not the father of the twins and has not adopted them.
International Scenarios 5-1

International Scenario 1: Test Questions
Directions
questions.
21.1 Who can claim Edna as a dependent?

a. No one can claim Edna as a dependent
b. Doug, because Edna is his qualifying child
c. Doug, because Edna is his qualifying relative
d. Edna can claim her own exemption
21.2 Can Doug claim Jack and Tate as dependents?

a. Yes, because Claire does not have a filing requirement
b. Yes, because they are his qualifying children
c. No, because they are not U.S. citizens, U.S. resident aliens, U.S. nationals,
or residents of Canada or Mexico
d. No, because they were born in Great Britain
21.3 If Claire decides she does not want to file a joint return with Doug, can Doug
claim a personal exemption for Claire?
a. Yes, because she has an ITIN and no income and cannot be claimed as a
dependent by anyone else
b. No, he can only claim Claire as a dependent
c. No, the only way Doug could claim Claire’s personal exemption is to file a
joint return with her
d. No, since Claire does not qualify for a personal exemption
21.4 If Doug files as Head of Household, who would be his qualifying person?
a. Claire, because she is his nonresident alien spouse
b. Jack and Tate, because they live with Doug
c. Edna, because she is his qualifying child
d. Doug is not eligible to file as Head of Household
5-2 International Scenarios

International Scenario 2: Don and Barbara Chabot
Interview Notes
• Don and Barbara Chabot moved to Germany on January 20, 2009, for Barbara’s
temporary job assignment. They are U.S. citizens and have valid social security
numbers.
• They left for a visit to the U.S. on July 1, 2009, and returned to Germany on July 15,
2009.
• They also spent 14 days sightseeing in France and Spain, in September.
• They currently rent a home in Germany and sublet their apartment in the U.S.
Directions
questions.
22.1 Which test qualifies Don and Barbara for the Foreign Earned Income
Exclusion?
a. Bona fide residence test
b. Physical presence test
c. Both a and b
d. Don and Barbara are not eligible to exclude their foreign earned income
22.2 When calculating the 330 full days in a foreign country for the physical presence
test, how do you treat the 14 days spent sightseeing in France and Spain?
a. The days are counted as days spent in a foreign country
b. The days are not counted as days spent in a foreign country
c. The first and last days of the trip do not count as days spent in a foreign
country

International Scenario 3: Jason and Ella Barnes
Taxpayer Documents
• Social security cards for Jason and Ella Barnes

• Form W-2 for Ella Barnes
• Form 1099-INT
Interview Notes
• Jason and Ella Barnes, a married couple, are U.S. citizens who have lived and
worked in France since June 23, 2004. They did not return to the U.S. at any time
during 2009.
• Income
– Jason worked the entire year as a self-employed photographer in France.
– Jason had $16,000 in receipts from sales, teaching and consulting.
– His expenses included:
- $250 per month in rent for shared office space, which included utilities
- $600 in supplies
- $300 in business-related long-distance telephone calls.
– Jason’s studio is located at 144 Rue Ste. Francois, Lyon, France.
– They have taken the Foreign Earned Income Exclusion for Jason’s earnings
in 2006, 2007, and 2008, and expect to take it again in 2009. They have never
revoked this exclusion.
– Ella worked at the U.S. consulate and has Form W-2 for her salary.
– They have checking and savings accounts at a French bank, Banc Lyon. After
converting to U.S. dollars, the interest was $2,183; the French income tax with-
held on the interest was $546.
– They also have an account in a U.S. bank (Form 1099-INT).
• Sale of property, lake lot
– Purchased August 8, 2000, for $10,000
– Sold March 1, 2009, for $12,000
– Sale was net of commissions
• Sale of stock
– Ella inherited 500 shares of J&J Imports stock on October 5, 2009.
– Fair market value at the time the shares were inherited was $12,000.
– Ella sold 250 shares of the stock on October 30, 2009, for $10,000 (net of
commission).
• The sale of the lake lot and the stock sales were U.S. transactions.

Interview Notes (continued)
• Additional Information
– Jason and Ella rent an apartment in Lyon and do not maintain any other resi-
dence abroad or in the U.S.
– They consider themselves residents of France and have never stated otherwise.
– They understand they must pay income tax to France.
– Ella is an employee of the U.S. consulate and Jason has an unlimited work visa.
– Jason and Ella did not itemize for 2008 and do not have enough to itemize
for 2009
– Jason and Ella paid no real estate tax in 2009.
– They want to file a joint return.
– Neither Jason nor Ella want to designate $3 to the Presidential Election
Campaign Fund.

