federal income tax changes summary - 2021

Federal Income Tax Changes

Summary - 2021

#8035EXAM MATERIAL

8035 Final Exam • 1

FEDERAL INCOME TAX CHANGES SUMMARY - 2021 (COURSE #8035)

COURSE DESCRIPTION

Each year, various limits affecting income tax preparation and planning change. Some changes commonly occur each year as a result of inflation indexing, while others occur because of new legislation or the sunsetting of existing law. This course will examine the tax changes that took effect as a result of passage of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)), and the inflation-changed limits effective for 2021 that are more significant from the perspective of an income tax preparer. Some context will be supplied, as appropriate, to assist readers in understanding the changes. No prerequisites. Course level: Basic. Course #8035 - 3 CPE hours.

LEARNING ASSIGNMENTS AND OBJECTIVES

As a result of studying each assignment, you should be able to meet the objectives listed below each individual assignment.

ASSIGNMENT 1: SUBJECTChanges in Various Limits

Study the course materials from pages 1 to 22Complete the review questions at the end of the chapterAnswer the exam questions 1 to 3

Objectives:

• To recognize the 2021 changes in various amounts, including the standard deduction, limits related to income from U.S. Savings Bonds for taxpayers paying higher education expenses, and deductions for qualified long-term care insurance premiums

ASSIGNMENT 2: SUBJECTTax Credit Changes


Objectives:

• To identify the 2021 tax credit changes affecting the saver’s credit, child tax credit, child and dependent care tax credit, and adoption credit

2 • 8035 Final Exam

ASSIGNMENT 3: SUBJECTPPACA-Related Tax Changes


Objectives:

• To recognize the changes effective for 2021 with respect to the small business employer premium tax credit and applicable large employer mandate

ASSIGNMENT 4: SUBJECTChanges in Archer MSAs, HSAs, and IRAs


Objectives:

• To recognize the 2021 changes affecting Health Savings Account (HSA) and Archer Medical Savings Accounts (MSA) requirements and contribution limits, and Roth IRA eligibility

ASSIGNMENT 5: SUBJECTPandemic-Related Economic Stimulus

Study the course materials from pages 87 to 120 Complete the review questions at the end of the chapterAnswer the exam questions 13 to 15

Objectives:

• To recognize the principal CARES Act provisions, including those related to the Paycheck Protection Program

• To identify various provisions of the American Rescue Plan Act

ASSIGNMENT 6:• Complete the Answer Sheet and Course Evaluation and submit to PES


NOTICE

This course and test uses the materials entitled Federal Income Tax Changes Summary - 2021 © 2021 by Paul J Winn. Displayed by permission of the author. All rights reserved. No part of this course may be reproduced in any form or by any means without the written permission of the copyright holder.

Use of these materials or services provided by Professional Education Services, LP (“PES”) is governed by the Terms and Conditions on PES’ website (www.mypescpe.com). PES provides this course with the understanding that it is not providing any accounting, legal, or other professional advice and assumes no liability whatsoever in connection with its use. PES has used diligent efforts to provide quality information and material to its customers, but does not warrant or guarantee the accuracy, timeliness, completeness, or currency of the information contained herein. Ultimately, the responsibility to comply with applicable legal requirements falls solely on the individual licensee, not PES. PES encourages you to contact your state Board or licensing agency for the latest information and to confirm or clarify any questions or concerns you have regarding your duties or obligations as a licensed professional.

© Professional Education Services, LP 2021

Program Publication Date 6/28/2021

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FEDERAL INCOME TAX CHANGES SUMMARY - 2021 (COURSE #8035)

EXAM INFORMATION

COURSE EXPIRATION DATE: Per AICPA and NASBA standards, this course must be completed within ONE YEAR from the date of purchase.

TEST FORMAT: The following final exam, consisting of 15 multiple choice questions, is based specifically on the material included in this course. The answer sheet must be completed and returned to PES for CPE certification. You will find the answer sheet at the back of this exam packet so that you may easily remove it and use it while taking your test.

