Download Maryland Tax Preparer Exam 2026–2027 \100 Most-Tested Questions with Verified Answers & Ex and more Exams Nursing in PDF only on Docsity!
Maryland Tax Preparer Exam 2026– 2027 \
Most-Tested Questions with Verified Answers &
Explanations
Overview
This Maryland Tax Preparer Exam study guide is designed to prepare candidates for state registration, certification, and competency assessments required to legally prepare tax returns for compensation in the state of Maryland. The exam content reflects current IRS regulations and Maryland Comptroller requirements, with a strong focus on most-tested concepts and real exam scenarios. The question set covers all major areas tested on the Maryland Tax Preparer Exam, including: Federal & Maryland Income Tax Fundamentals Filing Status, Dependents, and Residency Rules Gross Income, Adjustments, and Deductions Tax Credits (Federal and Maryland-Specific) Business Income, Self-Employment & Schedule C Maryland Forms, Local County Taxes, and Modifications Ethics, Due Diligence, and Preparer Penalties E-Filing, Recordkeeping, and Confidentiality Requirements All questions are written in exam-style multiple-choice format, with correct answers clearly shown in bold and supported by verified explanations to reinforce understanding and improve exam performance
Federal & Maryland Tax Fundamentals (Q1–20)
1. Who must register as a tax preparer in Maryland?
A. Anyone filing their own return B. Anyone preparing returns for compensation C. Only CPAs D. Only IRS employees Answer: B Explanation: Maryland requires paid tax preparers to register with the Comptroller.
2. What form reports individual federal income tax?
A. Form 1099 B. Form W- C. Form 1040 D. Schedule C Answer: C Explanation: Form 1040 is the primary individual income tax return.
3. Maryland income tax is based on which principle?
A. Gross receipts B. Flat tax C. Progressive tax D. Consumption tax Answer: C Explanation: Maryland uses progressive tax rates that increase with income.
4. What is taxable income?
A. Gross income minus adjustments and deductions B. Total wages only C. Net business income D. Adjusted gross income only Answer: A Explanation: Taxable income = gross income − adjustments − deductions.
5. Which income is ALWAYS taxable?
A. Child support B. Gifts received C. Wages D. Life insurance proceeds Answer: C Explanation: Wages are taxable unless specifically excluded by law.
6. What does AGI stand for?
Filing Status & Dependents (Q21–35)
2 1. Who qualifies as Head of Household?
A. Married taxpayers B. Unmarried with a qualifying dependent C. Anyone with dependents D. Anyone filing jointly Answer: B
2 2. A dependent must meet which test?
A. Citizenship test B. Relationship, residency, support tests C. Employment test D. Age only Answer: B
2 3. Can a taxpayer claim a dependent who provides over half their own support?
A. Yes B. No C. Only in Maryland D. Only federally Answer: B
2 4. Which filing status is MOST disadvantageous tax-wise?
A. Single B. Head of household C. Married filing jointly D. Married filing separately Answer: D
2 5. Who may claim a qualifying child?
A. Anyone living with the child B. Taxpayer meeting IRS dependency rules C. Only parents D. Only guardians Answer: B Income, Adjustments & Deductions (Q36–55)
3 6. Which is an adjustment to income?
A. Mortgage interest B. Charitable contributions C. Student loan interest D. Medical expenses Answer: C
3 7. Which income is NOT taxable?
A. Wages B. Interest C. Child support received D. Business income Answer: C
3 8. Itemized deductions include which expense?
A. Groceries B. Medical expenses exceeding threshold C. Rent D. Utilities Answer: B
3 9. Which deduction reduces AGI?
A. Standard deduction B. Itemized deduction C. Above-the-line deduction
A. Schedule C B. Schedule D C. Schedule B D. Schedule E Answer: C
4 5. Maryland allows which type of subtraction modification?
A. Federal tax paid B. Certain retirement income C. Property taxes D. Social Security wages Answer: B Credits & Payments (Q56–70)
5 6. What is a tax credit?
A. Deduction from income B. Dollar-for-dollar tax reduction C. Penalty D. Refund only Answer: B
5 7. Which credit is refundable?
A. Mortgage interest B. Earned Income Tax Credit C. Standard deduction D. Personal exemption Answer: B
5 8. Maryland offers a state version of which credit?
A. Child support credit B. Earned Income Tax Credit C. Education credit
D. Fuel credit Answer: B
5 9. Estimated taxes are required when?
A. No withholding exists B. Tax liability exceeds threshold C. Only for businesses D. Only for Maryland residents Answer: B
6 0. Overpayments result in what?
A. Penalty B. Audit C. Refund or credit forward D. Interest charge Answer: C Ethics, Due Diligence & Penalties (Q71–85)
7 1. A tax preparer must sign the return they prepare.
A. False B. True Answer: B Explanation: Paid preparers are legally required to sign returns.
7 2. What is preparer due diligence?
A. Filing quickly B. Verifying client information C. Guaranteeing refunds D. Avoiding audits Answer: B
D. SSA
Answer: B
7 8. A preparer guaranteeing a refund is:
A. Ethical B. Legal C. Prohibited D. Encouraged Answer: C
7 9. E-filing is required when:
A. Preparing one return B. Preparing multiple returns annually C. Requested by client D. Filing state returns only Answer: B
8 0. Failure to sign a return may result in:
A. No issue B. Penalties and sanctions C. Refund delay only D. Audit of taxpayer Answer: B Maryland-Specific & Final Review (Q86–100)
8 6. Maryland local tax is based on:
A. Flat statewide rate B. County of residence C. Federal AGI only D. City income Answer: B
8 7. Part-year residents must file:
A. Federal only B. Maryland part-year return C. Nonresident return D. No return Answer: B
8 8. Which income is taxable to Maryland residents?
A. Maryland-source only B. Worldwide income C. Federal income only D. Business income only Answer: B
8 9. Nonresidents are taxed on:
A. Worldwide income B. Federal refunds C. Maryland-source income D. Social Security Answer: C
9 0. The filing deadline is generally:
A. March 15 B. April 15 C. May 1 D. June 30 Answer: B
9 1. Extensions extend time to:
A. Pay tax B. File return only
9 6. Fraud differs from error because fraud is:
A. Accidental B. Minor C. Intentional D. Correctable Answer: C
9 7. What is the primary role of a tax preparer?
A. Reduce taxes at all costs B. Prepare accurate, lawful returns C. Guarantee refunds D. Avoid audits Answer: B
9 8. Maryland tax credits primarily reduce:
A. AGI
B. State tax liability C. Federal tax D. Local tax only Answer: B
9 9. Failure to register as a Maryland preparer may result in:
A. Warning only B. Penalties and fines C. No consequence D. IRS audit Answer: B
1 00. The MOST important rule for tax preparers is:
A. Speed B. Client satisfaction C. Accuracy and compliance
D. Maximizing refunds Answer: C
