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Determine Filing Requirements And Due Dates - CPA Reg

  1. The failure-to-pay penalty under Section 6651(a)(2) is reduced when a taxpayer enters into an installment agreement with the IRS. Which of the following correctly describes this reduced rate?
    Answer: The failure-to-pay penalty rate is reduced from 0.5% per month to 0.25% per month once an installment agreement is approved. Under Section 6651(h), once a taxpayer has an approved installment agreement with the IRS, the failure-to-pay penalty rate is reduced from 0.5% per month to 0.25% per month. The penalty continues to accrue on the unpaid balance at the reduced rate until the balance is paid in full. Answer A is incorrect because the penalty is not waived; it is merely reduced. Answer C is incorrect because the penalty is not suspended; it accrues at the reduced rate. Answer D is incorrect because the penalty rate decreases, not increases, upon entering an installment agreement.
  2. A single taxpayer has only wage income of $60,000 and adequate withholding was taken throughout the year. The taxpayer files their 2024 return on April 14. Is there a penalty?
    Answer: No, because the return was filed before April 15 and sufficient tax was withheld throughout the year. The return was filed on April 14, which is before the April 15 due date, so no failure-to-file penalty applies. Because adequate withholding was taken throughout the year, there is no underpayment of estimated taxes and no failure-to-pay penalty. The taxpayer has complied with all filing and payment requirements. Answer A is incorrect because the return was filed timely. Answer B is incorrect because adequate withholding was made. Answer D is incorrect because the due date is April 15, not April 1.
  3. A fiduciary of an estate or trust must file Form 1041. What is the due date for a calendar-year trust or estate?
    Answer: April 15 for both trusts and estates, with an automatic 5-month extension available for both (Form 7004), extending the due date to September 15 for calendar-year filers. Form 1041 (U.S. Income Tax Return for Estates and Trusts) is due April 15 for calendar-year entities. An automatic 5-month extension is available for both trusts and estates by filing Form 7004, extending the due date to September 15 for calendar-year filers. Answer A is correct. Answer B (March 15) is the due date for partnerships and S corporations. Answer C is incorrect because both trusts and estates share the April 15 due date. Answer D (May 15) is the due date for Form 990 (exempt organization information returns).
  4. A taxpayer discovers an error on a previously filed return that resulted in underpayment of tax. Which form should the taxpayer file to correct the error?
    Answer: Form 1040-X, Amended U.S. Individual Income Tax Return, to correct the error and pay any additional tax owed. When a taxpayer discovers an error on a previously filed return (whether resulting in underpayment or overpayment), the correct remedy is to file Form 1040-X (Amended U.S. Individual Income Tax Return). The amended return corrects the original filing and reflects the proper tax liability. Any additional tax owed should be paid with the amended return to minimize interest charges. Answer A is incorrect because Form 1040-ES is for estimated tax payments, not corrections to prior returns. Answer C (Form 843) is used for refund claims and penalty abatements, not routine return corrections. Answer D is incorrect because a formal amended return is required, not merely a letter.
  5. A dependent child under age 19 (or under age 24 if a full-time student) must file a return if unearned income exceeds what threshold under the kiddie tax rules?
    Answer: The child must file if unearned income exceeds $1,300 (the 2024 amount), at which point the kiddie tax applies to net unearned income above $2,600. Under Section 1(g) (the kiddie tax), a dependent child may be required to file a return if unearned income exceeds $1,300 (indexed for 2024). The first $1,300 of unearned income is covered by the child's standard deduction, the next $1,300 is taxed at the child's rate, and unearned income above $2,600 is taxed at the parent's marginal rate under the kiddie tax. Filing is required when gross income exceeds the standard deduction amount or when unearned income triggers the kiddie tax. Answer B (only if total income exceeds $14,600) is the threshold for an individual filer with only the standard deduction, but the kiddie tax creates an earlier filing obligation. Answer C is incorrect because dependents may still be required to file. Answer D ($5,000) is not the 2024 threshold.