LICENSE RENEWAL INFORMATION: The Federal Income Tax Changes Summary - 2021 course (#8035) qualifies for 3 CPE hours.

PROCESSING: You must score 70% or better to pass. If you mail or fax your exam, when you pass, your Certificate of Completion will be mailed. If you do not pass, we will give you a courtesy call to inform you of this. When completing your exam online, grading is instantaneous. Upon achieving a passing score, the completion certificate is immediately available in your account under “My Completed CPE.” Please note: failed exams may be retaken. Per NASBA and AICPA guidelines, missed questions cannot be indicated until after you pass.

GRADING OPTIONS – Please choose only ONE of the following:

GRADING OPTIONS: Please choose only ONE of the following. If mailing or faxing, make sure to fill out your Answer Sheet completely prior to submitting it.

• ONLINE GRADING –Visit our website at http://www.mypescpe.com. Login to your account (if you are a first-time user, you must set up a new user account). Click on the course title of the exam you wish to take. Once all answers have been selected, click the “Submit/Grade Answers” button at the bottom of the page for instant grading and certification. If you do not see the exam listed, click on “My CPE in Progress.” Click on the “Add Exam to Account” button and follow the instructions.

• MAIL – Your exam will be graded and your certificate of completion mailed to you within one business day. Your certificate will be dated according to the postmark date. Please mail your Answer Sheet to:

Professional Education Services, LP4208 Douglas Blvd., Ste 50

Granite Bay, CA 95746

• FAX – Your exam will be graded and you will be contacted either via phone or fax with your results within 4 business hours of receipt. A copy of your graded exam and certificate of completion will be mailed to you. Your certificate will be dated according to the fax date. If you choose to fax your exam, please do not mail it. Your fax will serve as the original. Please refer to the attached answer sheet for further instructions on fax grading. Fax number (916) 791-4099.

THANK YOU FOR USING PROFESSIONAL EDUCATION SERVICES.


FEDERAL INCOME TAX CHANGES SUMMARY - 2021 (COURSE #8035) – FINAL EXAM

The following questions are multiple choice. Please indicate your choice on the enclosed Answer Sheet.

1. What is the 2021 standard deduction for a 50 year-old married couple filing jointly, neither of whom is blind:

A. $8,100B. $12,550C. $18,800D. $25,100

2. Eileen and Hal, a married couple filing jointly, received $10,000 of Series I bond interest in 2021. If all the proceeds of the redeemed bond were used to pay qualified education expenses and their modified adjusted gross income exceeded the applicable dollar amount by $30,000, how much of the bond interest could they exclude from income:

A. $0B. $2,500C. $7,500D. $10,000

3. Julian is age 60 and paid $1,700 in premiums for qualified long-term care insurance in 2021. How much of the premium can he include in his medical expenses:

A. $0 B. $1,060C. $1,690

D. $1,700

4. Barbara is a single taxpayer who had a 2021 adjusted gross income of $25,000 and who contributed $4,000 to her traditional IRA. Assuming she has a $2,000 income tax liability for the year, what is her maximum retirement contribution savings credit:

A. $200B. $800+C. $1,000D. $2,000

5. What is the child tax credit for a four year-old qualifying child in 2021:

A. $1,000B. $1,400C. $3,000D. $3,600

6. What is the level of eligible expenses that may be considered in 2021 for purposes of the child and dependent care tax credit:

A. 35%B. 50%C. 75%

D. 100%


7. In 2021, Jose and his spouse adopted a 7 year-old child and his 22 year-old special needs brother. If Jose’s employer provided $30,000 under its adoption assistance program, what is the maximum amount of the adoption assistance they can exclude from income assuming their combined modified adjusted gross income does not exceed the applicable amount:

A. $0B. $14,440 C. $28,880D. $30,000

8. The premium for the second-lowest-cost health insurance plan that would cover the family at the silver level of coverage is referred to as ____________and is used to determine any health insurance premium tax credit.

