How Much Do You Know About Taxes?

Tax day 2016 is tomorrow (4/18/17). Before you file your return, perhaps you should check your knowledge of the tax code (with a bit of state trivia thrown in). Are the below statements True or False? No Googling – you’ll hate yourself in the morning! Link to the answers is at the end.

  1. You can deduct health insurance up to the amount of your earned income if you are self-employed.
  2. You can contribute to a Roth IRA or you can convert to a Roth IRA in a year, but not both.
  3. You can convert up to $100k to a Roth IRA annually.
  4. You can continue to contribute to a Roth IRA after age 70 ½ as long as you have earned income.
  5. You can set up an S-corporation without having an LLC.
  6. You can wait until 10/15 to contribute to a SEP IRA for the prior year as long as you elect to do so by 4/15.
  7. You can file for an extension of time to pay taxes.
  8. The extended due date for business income tax returns is 10/15.
  9. Both parents must have earned income to qualify to take the Child Care Credit
  10. Tax-exempt interest can raise your taxes.
  11. Your income is not a factor in calculating your Health Savings Account (HSA) contribution or deduction.
  12. You can contribute to an IRA without earned income.
  13. You should still file an income tax return for gifts when you have no taxable income.
  14. You never need to file a gift tax return unless your annual gifts exceed $14k per person per donee.
  15. You can take a home office deduction on a garage if you your store inventory and also park your car there.
  16. You cannot claim an exemption for your child if she files a separate tax return.
  17. New York is the state with the highest income taxes.
  18. The top 3 states with the highest total sales taxes (state and local) are in the Southeast.
  19. If you get an MBA to become a hospital administrator after becoming a doctor, it can be deductible.
  20. You can deduct time away from work volunteering.
  21. If you drive your vehicle 100% for business, there is no need to keep records.
  22. Any unused operating losses transfer to your spouse when you die.
  23. A good way to defer taxes on the sale of your vacation home is a section 1031 like-kind exchange.
  24. You can rent your home to your business for 2 weeks a year without paying taxes on the income.
  25. You get a 100% deduction for buying lunch for the office.

Let’s see how you scored – answers are here.

How did you fare? If you’re at PPS, you may have just found a way to earn some coveted IC (Independent Contractor) income moonlighting as a tax preparer!

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