The Basics
April has 2 kids whom both live with her , she has both kids in daycare so she can go to work and pay her bills. April pays 100% of her bills herself.
what is her filing status?
head of household
Jessica works at Walmart as a cashier and receives a paycheck with taxes withheld.
what kind of income form should she receive?
W-2
What is the difference between 1099-NEC and 1099-misc?
NEC = Nonemployee Compensation- Reports payments for services performed by independent contractors
MISC - Reports certain other types of income, such as rent, royalties, and prizes
NEC- Common for barbers, hairstylists, cleaners, and contractors
Misc-Common for landlords, prize winners, and people receiving royalties
What does PTIN stand for?
Preparer Tax Identification Number.
You are required to have one to file anyone's taxes.
What is standard deduction?
A fixed dollar amount that reduces the income subject to federal income tax.
John and Marry has been married for 4 years, John recently moved to a different state in October, they have been living apart for 3 months now. They both work regular w2 jobs for the year and has 3 kids together.
What Is the best filing status for both of them?
Married filing jointly
Marcus is a self-employed barber. A barbershop pays him $15,000 as an independent contractor.
What kind of form should he receive?
1099-NEC Self-employment or contractor income
Tiffiany want you to file her taxes and lets you know that she has 3 kids but has not worked a job all year, when you ask what kind of income did she make , she states she only received social security and unemployment and no federal taxes were withheld.
Will she qualify for a refund?
No, the kind of income received is not earned income.
what IRS form is used to document paid preparer due diligence for EITC, CTC/ACTC/ODC, AOTC, and HOH?
Form 8867
What is the 2026 standard deduction for Single and Married Filing Separately?
$16,100
Derick is on his 2nd yr of college and currently works part time at walmart to pay bills in his 1 bedroom apartment. Derick has 2 w2s to file and has no children.
what is his filing status and what credit does he probably qualify for?
Single and AOTC (AMERICAN OPPORTUNITY TAX CREDIT)
Ashley sells merchandise online and receives customer payments through PayPal or a card processor.
What kind of income form should she receive?
1099-K Payments processed through payment apps or marketplaces
Ariana cleaned houses all year and received both cash and cashapp payments. she tells you she made $25k in cash. She shows you her receipt book adding up to $25k cash for the year. plus gives you her cashapp statements that adds up to $5k , giving her a total income of $30k for the year. Ariana has no kids. What kind of form will you as the preparer file to report this income ? and will she most like owe or receive a refund?
Schedule C . She will most likely owe since she has not paid any taxes on the $30k she earned and she does not have dependents to claim.
A client claims a child lived with them all year, but their documents show a different address. What should the preparer do?
Ask reasonable follow-up questions and document the answers.
What is the 2026 standard deduction for Head of Household?
$24,150
Alex And Ray are married living together with 4 kids.
Ray had terrible accident a yr again and has passed away , leaving Alex to raise the kids on her own.
Alex now pays 100% of the bills herself and cares for the kids herself.
what is the best filing status for her?
Qualifying Surviving spouse
James owns a rental property and receives rental payments reported by a property manager
1099-MISC Rent, royalties, prizes, and certain other income
What is the refundable portion of the child tax credit?
$1700
A client asks you to invent business expenses to increase their refund. What should you do?
Refuse to fabricate deductions.
What is the 2026 standard deduction for Married Filing Jointly?
$32,200
Jessica and Marcus has been married 4 years now but jessica does not want to combine her income with her husbands income. Jessica wants to file her tax return on her own.
what filing status should jessica use?
MARRIED FILING SEPARETE
Brittany has a savings account that earned $350 in interest.
what kind of income form should she receive?
1099-INT Interest income
How old does a child have to be at the end of the year to claim the CTC?
UNDER 17
how long must a paid preparer generally retain required due diligence records?
Three years
What is the 2026 standard deduction for Qualifying Surviving Spouse?
$32,200