Directions
23.1 What is the amount of wages reported in the Income section of Form 1040?
a. $32,000
b. $42,000
c. $58,000
d. $65,000
23.2 What is the net business income or loss from self-employment reported on
Schedule C-EZ?
a. $0
b. $12,100
c. $13,400
d. $16,000
23.3 What is the net short-term capital gain or loss on Schedule D, line 7? $ ______
23.4 What is the Barnes’ net long-term capital gain or loss on Schedule D, line 15?
a. $0
b. $5,380
c. $6,000
d. $7,130
23.5 What are the start and end dates for the Barnes’ bona fide residence on
Form 2555, line 10?
a. 06/23/2004, Continues
b. 01/01/2006, 12/31/2009
c. 06/23/2004, 12/31/2009
d. 01/01/2009, 12/31/2009
23.6 The correct amount of other income reported in the Income section of Form
1040 is ($12,100).
a. True
b. False

23.7 Ella’s salary does not qualify for the foreign earned income exclusion since it is
pay from the U.S. Government.
a. True
b. False
23.8 The Barnes’ Foreign Tax Credit reported on the Tax and Credits section of
Form 1040 is: $______
23.9 What is the amount of self-employment tax reported in the Other Taxes section
of Form 1040?
a. $1,710
b. $1,921
c. $2,123
d. $7,546


Blank Forms
The following blank forms can be used to complete the test for your chosen training
course. If additional forms are needed, the forms can be photocopied.
The Tax Tables and EIC Tables are available in Publication 4491-W, the
Comprehensive Problems and Exercises Workbook.
Form 1040, U.S. Individual Income Tax Return, pages 1 & 2 . . . . . . . . . . . . . . . . . . . . 3
Schedule A, Itemized Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule A, page 2, Worksheet for line 7, New motor vehicle tax deduction . . . . . . . . 9
Schedule B, Interest and Ordinary Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Schedule C-EZ, Net Profit From Business, pages 1 & 2 . . . . . . . . . . . . . . . . . . . . . . . 12
Schedule D, Capital Gains and Losses, pages 1 & 2 . . . . . . . . . . . . . . . . . . . . . . . . . 14
Schedule E, Supplemental Income and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Schedule EIC, Earned Income Credit, page 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule L, Standard Deduction for Certain Filers . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule M, Making Work Pay and Government Retiree Credits . . . . . . . . . . . . . . . . 21
Earned Income Worksheet for Schedule M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Schedule SE, Self-Employment Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness
(and Section 1082 Basis Adjustment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Form 1116, Foreign Tax Credit, pages 1 & 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Form 2106-EZ, Employee Business Expenses, page 1 . . . . . . . . . . . . . . . . . . . . . . . 29
Form 2441, Child and Dependent Care Expenses, pages 1 & 2 . . . . . . . . . . . . . . . . . 30
Form 2555, Foreign Earned Income, pages 1, 2 & 3 . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Form 5405, First-time Homebuyer Credit and Repayment of the Credit . . . . . . . . . . . 35
Form 5695, Residential Energy Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Form 8812, Additional Child Tax Credit, pages 1 & 2 . . . . . . . . . . . . . . . . . . . . . . . . . 38
Form 8863, Education Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Form 8880, Credit for Qualified Retirement Savings Contributions . . . . . . . . . . . . . . . 41
Form 8888, Direct Deposit of Refund to More Than One Account . . . . . . . . . . . . . . . 42
Child Tax Credit Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Child Tax Credit Worksheet, Line 51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
EIC worksheet, Lines 64a and 64b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
EIC Worksheet A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Foreign Earned Income Tax Worksheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
IRA Deduction Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Qualified Dividends and Capital Gain Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . 53
Simplified Method Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Social Security Benefits Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Standard Deduction Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Student Loan Interest Deduction Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Blank Forms F-1

F-2 Blank Forms

Blank Forms F-3
F-4 Blank Forms
Blank Forms F-5
F-6 Blank Forms
Blank Forms F-7
F-8 Blank Forms
Blank Forms F-9
F-10 Blank Forms
Blank Forms F-11
F-12 Blank Forms
Blank Forms F-13
F-14 Blank Forms
Blank Forms F-15
F-16 Blank Forms
Blank Forms F-17
F-18 Blank Forms
Blank Forms F-19
F-20 Blank Forms
Blank Forms F-21
F-22 Blank Forms
Blank Forms F-23
F-24 Blank Forms
Blank Forms F-25
F-26 Blank Forms
Blank Forms F-27
F-28 Blank Forms
Blank Forms F-29
F-30 Blank Forms
Blank Forms F-31
F-32 Blank Forms
Blank Forms F-33
F-34 Blank Forms
Blank Forms F-35
F-36 Blank Forms
Blank Forms F-37
F-38 Blank Forms
Blank Forms F-39
F-40 Blank Forms
Blank Forms F-41
F-42 Blank Forms
Blank Forms F-43
F-44 Blank Forms
Blank Forms F-45
F-46 Blank Forms
Blank Forms F-47
F-48 Blank Forms
Blank Forms F-49
F-50 Blank Forms
Blank Forms F-51
F-52 Blank Forms
Blank Forms F-53
F-54 Blank Forms
Blank Forms F-55
F-56 Blank Forms
Blank Forms F-57
F-58 Blank Forms

