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H&R BLOCK INCOME TAX EXAM 2025 | ALL
QUESTIONS AND CORRECT ANSERS |
ALREADY GRADED A+ | LATEST EXAM |
VERIFIED ANSWERS
What is Earned Income? ---------CORRECT ANSWER-----------------Income from personal services as distinguished from income generated by property or other sources. Earned income includes all amounts received as wages, tips, bonuses, other employee compensation, and self-employment income, whether in the form of money, services, or property. What is Federal Income Tax Withheld? ---------CORRECT ANSWER--------- --------The amount taken out of income by the payer and submitted to the IRS as an advance payment of the taxpayer's federal income tax. What is a W-2? ---------CORRECT ANSWER-----------------For W-2 is a Wage and Tax Statement and is received by employee from an employer by JANUARY 31st.
- a W-2c is used when an employee notices a discrepency and tells their employer and it is used to correct the information on the W-2. They send the information to the Social Security Administration. 1.12 What is Form 4852? ---------CORRECT ANSWER----------------- Substitute for Form W-2. If an employee is unable to obtain a Form W- 2 from an employer. Cannot be filed until end of February so that enough time has been given to try to obtain the actual form from the employer. Send originally signed forms to IRS and SSA.
1.12 What is Form W-9? ---------CORRECT ANSWER-----------------Request for Taxpayer Identification Number and Certification. 1.13 What is Form 4070? What is Form 4070A? ---------CORRECT ANSWER------------------Employee's Report of Tips to Employer. Done every month. Don't need to report on tips to the employer less than $20 on the month. However, these tips must still be reported to the IRS as income.
- Employee's Daily Record of Tips. 1.13 What is form 4137? ---------CORRECT ANSWER-----------------Social Security and Medicare Tax on Unreported Tip Income. 1.16 What is Interest? ---------CORRECT ANSWER-----------------Currency paid or received for the use of money. Most is taxable. 1.18 Where is total taxable interest of $1,500 or more reported? Where is total taxable interest of $1,500 or less reported? --------- CORRECT ANSWER------------------Schedule B (Form 1040).
- Report directly on Form 1040, line 2B. 1.18 What is an example of Early Withdrawal of Savings? --------- CORRECT ANSWER-----------------In January 2020, Paula Pendleton invested $100,000 in a five-year certificate of deposit (CD) with her bank. The CD pays 1.2% interest annually, but if Paula were to cash it in prematurely, she would be charged a penalty. In February 2023, Paula cashed in the CD. The bank computed her interest income for 2023 to be $75, but she had to pay a $50 penalty. She would report $75 in taxable interest and claim an adjustment to income by subtracting $50 from taxable income on Schedule 1 (Form 1040), line 18.
advance payments (withholding, estimated payments, etc.) made by the taxpayer. What is Taxable Income? ---------CORRECT ANSWER----------------- Adjusted gross income, less itemized deductions or the standard deduction, less the qualified business income deduction, if applicable. This term is also used to refer to income that is not exempt or excluded from taxation. For example, wages are taxable income, but gifts are not. What is Unearned Income? ---------CORRECT ANSWER----------------- Taxable income other than that received for services performed (earned income). Unearned income includes money received for the investment of money or other property, such as interest, dividends, and royalties. It also includes pensions, alimony, unemployment compensation, and other income that is not earned. 1.2 What is the 16th Amendment? - --------CORRECT ANSWER----------------
- "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration" Ratified - Feb 3rd, 1913. 1.2 What has to be filed by a U.S. citizen or Resident Alien? --------- CORRECT ANSWER-----------------Form 1040 or Form 104-SR 1.2 What is a Resident Alien? ---------CORRECT ANSWER-----------------a citizen of another country who lives in the US and/or has resident status by law or visa or passes the SUBSTANTIAL PRESENCE TEST. Use IRS Publication 519 for their tax guide.
1.2 What is a NONRESIDENT Alien? ---------CORRECT ANSWER------------ -----is a person who is NOT a U.S. citizen and does not live in the US or lives in the US under a nonresident visa or does not meet the substantial presence test. They use Form 1040-NR 1.2 What is Form 1040-NR? ---------CORRECT ANSWER-----------------A 1040 for a Nonresident Alien 1.2 What are Supplemental Statements? ---------CORRECT ANSWER------- ----------May or may not be official IRS forms. They are attached to the return to explain various types of income, deductions, and credits reported either on a schedule or form, or directly on form 1040. 1.2 what are "worksheets"? ---------CORRECT ANSWER-----------------Many forms have worksheets to calculate the amount reported on the schedule form for Form 1040. These are NOT sent to the IRS with the return. 1.3 How does Rounding work with the IRS? ---------CORRECT ANSWER--- --------------Round to the nearest dollar. 1-49 cents round down. 50-99 cents round up.