A. the benchmark planB. the bronze planC. the qualified planD. the essential health plan

9. What is the maximum percentage of the paid health insurance premium for which an eligible non-profit small employer could be eligible as a tax credit in 2021:

A. 0%B. 25%C. 35%D. 50%

10. Al owned a family high deductible health policy as part of his MSA for the entire year. What is his maximum permitted contribution to the MSA in 2021 if his deductible is $5,000:

A. $3,350B. $3,750C. $5,000

D. $6,650

11. Jack is age 45 and owns a self-only high deductible health policy with a $5,000 deductible under his HSA. What is his maximum permitted HSA contribution in 2021:

A. $3,250B. $3,600C. $3,750D. $7,200

12. Linda, age 58, contributed $3,000 to her traditional IRA in 2021. If her permitted Roth IRA contribution is not reduced because of her income, what is the maximum amount she can contribute to it in 2021:

A. $7,000B. $6,000C. $4,000 D. $2,000

13. What is the maximum available PPP loan:

A. $93,333B. $100,000C. $10,000,000D. $11,700,000

14. The American Rescue Plan Act (ARPA) suspends the federal income tax on up to _______ of 2020 unemployment compensation (received by each spouse in the case of a joint tax return) if the taxpayer meets specified adjusted gross income limits.

A. $5,100B. $10,200C. $75,000

D. $150,000


15. At what level of income does the child and dependent care tax credit begin to phase-out in 2021:

A. $8,000B. $15,000C. $125,000D. the child and dependent care tax credit is

not subject to phase-out in 2021 based on taxpayer income

Congratulations –

you’ve completed the exam!


FEDERAL INCOME TAX CHANGES SUMMARY - 2021 #8035 (3 CPE HOURS) – ANSWER SHEET (6/21)

IMPORTANT NOTE: For certification, this answer sheet must be completed and submitted to PES for grading within ONE YEAR from the date of purchase. Please use BLACK INK and PRINT for quicker processing – thank you.

Full Name (as it appears on your license) _______________________________________________________________________________

Address (□ Home □ Work ) ___________________________________________________________________________________

City _____________________________________________________ State ______________________________ Zip _________

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License Number ______________________ State _______ Exp Date: ____/____ Are you a: □ CPA □ CFP □ EA (check all that apply)

PTIN Number (if applicable) ______________________________________________________________________________________

If course was ordered by another party, please indicate their name here: _____________________________________________

GRADING OPTIONS – Please choose only ONE of the following:ONLINE GRADING – Visit our website at www.mypescpe.com. Login to your account (if you are a first-time user, you must set up a new user account). Click on the course title of the exam you wish to take. If you do not see the exam listed, click on “My CPE in Progress,” then click on the “Add Exam to Account” button and follow the instructions.

Mail – Mail your exam to: PES, 4208 Douglas Blvd., Ste 50, Granite Bay, CA 95746

Fax – Fax your exam to (916) 791-4099 and choose one of the following options: □ Mail my results □ Fax my results (_____)__________________ □ Phone my results (_____)__________________

PLEASE INDICATE YOUR ANSWER BY FILLING IN THE APPROPRIATE CIRCLE

Please complete the attached course evaluation - your opinion is extremely valuable!


FEDERAL INCOME TAX CHANGES SUMMARY - 2021 #8035 COURSE EVALUATION

Rate on a scale of 1-10 with 1 being poor and 10 being excellent.

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2. The course was up to date, held my interest, was timely, and effective. ______

3. The course materials were understandable, valuable, and suitable for a correspondence course. ______

4. The amount of advance knowledge and stated prerequisites were appropriate. ______

5. The completion time was appropriate for the number of credits allowed. ______

6. The course met my professional education needs. ______

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PLEASE MAIL YOUR EVALUATION TO: Professional Education Services, LP

4208 Douglas Blvd., Ste 50 • Granite Bay, CA 95746

federal income tax changes summary - 2021

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