RETEST QUESTIONS
The retest questions are all based on the test scenarios. This year there
are mini-scenarios and questions in Basic, Intermediate, Advanced,
Military, and International. The Interview Notes for the mini-scenarios are
included on the following pages.
To answer the retest questions for return preparation scenarios, refer
to the Interview Notes, Intake/Interview & Quality Review Sheet, and
taxpayer documents provided in the test scenarios beginning on page 1-6
of this booklet.
Retest Questions R-1

Retest Answer Sheet Question Answer Question Answer
Intermediate Scenario 1 Military Scenario 1
Name 9.1 17.1
Record all your answers on this tear-out page. 9.2 17.2
Your Instructor will tell you where to send your Intermediate Scenario 2 Military Scenario 2
10.1 18.1
Retest Answer Sheet for grading. Be sure to complete
10.2 Military Scenario 3
and sign the Form 13615, Volunteer Agreement.
Intermediate Scenario 3 19.1
11.1 19.2
11.2 19.3
Privacy Act Notice Question Answer 11.3 19.4
The Privacy Act of 1974 requires that Basic Scenario 1 11.4 19.5
when we ask for information we tell you
our legal right to ask for the information, 1.1 11.5 19.6
why we are asking for it, and how it will 1.2 11.6 19.7
be used. We must also tell you what
could happen if we do not receive it, Basic Scenario 2 11.7 19.8
and whether your response is voluntary, 11.8 19.9
required to obtain a benefit, or mandatory.
2.1
2.2 11.9 19.10
Our legal right to ask for information is
5 U.S.C. 301. Basic Scenario 3 Intermediate Scenario 4 Military Scenario 4
We are asking for this information to assist 3.1 12.1 20.1
us in contacting you relative to your inter- 12.2 20.2
est and/or participation in the IRS volun-
3.2
teer income tax preparation and outreach Basic Scenario 4 12.3 20.3
programs. The information you provide
4.1 12.4 20.4
may be furnished to others who coordi-
nate activities and staffing at volunteer 4.2 12.5 20.5
return preparation sites or outreach activi-
ties. The information may also be used to Basic Scenario 5 12.6 20.6
establish effective controls, send corre- 12.7 20.7
spondence and recognize volunteers.
5.1
5.2 Total Answers Correct: Total Answers Correct:
Your response is voluntary. However, if
you do not provide the requested informa- Basic Scenario 6 Total Questions: 20 Total Questions: 20
tion, the IRS may not be able to use your Passing Score: 16 of 20 Passing Score: 16 of 20
assistance in these programs. 6.1
6.2 Question Answer Question Answer
6.3
Advanced Scenario 1 International Scenario 1
6.4
13.1 21.1
6.5
13.2 21.2
6.6
Advanced Scenario 2 21.3
6.7
14.1 21.4
Basic Scenario 7 14.2 International Scenario 2
7.1
7.2
15.1 22.2
7.3
15.2 International Scenario 3
7.4
7.5
16.1 23.2
7.6
16.2 23.3
7.7
16.3 23.4
7.8
16.4 23.5
Basic Scenario 8 23.6
16.5
8.1
16.6 23.7
8.2
16.7 23.8
8.3
16.8 23.9
8.4
16.9 Total Answers Correct:
8.5
Total Answers Correct: Total Questions: 15
Total Answers Correct:
Total Questions: 15 Passing Score: 12 of 15
Total Questions: 30
Passing Score: 12 of 15
Passing Score: 24 of 30
R-2 Retest Questions

The first five short scenarios are designed to measure key competencies related to
dependency exemptions and related tax benefits. These first five scenarios do not
require you to prepare a tax return. Read each scenario carefully and use your training
and reference tools to answer the questions after the scenario.
Basic Scenario 1: Janice Simpson
Interview Notes
• Janice is 19 years old, single, and a full-time student.

• Janice lived with her parents all year. She did not pay rent or household bills.
• Janice did not provide over half of her own support.
• In 2009, Janice worked at a department store and earned $4,700, which was her
total income for the year.
• Janice’s federal income tax withholding was $250.
• Janice and her parents are U.S. citizens and have valid social security numbers.
Basic Scenario 1: Retest Questions
Directions
questions.
1.1 Janice is entitled to claim one personal exemption.

a. True
b. False
1.2 Janice cannot claim the making work pay credit on her return because:
a. Her income is too high
b. Federal income tax was withheld from her income
c. She can be claimed as a dependent on her parents’ return
d. She is a student

Basic Scenario 2: John Gordon
Interview Notes
• John is single and lives with his girlfriend, Theresa, and her three-year-old son
Timmy. The three of them have lived together since October 2007. They lived
together for the entire year of 2009.
• John is not Timmy’s father.
• Timmy’s father does not contribute to Timmy’s support; he left shortly after Timmy
was born. Theresa has not had any contact with Timmy’s father since he left.
• John and Theresa provided all of Timmy’s support during 2009.
• John earned $42,000 in 2009. He had no other income.
• Theresa worked part-time and earned $15,000.
• John, Theresa, and Timmy are U.S. citizens and have valid social security numbers.
Directions
questions.
2.1 What is John’s correct filing status?