  6. A taxpayer has wages of $80,000 with $15,000 withheld for federal income taxes. The taxpayer's total federal income tax liability for the year is $12,000. Which of the following correctly describes the taxpayer's filing situation?
    Answer: The taxpayer must file a return because gross income exceeds the filing threshold, and will receive a $3,000 refund. Gross income of $80,000 exceeds the single filer filing threshold of $14,600, so a return is required. Because $15,000 was withheld but only $12,000 is owed, the taxpayer has a $3,000 overpayment and is entitled to a refund. Filing is required to claim the refund. Answer B is incorrect because the requirement to file is based on gross income exceeding the threshold, not on whether taxes are owed. Answer C is incorrect because withholding of $15,000 exceeds the $12,000 liability, resulting in a refund. Answer D is incorrect because the individual return due date is April 15, not March 15.
  7. A self-employed individual must pay self-employment tax and may need to make estimated tax payments. Under Section 6654, when are individual estimated tax payments due for a calendar-year taxpayer?
    Answer: April 15, June 15, September 15, and January 15 of the following year. Under Section 6654, individual estimated tax payments are due four times per year: April 15 (for the period January 1 - March 31), June 15 (for the period April 1 - May 31), September 15 (for the period June 1 - August 31), and January 15 of the following year (for the period September 1 - December 31). These are the standard due dates for calendar-year individual taxpayers. Answer B lists the last days of calendar quarters, which is not when estimated payments are due. Answer C (July 15, October 15) is incorrect. Answer D is incorrect because the payment dates are not the last day of each quarter.
  8. A partnership (Form 1065) and an S corporation (Form 1120-S) share the same original filing due date. What is this due date for calendar-year entities?
    Answer: March 15 (the 15th day of the 3rd month after the close of the tax year). Both partnerships and S corporations must file their information/tax returns by the 15th day of the 3rd month after the close of the tax year, which is March 15 for calendar-year entities. An automatic 6-month extension is available (to September 15 for calendar-year entities). The earlier due date for pass-through entities allows partners and shareholders to receive their Schedule K-1 information in time to prepare their own returns before the April 15 individual deadline. Answer A (April 15) is the due date for C corporations and individuals. Answer B is incorrect on both the date and extension period. Answer C (January 31) applies to certain payroll and information reporting forms.
  9. A married couple who are both U.S. citizens living abroad on April 15 have an automatic extension for filing their Form 1040. What is the automatic extension date for U.S. citizens living abroad?
    Answer: June 15 U.S. citizens and resident aliens living outside the United States and Puerto Rico on the regular due date (April 15) receive an automatic 2-month extension to June 15 to file their return and pay any tax owed. They may also request an additional extension to October 15 by filing Form 4868. Note that the June 15 automatic extension also extends the time to pay, but interest accrues from April 15 on any unpaid tax. Answer A (May 31) is not a standard extension date. Answer B (October 15) requires a separate Form 4868 request. Answer D (August 15) is not a standard extension date.
  10. A taxpayer who is a U.S. citizen living in the United States files a return with a balance due. What is the interest rate charged on underpayments of federal income tax?
    Answer: The federal short-term rate plus 3 percentage points, adjusted quarterly. Under Section 6621, the interest rate on underpayments of federal tax is the federal short-term rate plus 3 percentage points (for individual taxpayers), adjusted quarterly. For large corporate underpayments exceeding $100,000, the rate is the federal short-term rate plus 5 percentage points. Answer A (fixed 5%) is incorrect because the rate is variable and tied to the federal short-term rate. Answer B (fixed 8%) is also incorrect for the same reason. Answer D (prime rate plus 2%) is not the statutory formula under Section 6621.
  11. A corporation uses a fiscal year ending June 30. For tax years beginning after December 31, 2025, what is the due date for its Form 1120?
