question archive Question 1) Tom reported $1,000 of municipal bond fund interest on line 2a of Form 1040
Question 1) Tom reported $1,000 of municipal bond fund interest on line 2a of Form 1040
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Question 1) Tom reported $1,000 of municipal bond fund interest on line 2a of Form 1040. The municipal bond fund's statement showed 80% of the interest was attributable to investments in California bonds and the other 20% in other states. Which of the following adjustments should he make on line 2 of his California Schedule CA (540)?
Add $200 in column C.
Subtract $200 in column B.
Add $800 in column C.
Subtract $800 in column B.
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Question 42 of 99.
In 2019, Andrew received a refund from his state Department of Revenue for the amount of state taxes that he overpaid in 2018. He was able to reduce his 2018 federal tax liability by itemizing and claiming a deduction for state and local income taxes paid that year. On his 2019 return, Andrew may need to report all or part of the state tax refund that he received in 2019 as:
A negative credit on both the federal and California returns.
A negative deduction on both the federal and California returns.
A refundable credit on the federal return and an adjustment on the California return.
Taxable income on the federal return and an adjustment on the California return.
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Question 43 of 99.
What is the percentage of social security income that may be taxed on the California return?
0%.
15%.
50%.
85%.
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Question 44 of 99.
How is railroad retirement income treated on the federal and California tax returns.
On the federal return, Tier I railroad retirement income is treated the same as social security and Tier II as pension income. The same is true for California.
On the federal return, Tier I & Tier II railroad retirement income are treated the same as social security. The same is true for California.
On the federal return, Tier I railroad retirement income is treated the same as social security and Tier II as pension income. Neither are taxable on the California return.
On the federal return, Tier I & Tier II railroad retirement income are treated the same as pension income. Both are taxable on the California return.
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Question 45 of 99.
How is the mortgage interest credit treated on the California return?
The credit is claimed as an adjustment to income rather than as a credit.
There is no mortgage interest credit in California; however, a taxpayer who claimed the credit on the federal return may have an addition to the California itemized deductions.
The mortgage interest credit has no effect on the California return.
When the mortgage interest is claimed on the federal return, there will be an addition to income and an addition to itemized deductions on the California return.
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Question 46 of 99.
When is itemizing for federal, but not for California, preferred?
That is not allowed. When itemizing for federal, the taxpayer must also itemize for California.
When it is more beneficial to do so for both the federal and California returns.
When taxpayers are filing MFS.
When taxpayers have a different filing status for California than for federal.
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Question 47 of 99.
To withhold at a different rate for California than for federal, what would a taxpayer need to do?
File two Forms W-4 with their employer, one for federal and one for California.
File a Form DE 4 for California with their employer.
File a Form W-4 with their employer with a notation of the difference for California.
The rates for California must be the same as for federal.
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Question 48 of 99.
John and Megan will be itemizing their deductions on their 2019 tax returns for both federal and California. What is the impact of the $245 California 2018 balance due they paid in April of 2019?
It will be an itemized deduction on both returns.
It will have no impact on either tax return.
It will be an itemized deduction on the federal return and a subtraction on page 1 of Schedule CA (540).
It will be an itemized deduction on the federal return and a subtraction on page 2 of Schedule CA (540).
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Question 49 of 99.
Jen has the following miles related to her employment (she works at two different company locations and was not reimbursed for any of her mileage): 1,600 miles for going back and forth to work. 830 miles for business errands her boss required of her. 500 miles to meet with her clients from her work location and back. 450 miles going from one office location to another. How much will Jen enter on Schedule CA (540), page 3, line 19 (rounded to the nearest dollar) using the 2019 mileage rate of 58¢ per mile?
$0
$928
$1,032
$1,960
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Question 50 of 99.
Which of these California deductions is NOT subject to a 2% of AGI limitation?
Business mileage.
Tax preparations fees.
Gambling losses.
Safe deposit box.
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Question 51 of 99.
Which of these is incorrect for a claim of right?
If the claim of right is over $3,000, it may be entered as an Other Itemized Deduction for California on Part II, line 16, of Schedule CA (540).
If the claim of right is $3,000 or less, it may be taken as a deduction subject to the 2% of AGI limit for California on Part II, line 21, of Schedule CA (540).
If the claim of right is more than $3,000, it may be taken as a credit for California.
If the amount repaid was not taxed by California, the claim of right is subject to the 2% of AGI limit for California.
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Question 52 of 99.
Which of these is NOT a deductible California expense subject to the 2% of AGI limit?
Legal expenses necessary to produce or collect taxable income.
Legal expenses to produce income from California municipal bonds.
Expenses to produce income from Nevada municipal bonds.
Fees paid for investment advice.
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Question 53 of 99.
Which of these investment expenses is NOT a miscellaneous deduction?
Amounts paid to a broker or similar agent to collect taxable income.
Fees paid for investment advice.
Rental fee for a safe deposit box used to store jewelry.
Amounts actually paid for clerical help or renting an office used in taking care of investments.
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Question 54 of 99.
To calculate the California itemized deduction limitation, a taxpayer would:
Reduce all itemized deductions by 3% of the excess of the AGI over the threshold amount.
Reduce medical expenses by 7.5% of the AGI.
Reduce only medical expenses, investment interest, and gambling losses.
Complete the California Itemized Deduction Worksheet.
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Question 55 of 99.
What adjustments may be required for a California return when a taxpayer has a Health Savings Account (HSA)?
An income subtraction and an itemized deduction addition.
An income subtraction and an itemized deduction subtraction.
An income addition and an itemized deduction subtraction.
An income addition and an itemized deduction addition.
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Question 56 of 99.
California's Alternative Minimum Tax __________.
Affects more California taxpayers than the federal.
Has different exemption amounts and tax rates than the federal.
Is discussed in the instructions for Schedule CA (540).
Follows different principles than the federal.
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Question 57 of 99.
In which of these does California conform to federal law for Alternative Minimum Tax?
The same basic principles.
The same tax rates.
The same exemption amounts.
Small businesses may be exempt.
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Question 58 of 99.
Does California conform to federal law for certain transportation benefits being excluded from income?
California conforms completely.
California does not conform. There are fewer limitations in the California law.
California conforms, but with a lower dollar limitation.
California does not conform. There is no exclusion under California law.
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Question 59 of 99.
Club dues for which one of these clubs would be allowed as a Schedule C deduction for California?
A club for men only.
A club only for Buddhists.
A club for Italians only.
A club only for the wealthy.
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Question 60 of 99.
Which one of these deductions would NOT be disallowed on the California return during months when a rental is deemed as substandard housing?
Mortgage interest.
Property tax.
Insurance.
Depreciation.
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