a. Single
b. Married Filing Jointly
d. Head of Household
2.2 John can claim Timmy as a dependent.

a. True
b. False

Basic Scenario 3: Peggy Jackson
Interview Notes
• Peggy Jackson and Michael Martin were divorced in October 2009. They have not
lived together for three years.
• They have one child, Lizzie, age 4.
• In 2009, Lizzie lived with Peggy the entire year.
• Peggy and Michael provided all of Lizzie’s support.
• In 2009, Peggy worked and earned $18,000. Michael worked and earned $33,000.
• Since Michael pays child support, Peggy told Michael to claim Lizzie for everything
on his tax return.
• The divorce decree states that Michael can claim Lizzie as a dependent.
• Peggy, Michael, and Lizzie are U.S. citizens and have valid social security numbers.
Directions
questions.
3.1 Can Michael claim Lizzie as a dependent?

a. Yes, but only if Peggy gives Michael a signed Form 8332, Release of Claim
to Exemption for Child of Divorced or Separated Parents.
b. Yes, because the divorce decree states that Michael can claim Lizzie.
c. Yes, because Michael paid child support.
d. No, Lizzie is not the dependent of either Peggy or Michael.
3.2 Only Peggy can claim Lizzie as a qualifying child for the earned income credit
(EIC).
a. True
b. False

Basic Scenario 4: Rebecca Grant
Interview Notes
• Rebecca Grant is 46 years old.

• Roger is Rebecca’s 26-year-old son. Roger is totally and permanently disabled.
• Roger’s father died in 2006.
• In 2009, Rebecca and Roger lived with Samuel Grant in his home. Samuel Grant is
Rebecca’s father and Roger’s grandfather.
• In 2009, Roger received Form SSA-1099 showing social security disability benefits
of $12,000, his only income. Roger provided all of his own support with this income.
• Rebecca worked as a clerk and earned $25,000.
• Samuel Grant worked part-time and earned $15,000 to supplement his social secu-
rity retirement income of $6,000.
• Rebecca, Roger, and Samuel Grant are U.S. citizens and have valid social security
numbers.
Directions
questions.
4.1 Rebecca can claim Roger as a dependent.

a. True
b. False
4.2 Who can claim Roger as a qualifying child for EIC?

a. Rebecca, because her AGI is higher than Samuel’s AGI.
b. Either Rebecca or Samuel.
c. Samuel because Roger lives in his home.
d. Roger cannot be claimed as a qualifying child for EIC because he is over
19 and not a full-time student.

Basic Scenario 5: Victor and Maria Olivet
Interview Notes
• Victor and Maria are married and lived together in the U.S. all of 2009 with their two
sons, Peter, age 2, and Julian, age 4.
• Victor and Maria have lived in the U.S. for 5 years.
• Together, Victor and Maria earned $36,500, which was their only income.
• Victor and Maria provided all the support for Peter and Julian.
• Victor and Maria have Individual Taxpayer Identification Numbers (ITINs).
• Peter and Julian are both U.S. citizens and have valid social security numbers
(SSNs).
Directions
questions.
5.1 Victor and Maria are filing a joint return. They cannot claim Peter and Julian as
dependents.
a. True
b. False
5.2 Do Victor and Maria qualify for the earned income credit on their joint return?
a. Yes
b. No

Directions
Refer to the scenario information for Darius and Matilde Howard beginning on page 1-6.
6.1 What is the taxable amount of social security benefits?

a. $4,250
b. $4,340
c. $4,350
d. $10,000
6.2 What is the total amount of adjustments used to determine adjusted gross
income on Form 1040, page 1? $_______
6.3 What is the Howards’ standard deduction?

a. $11,400
b. $11,900
c. $12,500
d. $13,500
6.4 The amount of retirement savings contribution credit on Form 8880 is $100.
a. True
b. False
6.5 The amount of the Howards’ making work pay credit on Form 1040, page 2 is:
$_______
6.6 Darius and Matilde have an amount owed on their return, which is shown on
page 2 of Form 1040, in the Amount You Owe section. They are sure they
cannot pay this amount by April 15. They can use Form 9465, Installment
Agreement Request, to apply to the IRS for a monthly installment agreement.
a. True
b. False
6.7 The Howards want to know how to prevent having an amount owed on their tax
return next year. What could they do?
a. Give their employers revised Form(s) W-4 to increase withholding
b. They should not do anything and file their return as usual
c. Make estimated tax payments
d. Either a or c

Directions
Refer to the scenario information for Gladys Berry beginning on page 1-13.
7.1 Using the Determination of Filing Status flowchart in Publication 4012,
Volunteer Resource Guide, Gladys’ filing status is Single.
a. True
b. False
7.2 How much unemployment compensation from Form 1099-G does Gladys
include in her total income? $_________
7.3 Gladys’ standard deduction is $8,350.