- Include cents when adding the amounts from multiple source documents and THEN round off the total. 1.2 What are the 3 Schedule Forms associated with Form 1040? --------- CORRECT ANSWER------------------Schedule1: Additional Income ad Adjustments to Income
- Schedule2: Additional Taxes
- Schedule 3: Additional Credits and Payments
1.7 Gross income can be broken into two categories, which are: --------- CORRECT ANSWER-----------------1: Earned income: Wages, salaries, tips, commissions, farming, business income. 2: Unearned income: Taxable income that does not meet the definition of earned income. Money received from the investment of money or property, interest, dividends, capital gains, rents, royalties, taxable scholarship & fellowship. Also includes: pensions, alimony, unemployment, Social security benefits. The IRS requires every tax preparer to have a valid __________? --------- CORRECT ANSWER-----------------PTIN - Preparer Tax Identification Number What is a PTIN? ---------CORRECT ANSWER-----------------Preparer Tax Identification Number What is the due date for filing federal income tax? ---------CORRECT ANSWER-----------------April 15th What is U.S. income tax considered progressive? ---------CORRECT ANSWER-----------------Because it taxes a larger percentage of income in higher-income taxpayers than on lower-income taxpayers. What does IRS stand for? ---------CORRECT ANSWER-----------------Internal Revenue Service - enforces the Internal Revenue Code
Who are the 5 categories of professionals that can practice before the IRS? ---------CORRECT ANSWER-----------------Attorneys, CPS's, Enrolled Agents, Enrolled Actuaries, Enrolled Retirement Plan Agents What can a "Tax Preparer" do as far as representing a taxpayer? --------- CORRECT ANSWER-----------------May represent a taxpayer before revenue agents, customer service reps, or similar officers and employees of the IRS, including Taxpayer Advocate Service, only during an examination, if the paid tax return preparer signed the tax return or claim for refund that is under examination. a paid "tax preparer" CANNOT ---------CORRECT ANSWER------------------ Represent a taxpayer before any of these IRS officers: appeals, revenue, counsel, or similar officers and employees of the IRS.
- Provide tax advice other than advice necessary to prepare a return, a claim for refund, or other document intended to be submitted to the IRS. What is "Circular 230"? ---------CORRECT ANSWER----------------- Regulations Governing Practice before the Internal Revenue Service. What is "Circular 230", in greater detail? ---------CORRECT ANSWER-------- ---------These rules require attorneys, those qualified to practice as certified public accountants, enrolled agents, and other persons who prepare tax returns and provide tax advice to conduct business with high ethical standards that protect the taxpayers. What is Form 1040? ---------CORRECT ANSWER-----------------The current base form for individual income tax returns. *In addition, numerous other forms and schedules are required to support the line entries on these base forms.
- Tax Periodicals
- Common reference materials, such as dictionaries and encyclopedias
- Secondary authority sources can help you understand the intent of the law, or provide an interpretation of the law. They are not binding authority. What is IRS Publication 17? ---------CORRECT ANSWER-----------------The Federal Income Tax Guide for Individuals What is a Wage? ---------CORRECT ANSWER-----------------compensation, usually financial, received by workers in exchange for their work.
- The Internal Revenue Service (IRS) states that wages received by an employee for performing services for an employer must be included in gross income What is Adjusted Gross Income (AGI)? ---------CORRECT ANSWER--------- --------Adjusted gross income equals total income less reductions that are allowable, regardless of whether personal deductions are itemized. What are Deductions? ---------CORRECT ANSWER-----------------Amounts that may be subtracted from income that is otherwise taxable. 1.19: What is Schedule B (Form 1040)? ---------CORRECT ANSWER-------- ----------Interest and Ordinary Dividends
- When the taxpayer receives taxable interest totaling more than $1,500, it must be listed on Schedule B (Interest and Ordinary Dividends). Taxable interest totaling less than $1,500 is reported directly on Form 1040, page 1, line 2a.
- FOREIGN INVESTMENT INTEREST is reported on Schedule B even if under $1,500.