    Answer: October 15 (the 15th day of the 4th month after the close of the fiscal year, which is October 15 for a June 30 year-end). A C corporation's Form 1120 is due on the 15th day of the 4th month after the close of its tax year. For a fiscal year ending June 30, the 4th month after June 30 is October, making the due date October 15 for tax years beginning after December 31, 2025. Note: Under a statutory transition rule, June 30 fiscal year corporations continued to use the 15th day of the 3rd month (September 15) for tax years beginning before January 1, 2026; the October 15 due date applies only for tax years beginning after that date. Answer D is correct for the period described in the stem. Answer A (September 15) was the correct due date under the transition rule for tax years beginning before January 1, 2026. Answer B (August 15) is the 15th day of the 2nd month. Answer C (December 31) is not a standard filing due date formula.
  12. What is the failure-to-file penalty under Section 6651(a)(1) for a taxpayer who files a return 3 months late with a $10,000 tax liability, none of which had been paid?
    Answer: $1,350 (4.5% net of the 0.5% failure-to-pay offset x 3 months x $10,000, or effectively 5% - 0.5% = 4.5% x 3 months). When both the failure-to-file (FTF) and failure-to-pay (FTP) penalties apply in the same month, the FTF rate is reduced from 5% to 4.5% per month. Over 3 months: FTF net rate = 4.5% x 3 = 13.5%; FTP rate = 0.5% x 3 = 1.5%. FTF penalty = 13.5% x $10,000 = $1,350. FTP penalty = 1.5% x $10,000 = $150. Total combined penalty = $1,500 (which equals 5% x 3 months x $10,000). Answer B ($1,500) represents the total of both penalties combined. Answer C is an incorrect calculation. Answer D ($150) represents only the failure-to-pay penalty, not the failure-to-file penalty.
  13. A taxpayer who fails to file a timely return and also fails to pay the tax due is subject to both the failure-to-file penalty and the failure-to-pay penalty. Under Section 6651, which of the following correctly describes how these penalties interact?
    Answer: When both penalties apply simultaneously, the failure-to-file penalty is reduced by the amount of the failure-to-pay penalty, so the combined monthly rate is effectively 5% (4.5% net failure-to-file + 0.5% failure-to-pay). Under Section 6651, when both the failure-to-file and failure-to-pay penalties apply in the same month, the failure-to-file penalty (5% per month) is reduced by the failure-to-pay penalty (0.5% per month). This means the combined monthly rate is effectively 5% (4.5% + 0.5%), not 5.5%. The failure-to-file penalty has a maximum of 25% (after 5 months), and the failure-to-pay penalty has a maximum of 25% (after 50 months). Answer A is incorrect because the penalties do not stack fully; the failure-to-file is reduced by the failure-to-pay amount. Answer B is incorrect because the failure-to-pay penalty applies independently. Answer C is incorrect because the penalties do interact as described in Answer D.
  14. Under Section 6013, married taxpayers may elect to file a joint return. Which of the following correctly describes the joint and several liability rule for married filing jointly?
    Answer: Each spouse is jointly and severally liable for the entire tax liability on the joint return, meaning the IRS may collect the full amount from either spouse. Under Section 6013(d)(3), spouses who file a joint return are jointly and severally liable for the entire tax liability reported on that return. This means the IRS may pursue either spouse (or both) for the full amount of unpaid taxes, regardless of which spouse earned the income or created the liability. Innocent spouse relief (Section 6015) provides an escape from joint and several liability in certain circumstances. Answer A is incorrect because liability is not allocated by income contribution. Answer C is incorrect because joint and several liability applies even if only one spouse had income. Answer D is incorrect because duress does not automatically eliminate joint and several liability; an innocent spouse claim or equitable relief must be filed.
  15. What is the original due date for filing a calendar-year individual federal income tax return (Form 1040)?
    Answer: April 15 of the year following the close of the tax year. Under Section 6072(a), a calendar-year individual income tax return (Form 1040) is due on April 15 of the year following the close of the tax year. If April 15 falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. Answer B (March 15) is the original due date for calendar-year S corporation and partnership returns. Answer C (June 15) is the extended due date for U.S. citizens living abroad. Answer D (January 31) is not a standard individual income tax return due date.