a. True
b. False
7.4 What is the credit for child and dependent care expenses on Form 2441?
$_______
7.5 Do Gladys’ children qualify her for the child tax credit?
a. Yes
b. No
7.6 What is the amount of Gladys’ earned income credit in the Payments section
on Form 1040?
a. $1,252
b. $2,668
c. $3,297
d. $3,423
7.7 The amount of the additional child tax credit in the Payments section of Gladys’
return is $3,000.
a. True
b. False
7.8 Gladys should use Form 8888 to request her refund be deposited in two differ-
ent accounts.
a. True
b. False

Directions
Refer to the scenario information for Allison Mankato beginning on page 1-19.
You are conducting a quality review of Allison’s tax return, which was prepared by
another volunteer tax preparer. Allison is sitting with you as you conduct the review. Using
Form 13614-C, your resource materials, and all of the taxpayer’s documents, conduct
a quality review of the tax return and answer the questions below. Section C of Form
13614-C should be completed for this review. You are a volunteer at site S21014444.
8.1 Which of the following was entered on Form 1040 incorrectly?

a. Tina’s name
b. Kyle’s name
c. Allison’s home address
d. All of the above
8.2 What information on Form 1040 is incorrect?

a. Kyle’s SSN
b. Tina’s SSN
c. Allison’s name
d. Allison’s SSN
8.3 Allison’s correct adjusted gross income is: $______
8.4 The Advance EIC payment reported on Allison’s Form W-2 in box 9 should be
shown on Form 1040, page 2.
a. True
b. False
8.5 Does Allison qualify for the making work pay credit?
a. Yes
b. No

scenario.
Intermediate Scenario 1: Joe Cooke
Interview Notes
• Joe’s correct filing status is Single and he is 32 years old

• Joe’s adjusted gross income is $37,000
• Joe did not buy a new car this year
• Joe paid $1,500 in real estate taxes on his personal residence
• Joe paid the following medical expenses:
– Stop smoking program
– Unreimbursed doctor bills
– Unreimbursed dental bills
– Nonprescription medicines
• Joe is a U.S. citizen and has a valid social security number
Intermediate Scenario 1: Retest Questions

Directions
Using your resource materials and above interview notes, answer the following
questions.
9.1 A stop smoking program is a medical expense a taxpayer can include on

Schedule A.
a. True
b. False
9.2 What is Joe’s standard deduction? $________

Intermediate Scenario 2: Sarah Ashland
Interview Notes
• Sarah is 53 years old.

• Sarah and her husband, Drew, have lived apart for two years, but have not yet filed
for divorce. Sarah does not want to file a tax return with him.
• Sarah’s 32-year-old unmarried son, Harlan, lost his job and moved into Sarah’s
house in November 2008.
• Harlan’s 2009 Form W-2 from a part-time job shows wages of $3,270 and his Form
1099-G shows unemployment compensation of $4,150.
• Sarah paid all the household expenses and provided over half of Harlan’s support.
• Sarah, Drew and Harlan are all U.S. citizens and have valid social security numbers.
Intermediate Scenario 2: Retest Question

Directions
questions.
10.1 Sarah’s correct filing status is Head of Household.

a. True
b. False
10.2 Harlan qualifies for the entire $400 making work pay credit.
a. True
b. False

Directions
Refer to the scenario information for Paul Harvard, beginning on page 2-3.
11.1 Paul’s adjustments to income include which of the following:

a. His IRA contribution
b. Child support paid
c. IRA contribution and child support paid
11.2 What is Paul’s total taxes paid on Schedule A, line 9? $_______
11.3 Paul’s total interest paid on Schedule A, line 15 is:

a. $724
b. $5,282
c. $6,006
d. $7,100
11.4 The total allowable deduction in the Gifts to Charity section of Paul’s
Schedule A is: $______
11.5 Course-related books are a qualifying expense for the American opportunity
credit (Hope credit expanded).
a. True
b. False
11.6 Paul should claim the lifetime learning credit on his Form 1040 in order to
receive the most advantageous education benefit.
a. True
b. False
11.7 What is the amount of refundable American opportunity credit on Section IV of

Paul’s Form 8863? $_______
11.8 What is the additional tax percentage Paul must pay on his 401(k) early
distribution?
a. 0%
b. 10%
c. 15%
d. 20%
11.9 What is Paul’s first-time homebuyer credit in the Payments section of Form
1040, page 2? $_______

Directions
Refer to the scenario information for George and Alberta Farmer, beginning on
page 2-12.
12.1 What is the amount of George’s gross receipts on Schedule C-EZ, line 1?
a. $1,000
b. $4,200
c. $5,200
d. $6,000
12.2 George’s total business expenses on Schedule C-EZ, line 2, are $______
12.3 What is the amount of pension the Farmers should include in the Income
section of Form 1040, line 16b?
a. $0
b. $3,275
c. $32,756
d. $34,840
12.4 What percentage of the self-employment tax calculated on Schedule SE is

used as an adjustment to income on Form 1040, page 1?
a. 0%
b. 15.3%
c. 25%
d. 50%
12.5 How do you properly report qualified student loan interest paid?
a. As an expense for an education credit
b. As an adjustment to income
c. As an itemized deduction on Schedule A
d. On Form 1040, line 21, Other income

