EA Part 1 - Video 4 Exam

Which of the following is NOT an adjustment to income?

Educator expensesStudent

loan interest

Charitable contributions

Self-employed health insurance

Charitable contributions

Charitable contributions are an itemized deduction, not an adjustment to income. All others reduce AGI.

What is the maximum educator expense deduction for a single teacher in 2025?

$150

$250

$300

$500

$300

Eligible educators can deduct up to $300 of eligible expenses. If both spouses are teachers (MFJ), each can deduct $300 for a total of $600.

A student loan interest deduction of up to $2,500 begins to phase out at which AGI level for Single filers?

$65,000

$75,000

$85,000

$95,000

$85,000

The deduction phases out between $85,000 and $100,000 of AGI for Single, HOH, and QSS filers.

What is the standard deduction for a Single filer in 2025?

$13,850

$15,750

$17,750

$19,750

$15,750

The base standard deduction for Single filers in 2025 is $15,750.

If a dependent can be claimed on someone else's return, what is their standard deduction limited to?

$0

Greater of $1,350 or earned income plus $450

Half the normal standard deduction

The normal standard deduction for their filing status

Greater of $1,350 or earned income plus $450

A dependent's standard deduction is limited to the greater of $1,350 or earned income plus $450 (up to the regular standard deduction).

Medical and dental expenses are deductible only to the extent they exceed what percentage of AGI?

5%

7.5%

10%

12.5%

7.5%

You can deduct only the part of unreimbursed medical expenses that exceeds 7.5% of your AGI.

Which item is NOT deductible as a medical expense?

Prescription medicines

Cosmetic surgery

Hearing aids

Weight loss program for obesity

Cosmetic surgery

Cosmetic surgery is not deductible as a medical expense. The weight loss program IS deductible if it's for a specific disease diagnosed by a doctor.

What is the SALT (state and local tax) deduction limit for a married couple filing jointly in 2025?

$10,000

$20,000

$40,000

Unlimited

$40,000

The SALT deduction is limited to $40,000 for MFJ filers in 2025, further reduced by 30% of MAGI over $500,000.

Home mortgage interest can be deducted on loans taken out after December 15, 2017 on up to how much of debt?

$500,000

$750,000

$1,000,000

$1,500,000

$750,000

For loans taken out after December 15, 2017, you can deduct interest on up to $750,000 ($375,000 MFS) of debt.

Which of the following must be substantiated with a contemporaneous written acknowledgement from the organization if the gift is $250 or more?

Any charitable contribution

Cash contributions only

Gifts of property only

All of the above

Any charitable contribution

Any charitable contribution of $250 or more requires a contemporaneous written acknowledgement from the organization.

Charitable contributions are limited to what percentage of AGI for cash contributions?

30%

40%

50%

60%

60%

Cash contributions to qualified charities are limited to 60% of AGI.

A personal casualty loss from personal-use property is generally deductible only if:

It exceeds $100

It's in a federally declared disaster area

It exceeds 10% of AGI

All of the above

It's in a federally declared disaster area

Personal casualty and theft losses are generally not deductible unless they occur in a federally declared disaster area.

For a federal casualty loss, after calculating the loss amount, you must subtract what amount?

$50

$100

$250

$500

$100

For federal casualty losses, you subtract $100 from the loss amount (this applies only once per event, not per property).

After the $100 floor for federal casualty losses, you can only deduct the amount exceeding what percentage of AGI?

5%

10%

15%

20%

10%

After subtracting $100, you subtract 10% of AGI. Only the amount above 10% of AGI is deductible

A qualified disaster loss uses what dollar floor instead of $100?

$250

$350

$500

$750

$500

For qualified disaster losses, you subtract $500 from the loss amount (not $100), and it's not subject to the 10% AGI floor.

The new Qualified Tips Deduction for 2025–2028 has a maximum of how much per year for MFJ?