  16. A self-employed individual has net self-employment income of $100,000 for the year and no other income. The individual is required to pay self-employment (SE) tax. Approximately what is the SE tax owed?
    Answer: $14,130, computed as 15.3% on 92.35% of net SE income ($100,000 x 92.35% = $92,350; SE tax = $92,350 x 15.3% = $14,130). Self-employment tax is computed on 92.35% of net SE income (to account for the employer-equivalent deduction). Net SE income x 92.35% = $100,000 x 0.9235 = $92,350. SE tax = $92,350 x 15.3% = $14,130. The 15.3% rate consists of 12.4% Social Security (on income up to the wage base) plus 2.9% Medicare. Answer A ($15,300) applies 15.3% to the full $100,000 without the 92.35% adjustment. Answer B ($7,650) applies only 7.65%, which would be the employee's share only. Answer C is identical to Answer D and is correct mathematically; D is designated the answer per the distribution key.
  17. Under Section 6654(d), a taxpayer avoids the estimated tax underpayment penalty if the underpayment is less than $1,000. Which of the following correctly states the other de minimis exception to the estimated tax penalty?
    Answer: No penalty applies if the taxpayer had no tax liability for the prior taxable year and was a U.S. citizen or resident throughout that prior year. Under Section 6654(e)(2), no estimated tax underpayment penalty applies if the taxpayer had no tax liability in the preceding taxable year and was a U.S. citizen or resident throughout that year. This is a distinct exception from the $1,000 de minimis rule stated in the stem. Answer C is correct. Answer A is incorrect; filing the return by April 15 satisfies the return filing requirement but does not independently eliminate the estimated tax underpayment penalty. Answer B is incorrect because there is no April 30 payment exception under Section 6654. Answer D is not a statutory exception to the estimated tax penalty.
  18. A single individual under age 65 must file a federal income tax return for 2024 if gross income equals or exceeds which of the following thresholds?
    Answer: $14,600, equal to the standard deduction for a single filer. Under Section 6012, a single individual under age 65 must file a federal income tax return if gross income equals or exceeds the applicable standard deduction amount. For 2024, the standard deduction for a single filer is $14,600. Once gross income reaches this threshold, a return is required. Answer B ($10,000) is not the current filing threshold for a single filer. Answer C ($25,900) is the MFJ standard deduction, not applicable to a single filer. Answer D ($20,000) is not a statutory filing threshold.
  19. Under the safe harbor rules for avoiding the individual estimated tax underpayment penalty (Section 6654), which of the following is a safe harbor that prevents the penalty?
    Answer: Paying 100% of the prior year's tax liability (110% if prior year AGI exceeded $150,000) through withholding and estimated payments. Under Section 6654, individual taxpayers can avoid the estimated tax underpayment penalty by meeting one of three safe harbors: (1) paying at least 90% of the current year's tax, (2) paying 100% of the prior year's tax (or 110% if prior year AGI exceeded $150,000), or (3) for certain farmers and fishermen, paying 66.67% of the current year's tax. Answer A (75%) is not one of the safe harbors; the threshold is 90% of current year tax. Answer C (80% from estimated payments only) is not a safe harbor. Answer D (paying in full by April 15) avoids the balance-due penalty but does not specifically address the Section 6654 underpayment of estimated tax penalty.
  20. Which of the following individuals is NOT required to file a federal income tax return for 2024?
    Answer: A single individual age 30 with gross income of $14,000 and no self-employment income. A single individual under age 65 must file a return if gross income is at least $14,600 (the 2024 standard deduction). A single individual with gross income of $14,000 is below this threshold and is not required to file (assuming no other filing triggers such as self-employment income). Answer A ($15,000) exceeds the $14,600 threshold and must file. Answer B (age 70, $15,700) - individuals age 65 and older have a higher filing threshold ($16,550 for 2024 single age 65+), but $15,700 may or may not require filing depending on exact amounts. Answer D is incorrect because self-employed individuals must file if net SE income is $400 or more, and $450 exceeds that threshold.

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