12.6 What is not an eligible expense for the nonbusiness energy property credit?
a. Insulation designed to reduce heat gain or loss in the home
b. Energy-efficient skylights
c. Compact fluorescent light bulbs (CFLs)
d. Energy-efficient exterior doors
12.7 The total amount of the Farmers’ making work pay and government retiree
credits on Schedule M is:
a. $250
b. $533
c. $783
d. $800

The first three scenarios do not require you to prepare a tax return. Read the scenario
scenario.
Advanced Scenario 1: Larry Fairfield
Interview Notes
• On June 11, 2009, Larry inherited 100 shares of PDQ stock from his Great-uncle Pete.
• Pete had purchased the stock for $5.00 per share in 1952.
• The fair market value on the date of Pete’s death was $20.00 per share.
• Larry sold the stock and received Form 1099-B reporting the following information:
– Date of sale: 12/1/2009
– Number of shares sold: 100 shares of PDQ Stock
– Sale price less commission: $1,800
• Larry is a U.S. citizen and has a valid social security number.
Advanced Scenario 1: Retest Questions
Directions
questions.
13.1 How much is the cost or other basis of Larry’s inherited stock as reported on
Form 1040, Schedule D? $_______
13.2 The holding period for inherited stock is always long term.
a. True
b. False
Advanced Scenario 2: Fred Marshall
Interview Notes
• Fred is single and purchased his first home in 2004 for $120,000.
• In 2005 Fred added a room at a cost of $20,000.
• In 2006 Fred had to repair the air conditioning system at a cost of $500.
• Fred lived in the home as his primary residence until he sold it on June 18, 2009.
• Fred sold the home for $275,000.
• Fred is a U.S. citizen and has a valid social security number

Directions
questions.
14.1 The gain from the sale of Fred’s home is taxable.

a. True
b. False
14.2 Which expenses can Fred use to adjust the cost basis of his home?
a. None, his cost basis is his original purchase price
b. He can add the cost of the room addition and the repair cost of the air
conditioning system
c. He can add the cost of the room addition
d. He can only include the costs incurred in the two years prior to the
date of sale
Advanced Scenario 3: Lucy Phillips
Interview Notes
• Lucy is single and a retired federal government employee. She is not eligible for and
did not receive any social security benefits.
• Lucy started receiving her pension in November 2006 and continues to receive
payments every month.
• The taxable amount of her pension for the year is $12,000.
• She worked part-time during 2009 and earned $8,000.
• She had no other income.
• Lucy’s AGI is $20,000
• Lucy is a U.S. citizen and has a valid social security number
Directions
questions.
15.1 What is the total amount of Lucy’s making work pay and government retiree
credits from Schedule M? $ _______
15.2 If Lucy’s only income in 2009 was from her pension, what would her making
work pay and government retiree credits be? $_______

Directions
Refer to the scenario information for Mark and Valerie Palmer, beginning on page 3-4.
16.1 The interest income from Mark’s Form 1041, Schedule K-1, is shown on which
line of Form 1040?
a. Line 8a
b. Line 8b
c. Line 21
16.2 The sale of ABC stock is:

a. Not reported on Form 1040, Schedule D
b. A capital gain distribution
c. A short-term transaction
d. A long-term transaction
16.3 What is the cost or other basis of the XYZ stock shown in column (e) of
Schedule D? $ ______
16.4 What is the amount of long-term capital gain or (loss) from Schedule D, line
15? $ ________
16.5 Which of the following is used to calculate the taxable portion of Mark’s
pension?
a. Mark’s current age
b. Mark and Valerie’s ages as of December 31, 2009
c. The age of the younger spouse
d. Mark and Valerie’s ages at the annuity starting date
16.6 How much, if any, of the $20,000 distribution reported on Form 1099-R is
excluded from income? $ ________

16.7 Mark and Valerie received a Form 1099-A reporting the foreclosure of their
principal residence. This transaction is reported on Form 1040, Schedule D.
a. True
b. False
16.8 In order to avoid reporting canceled debt as income, Mark and Valerie should
complete Form 982.
a. True
b. False
16.9 What are the total payments in the Payments section of Mark and Valerie’s
Form 1040?
a. $200
b. $800
c. $1,000
d. $1,800

scenario.
Military Scenario 1: Robert and Amy Bridgewater
Interview Notes
• Robert and Amy have been married for 40 years.

