Volunteer Income Tax Assistance (VITA) Certification Practice Test

What tax law certification level should the tax preparer have if a taxpayer has self-employment income checked on Form 13614-C?

1. Advanced

2. Basic

3. It doesn't matter, any level is fine

4. No tax law certification is necessary

The correct answer is: Advanced

In order to prepare a tax return for a taxpayer with self-employment income, a tax preparer must have an advanced level of certification. This is due to the complexity and specific requirements associated with self-employment income, which involves reporting business income, expenses, and possibly self-employment tax. The advanced certification ensures that the tax preparer is knowledgeable about the various deductions available for business expenses, the requirements for accurately reporting income, and the implications of self-employment tax. Without this level of knowledge, there is a risk of incorrectly preparing the tax return, which could lead to errors or missed opportunities for the taxpayer. Basic level certification is typically sufficient for straightforward tax situations, such as those involving W-2 income, but it does not cover the intricacies of self-employment income. It is crucial for a tax preparer to have appropriate training to handle the complexities that come with self-employment to provide accurate and compliant tax assistance.