Free IRS Enrolled Agent SEE Part 1 (Individuals) Deductions and Credits Practice Questions
Deductions and Credits on the IRS SEE Part 1 covers itemized deductions on Schedule A (medical, SALT, mortgage interest, charitable), the QBI deduction under §199A, and refundable and nonrefundable credits including EITC, CTC, AOTC, LLC, and the Saver’s Credit.
Sample Questions
Question 1
Easy
Which of the following is correct regarding the §35 health coverage tax credit (HCTC) for the 2025 tax year?
Solution
§35(b)(1)(B), as amended, made the HCTC available only for coverage months ending before January 1, 2022. Congress did not extend the credit, so for the 2025 tax year no HCTC may be claimed for any coverage month. Form 8885 was last issued for the 2021 tax year. Pub 502 (2021 edition) describes the historical rules; later editions confirm the sunset.
Question 2
Medium
Which of the following is NOT a "qualified adoption expense" for purposes of the §23 adoption credit?
Solution
IRC §23(d)(1)(B) expressly excludes from "qualified adoption expenses" amounts paid in connection with a surrogate parenting arrangement, expenses for adopting the spouse's child, expenses paid using funds from a federal/state/local program, expenses violating state or federal law, and reimbursed expenses. Adoption fees, court costs, attorney fees, and reasonable travel (including meals and lodging) directly related to the legal adoption are qualified per §23(d)(1)(A). See Form 8839 instructions.
Question 3
Hard
In 2025, Theo's personal-use vacation cabin (basis $80,000; FMV before $120,000; FMV after $30,000) was destroyed by a wildfire in a federally declared disaster area. He received $50,000 of insurance proceeds. His AGI is $70,000. What casualty loss may he deduct on Schedule A?
Solution
Under IRC §165(h), as amended by TCJA for tax years 2018–2025, personal casualty losses are deductible only if attributable to a federally declared disaster. Steps: (1) Loss = lesser of basis ($80,000) or decline in FMV ($120,000 − $30,000 = $90,000) = $80,000; (2) Reduce by insurance: $80,000 − $50,000 = $30,000; (3) Subtract the $100 per-event floor under §165(h)(1): $30,000 − $100 = $29,900; (4) Subtract 10% of AGI under §165(h)(2)(A): $29,900 − $7,000 = $22,900. The deductible loss is $22,900. See Pub 547 and Form 4684.