• Robert’s birth date is May 9, 1944.
• Amy’s birth date is August 2, 1946.
• Amy retired on December 31, 2008 and began drawing a monthly pension in
January 2009.
• Robert is still employed.
• The pension plan is a qualified plan and will be paid as a single annuity over Amy’s
lifetime.
• The gross distribution reported on Form 1099-R for 2009 was $20,943.
• The total employee contribution to the plan was $60,060.
• Robert and Amy are U.S. citizens and have valid social security numbers.
Military Scenario 1: Retest Questions
Directions
questions.
17.1 The taxable pension amount reported on Form 1040, line 16b is $20,943.
a. True
b. False
17.2 Which birth date is needed to compute the taxable pension amount?
a. Robert’s
b. Amy’s
c. Both
d. Neither; age is not a computation factor

Military Scenario 2: Daniel and Donna Hendrix
Interview Notes
• Daniel and Donna live in Houston, Texas, where Daniel joined the Navy. He finished
his training and will be stationed in San Diego for two years. This is a permanent
change of station (PCS).
• Donna and their two children traveled separately from Daniel and drove the family
van with their pets. They stopped in El Paso to see Donna’s parents for a long week-
end and then traveled on to San Diego. Their trip took a total of six days instead of
the authorized two days and one night.
• They decided to make a Do It Yourself (DITY) move and save money.
• Their move was estimated to cost $5,263 and the Navy provided $5,000 in advance.
• Their cost for moving household goods was $3,500, a hotel in Phoenix was $150,
Daniel’s airfare was $200, and gas and food for the family was $150.
• All expenses are considered reasonable; they are correctly documented and totaled
$4,000.
• Daniel, Donna and their children are U.S. citizens and have valid social security
numbers.
Military Scenario 2: Retest Question
Directions
question.
18.1 Which of the following statements is false?

a. The authorized meals and lodging for the family to travel would be limited
to one night in a hotel room and two days of meals.
b. The receipts for authorized expenses for the trip should be submitted to
the Navy with a voucher for the entire move, to substantiate the advanced
amount.
c. The net difference in the $4,000 cost and the $5,000 advance from the
Navy is the extra money Daniel and Donna get to keep.
d. The $1,000 net difference between the cost and the advance is not
included in Daniel and Donna’s gross income.

Directions
Refer to the scenario information for Diana Stewart and Henri Dumont beginning on
page 4-3.
19.1 If Diana does not file a joint return with Henri, she may choose to file as Head
of Household, even though she lived with Henri during the last six months of
the tax year.
a. True
b. False
19.2 What is the correct total number of exemptions that Diana and Henri can claim
on their joint return?
a. 1
b. 2
c. 3
d. 4
19.3 Diana’s combat zone income from Form W-2, box 12a, should not be reported
as wages, salaries, and tips in the Income section of Form 1040.
a. True
b. False
19.4 The long-term gain or loss on Schedule D, line 15 is:

a. $1,000 gain
b. $1,000 loss
c. $2,000 gain
d. $4,000 gain
19.5 Diana and Henri’s total rental real estate income or loss on Schedule E is:
$_______
19.6 The correct standard mileage rate on Diana’s Form 2106-EZ, line 1, is 50.5
cents per mile.
a. True
b. False

19.7 What are the total adjustments to gross income on Form 1040?
a. $275
b. $675
c. $990
d. $1,965
19.8 Diana asks you if they qualify for the earned income tax credit. You answer:
a. Yes, because she can exclude her combat zone income
b. No, because Henri has an ITIN
19.9 If it is beneficial, combat zone pay may be used to compute the earned income
tax credit by taxpayers who meet all the other qualifications.
a. True
b. False
19.10 Diana and Henri’s making work pay credit on their joint return will be:
$_________

Directions
Refer to the scenario information for Peter and Beth Anderson, beginning on page 4-13.
20.1 The sale of the Andersons’ personal residence is reported on their tax return.
a. True
b. False
20.2 On Form 1099R, box 7, what numerical code will generally indicate that the
distribution is subject to an additional tax?
a. 1
b. 2
c. 3
d. 4
20.3 What is the Andersons’ total income reported in the Income section of
Form 1040?
a. $59,590
b. $61,170
c. $65,145
d. $65,445
20.4 What dollar amount may be added to the Andersons’ standard deduction if they
do not itemize?
a. $500
b. $600
c. $800
d. $1,000
20.5 The Andersons are required to file Form 1116.

a. True
b. False

20.6 What is the foreign tax credit reported in the Tax and Credits section of Form
1040? $______
20.7 The Andersons’ son, Kenneth, is not entitled to a making work pay credit
because he can be claimed as a dependent on his parents’ tax return.
a. True
b. False

scenario.
International Scenario 1: Doug and Claire Emerson
Interview Notes
• Doug is a U.S. citizen and has a valid social security number. Doug and Claire are
married and live in London.
• Claire is a British foreign national (citizen of Great Britain).
• Doug’s total income was $85,000.
• Claire has an ITIN, but had no income and has never lived in the U.S.
• Doug’s 17-year-old daughter, Edna, lives with him. Edna’s mother died in 2005.
Edna is a U.S. citizen and has a valid social security number.
• Doug provided all the financial support for Edna.
• Claire has 4-year-old twins, Jack and Tate, both British citizens, who lived with Doug
and Claire in London for all of 2009.
• Doug is not the father of the twins and has not adopted them.
International Scenario 1: Retest Questions
Directions
questions.
21.1 Doug can claim a dependency exemption for Edna.

