Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 3, Problem 9FPE
Summary Introduction
To discuss: The advice for federal tax forms.
A taxable income is termed to any person's or business' remuneration that is utilized to decide tax liability. The gross income or total income is utilized as the origin to ascertain the amount of taxes an individual or a business owes to the government for the regular tax period.
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Question 31 of 50.
Review the following scenario, then choose the appropriate response describing steps a paid tax preparer must take to
demonstrate due diligence. Charlie (21) comes in to your office to have his tax return prepared. He states that he is a full-tim
college student with income from a part-time job, and his parents will not claim him as a dependent. He wants to claim the
American Opportunity Tax Credit (AOTC). Which of the following describes an appropriate question to ask or action to take
ooo
Ask him if he has ever been convicted of a misdemeanor offense or had his driver's license revoked.
Inform him that he may be assessed a penalty of $545 if he fails to provide all the information required.
Inform him he must provide copies of all transcripts before you can prepare his retum.
Request a copy of his Form 1098-T, Tuition Statement, and inquire into when and how his education and other
were paid.
Mark for follow up
Question 32 of 50.
Tee of these pro
ambing systems.…
Some people earn money that is paid to them in cash and then do not include this as income when they file their tax returns. What are the pros and cons of this practice?
Describe some reasons why it is a good idea to file a tax return if you have earned income, even if you do not owe any taxes.
Chapter 3 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Ch. 3 - Discuss the basic principles of income taxes and...Ch. 3 - Prob. 2LOCh. 3 - Prob. 3LOCh. 3 - Explain who needs to pay estimated taxes, when to...Ch. 3 - Know where to get help with your taxes and how...Ch. 3 - Implement an effective tax planning strategy.Ch. 3 - Calculating marginal tax rates. Lacey Hansen is...Ch. 3 - Estimating taxable income, tax liability, and...Ch. 3 - Calculating taxes on security transactions. If...Ch. 3 - Prob. 4FPE
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- John is not sure if he needs to complete a tax return. Assist him by critically assessing any 5circumstances that may qualify him.arrow_forwardTaxpayers are having a difficult time due to the large number of tax rules in place. To put it another way, what is the meaning of "substance above form?" Can you think of any examples?arrow_forwardYou and your friend Amy, while discussing your tax class, were surprised to learn that a substantial amount of income goes unreported each year by taxpayers. When taxpayers do not report all their income, the missing income must be replaced by imposing higher taxes on current taxpayers. Consider a time when you were trying to decide whether something should be put on your income tax return or not. Explain the differences between tax avoidance and tax evasion, and discuss the rewards of tax avoidance and the penalties of tax evasion.arrow_forward
- A paid tax preparer must demonstrate due diligence. Review the following scenario, and then choose the appropriate response. Cherylynn Johnson (58) comes in to your office to have her tax return prepared. She states that she wants to use the head of household filing status and claim the Earned Income Tax Credit (EITC). She also tells you that her dependent child is her granddaughter, Alana (12), who currently lives with her. All of the following are appropriate questions to ask or actions to take EXCEPT: Ask Cherylynn how long Alana has lived with her and inquire into the whereabouts of Alana's parents. Ask Cherylynn who paid most of the expenses of maintaining her home. Inform Cherylynn that she must provide you with documentation proving Alana lived with her before you can prepare the return. Inquire whether the IRS has ever denied or reduced Cherylynn's EITC in a prior year.arrow_forwardFreelancers look after their own taxes. O False Truearrow_forwardTax preparers often have a difference of opinion with their clients as to how some transactions should be treated on a tax return. If a client of yours does not wish to report information on their tax return that you feel should be reported, how would you handle the situation? Write in at least 300 words with two scholarly sources.arrow_forward
- Evaluate the three strategies reducing income, increasing deductions, and taking advantage of tax credits that you listed based on their overall effect on a person's tax situation (the amount of income taxes that the person will have to pay). Evaluate the ethical issues related to the payment of income taxes. in other words, if there is a legal tax-saving strategy available to a person who earns $50,000 per year, will it be ethical for the person to utilize this strategy in order to pay less tax? State how your answer to the previous question would change if the person were making $1,500,000.arrow_forwardYou are a CPA and do tax returns for individuals. A woman enters your office and asks you to complete her tax return. During your meeting, she mentions that she is expecting about $5000 in refund, and needs that to pay off a debt, that will result in a $1000 fine if she does not pay in the next month. You complete her tax return, but the refund is much lower than she expected, only $1000. She is very mad, and consults with another CPA. The other CPA determines that you made a significant mistake, but the period to file returns has passed. It will cost $500 to file an amendment. What damages is the woman likely entitled to? Group of answer choices A. None, because accountants can't be perfect B. $500, because that is all that is needed to make it right C. $500, and potentially $1000, because of the consequential damages of not being able to pay off her loan on time D. $4000, because that is the difference between the proper refund and your mistake.arrow_forwardHi can you help me come up with answers. Question: Among the essential characteristics of tax, which do you think is the most relevant for you as a student?arrow_forward
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