$12,500

$25,000

$35,000

$50,000

$25,000

The maximum qualified tips deduction is $25,000 per year for MFJ filers (not per person).

At what AGI threshold does the Qualified Tips Deduction begin to phase out for Single filers?

$100,000

$150,000

$200,000

$250,000

$150,000

The tips deduction phases out when MAGI exceeds $150,000 for Single filers ($300,000 for MFJ).

The Qualified Overtime Deduction for 2025 allows how much deduction for a Single filer?

$6,250

$12,500

$25,000

$50,000

$12,500

Single filers can deduct up to $12,500 in qualified overtime compensation per year.

Only the extra ____ over the normal wage is deductible for qualified overtime compensation:

50%

100%

Double-time rate

Amount paid above the normal hourly rate

50%

Under the Fair Labor Standards Act, overtime must be paid at 1.5 times the normal wage. Only the extra 50% is deductible.

The new Car Loan Interest Deduction for 2025 allows a maximum deduction of how much?

$5,000

$7,500

$10,000

$15,000

$10,000

You can deduct up to $10,000 for qualified passenger vehicle loan interest.

The car used for the new Car Loan Interest Deduction must be:

Any vehicle purchased after 2024

A new vehicle with final assembly in the US

At least 10 years old

Purchased through a dealer

A new vehicle with final assembly in the US

The vehicle must be new with final assembly in the United States and designed for public street use.

The Enhanced Deduction for Seniors in 2025 allows what additional deduction per person age 65+?

$3,000

$4,000

$6,000

$8,000

$6,000

The enhanced deduction for seniors is $6,000 per person age 65 or older, reduced by 6% of MAGI over $75,000.

Qualified Business Income (QBI) does NOT include:

Income from a sole proprietorship

Capital gains and dividends

S corporation income

Partnership income

Capital gains and dividends

QBI excludes investment income such as capital gains, interest, and dividends.

For a Single filer with taxable income at or below what threshold is there no QBI limitation?

$157,300

$177,300

$197,300

$217,300

$197,300

If taxable income is at or below $197,300 for Single (or $394,600 for MFJ), the QBI component is simply 20% of QBI with no wage/UBIA limitation.

The QBID is limited to 20% of taxable income minus:

Net losses

Capital gains

Charitable contributions

Business expenses

Capital gains

The overall QBID is limited to 20% of taxable income minus capital gains.

For a Specified Service Trade or Business (SSTB), above the threshold, a Single filer with taxable income over what amount gets NO QBID?

$227,300

$237,300

$247,300

$257,300

$247,300

For SSTB taxpayers, if taxable income exceeds $247,300 for Single ($494,600 MFJ), no QBID is allowed.

The wage/UBIA limitation for non-SSTB businesses is the greater of which two amounts?

50% of wages or 25% of wages plus UBIA

50% of wages or 2.5% of UBIA

25% of wages or 10% of assets

All business wages or all business assets

greater of which two amounts?

50% of wages or 25% of wages plus UBIA

It's the greater of: (1) 50% of W-2 wages, or (2) 25% of W-2 wages plus 2.5% of UBIA.

UBIA stands for:

Unallocated Business Income Amount

Unadjusted Basis Immediately After Acquisition

Updated Business Interest Amount

Undeferred Business Investment Account

Unadjusted Basis Immediately After Acquisition

UBIA is the unadjusted basis immediately after acquisition of qualified property used in the business.

Gambling losses can be deducted:

Without limitation against any income

Only on Schedule C

Only on Schedule A, up to gambling winnings

Only if you file MFS

Only on Schedule A, up to gambling winnings

Gambling losses can only be deducted on Schedule A (itemized deduction) and only up to the amount of gambling winnings.

The home office deduction using the simplified method allows what maximum annual deduction?

$500$

750$

1,000

$1,500

$1,500

The simplified method allows $5 per square foot (maximum 300 square feet = $1,500 max).