a. True
b. False
21.2 Doug can claim dependency exemptions for both Jack and Tate.
a. True
b. False
21.3 Doug can claim a personal exemption for Claire if:

a. His filing status is Married Filing Jointly
b. His filing status is Married Filing Separately
c. His filing status is Head of Household
d. Any of the above

21.4 Edna is Doug’s only qualifying person for the Head of Household filing status.
a. True
b. False
International Scenario 2: Don and Barbara Chabot
Interview Notes
• Don and Barbara Chabot moved to Germany on January 20, 2009, for Barbara’s
temporary job assignment. They are U.S. citizens and have valid social security
numbers.
• They left for a visit to the U.S. on July 1, 2009, and returned to Germany on July 15,
2009.
• They also spent 14 days sightseeing in France and Spain, in September.
• They currently rent a home in Germany and sublet their apartment in the U.S.
Directions
questions.
22.1 Don and Barbara meet the requirements of the physical presence test and can
exclude their foreign earned income.
a. True
b. False
22.2 The 14-day sightseeing trip counts toward the 330-day requirement for the
physical presence test.
a. True
b. False
Directions
Refer to the scenario information for Jason and Ella Barnes, beginning on page 5-4.
23.1 What is the amount of wages reported in the Income section of Form 1040?
$________
23.2 The net business income from Schedule C-EZ is: $___________
23.3 What is the net short-term capital gain or loss on Schedule D, Line 7?
a. $0
b. $1,750
c. $6,000
d. $7,130
23.4 What is the net long-term capital gain or loss on Schedule D, line 15? $______
23.5 The bona fide residence ending date on Form 2555 is?
a. 12/31/2009
b. Open
c. 6/23/2004
d. Continues
23.6 The correct amount reported on the other income line on Form 1040, page 1 is:
a. ($11,245)
b. ($12,100)
c. $42,000
d. ($42,000)
23.7 Earned income received from the U.S. Government for working abroad as an
employee does not qualify for the foreign earned income exclusion.
a. True
b. False
23.8 What is the Foreign Tax Credit in the Tax and Credits section of Form 1040?
a. $110
b. $168
c. $429
d. $2,119
23.9 What is the correct amount of self-employment tax reported in the Other Taxes
section of Form 1040? $_______

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2009 Form 6744

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2009 Form 6744

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2009 Form 6744

For Use in Preparing Tax Year 2009 Returns

• Volunteer Income Tax Assistance (VITA)

• Tax Counseling for the Elderly (TCE)

Department of the Treasury – Internal Revenue Service

Blank Forms Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

Retest Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-1

Introduction & Instructions i

Quality Return Process

ii Introduction & Instructions

Test Answer Sheet

Introduction & Instructions iii

iv Introduction & Instructions

Certification in Link & Learn Taxes

VITA/TCE Certification Requirements

MILITARY ADVANCED international

Introduction & Instructions v

vi Introduction & Instructions

viii Introduction & Instructions

Basic Scenario 1: Janice Simpson

• Janice is 19 years old, single, and a full-time student.

Basic Scenario 1: Test Questions

Basic Scenarios 1-1

Basic Scenario 2: Test Questions

2.1 Does John qualify for Head of Household filing status?

2.2 Can John claim Timmy as a dependent?

1-2 Basic Scenarios

Basic Scenario 3: Test Questions

3.1 Who can claim Lizzie as a dependent?

Basic Scenarios 1-3

• Rebecca Grant is 46 years old.

Basic Scenario 4: Test Questions

4.1 Who can claim Roger as a dependent?

4.2 Rebecca can claim Roger as a qualifying child for EIC.

1-4 Basic Scenarios

Basic Scenario 5: Test Questions

Basic Scenarios 1-5

• Social security cards for Darius and Matilde Howard

1-6 Basic Scenarios

6.1 What is the taxable amount of social security benefits? $_______

6.3 What is the Howards’ standard deduction amount? $_______

1-12 Basic Scenarios

Basic Scenarios 1-13

7.2 How much unemployment compensation from Form 1099-G is included in

7.3 What is Gladys’ standard deduction amount? $__________

1-20 Basic Scenarios

8.1 Select the name(s) entered incorrectly on Form 1040.

8.2 Which social security number is entered incorrectly on Form 1040?

8.3 Allison’s correct adjusted gross income is $21,250.

1-28 Basic Scenarios

Intermediate Scenario 1: Joe Cooke

• Joe’s correct filing status is Single and he is 32 years old

Intermediate Scenario 1: Test Questions

9.1 Which of these medical expenses could be included on Schedule A?

Intermediate Scenarios 2-1

• Sarah is 53 years old.

Intermediate Scenario 2 Test Question

10.1 What is Sarah’s correct filing status?

10.2 Is Harlan eligible for the making work pay credit?

2-2 Intermediate Scenarios

• Social security card for Paul Harvard

Intermediate Scenarios 2-3

2-4 Intermediate Scenarios