When tax returns are filed electronically, what is one way a taxpayer can sign the return? ---------CORRECT ANSWER-----------------D. This can be accomplished by using a personal identification number (PIN). To avoid the risk of penalties, tax preparers must abide by rules regarding preparer tax identification numbers (PTINs). Which of the following statements is TRUE regarding PTINs? ---------CORRECT ANSWER---------- -------The preparer must enter their PTIN on the tax return in the space provided. Caleb and his wife, Zuri, are filing their tax return. Which of the following statements regarding signing the return is NOT correct? ---------CORRECT ANSWER-----------------When a tax return is filed electronically, the taxpayer does not need to sign the tax return. Which of the following is an example of earned income? ---------CORRECT ANSWER-----------------Sick Pay Which box on Form W-2 reports the total amount of federal income tax withheld from an employee's wages? ---------CORRECT ANSWER------------ -----Box 2 Which of the following is included in a taxpayer's federal gross income? ---- -----CORRECT ANSWER-----------------Prizes and awards
Alex and Karina were married on October 15, 2023. They wish to file only one return. What is Alex's and Karina's correct and most favorable 2023 filing status? ---------CORRECT ANSWER-----------------Married filing jointly Roberto (22) lived with his father, Diego (45), all year in 2023. Roberto is Diego's qualifying child. In November 2023, Roberto married Valentina (21), and they both lived with Diego for the remainder of the year. Roberto is full0time student, he did not work, and he had no income. Valentina earned $3,400, all from wages, and had not other income. Valentina had $300 in federal income tax withheld from her paychecks during the year. Roberto and Valentina did not provide more than half of their own support. Which of the following statements is correct? ---------CORRECT ANSWER-- ---------------Diego may claim Roberto even if Roberto and Valentina file a joint return to get a refund of the taxes withheld from Valentina's wages. Which taxpayer has a potential qualifying relative that meets the relationship or member of the household test? ---------CORRECT ANSWER-----------------Nova's father, Kelvin, lived with her since 2022. Kelvin died on March 1, 2023. Beth is a qualifying child to three taxpayers: Her grandfather, whose AGI is $6,799. Her father, whose AGI is $26,222. Her uncle, whose AGI is $64,499. Which taxpayer is entitled to claim Beth, if all three wish to do so? --------- CORRECT ANSWER-----------------Her father, whose AGI is $26,222. The Child Tax Credit may be limited, reduced or excluded entirely due to the phaseout. What is the reduction of the Child Tax Credit for taxpayers with modified adjusted gross income over the threshold? ---------CORRECT
ANSWER-----------------$50 for each $1,000 (or a fraction thereof) over the threshold Sam lives with his daughter, June. Sam recieved $5,500 in social security benefits. He used $2,400 for rent, $1000 for food, $1,500 for recreation, $500 for the doctor, and $100 for eyeglasses. What amount of support must June pay to claim Sam as a qualifying relative? ---------CORRECT ANSWER-----------------more than $2, $5,500 / 2 = $2, Makayla and her daughter , Jade (5), lived all year with Makayla's mother, Yasmin. Yasmin paid the entire cost of keeping up the home. Makayla's adjusted gross income (AGI) was $13,000, and Yasmin's AGI was $39,000. Jade meets the requirements of a qualifying child dependent for both Makayla and Yasmin. Yasmin would like to claim her granddaughter, Jade As Yasmin's tax preparer, what information would you share with Yasmin? A.As long as Yasmin files before Makayla, she may claim Jade since Jade meets the requirements of a qualifying child for Yasmin.... --------- CORRECT ANSWER----------------- 18 Which of the following taxpayers may use the qualifying surviving spouse filing status for 2023? ---------CORRECT ANSWER-----------------Becky qualifies for the qualifying surviving spouse filing status Maria is not married. Her son, Diego, lived with her all year. To claim the filing status of head of household, Maria must: ---------CORRECT ANSWER-----------------Pay over half of the cost of maintaining the household for herself and Diego.
If a taxpayer's Earned Income Credit is disallowed due to reckless or intentional disregard of the rules, there is a waiting period after the disallowance. How long is the waiting period? ---------CORRECT ANSWER- ----------------Two to ten years. All of the following statements regarding the 2023 Additional Child Tax Credit are correct, EXCEPT? ---------CORRECT ANSWER-----------------The Additional Child Tax Credit is a nonrefundable credit. If a taxpayer has investment income that exceeds a certain threshold, they are not eligible to claim the Earned Income Credit. For 2023, what is that threshold? ---------CORRECT ANSWER-----------------11, A taxpayer may qualify for one of several exceptions to the additional tax on early distributions. Which of these would be an exception? --------- CORRECT ANSWER-----------------A 401(k) distribution made to an alternate payee under a qualified domestic relations order (QDRO). George (71), a single taxpayer, began receiving a pension of $3,500 per month for life on May 1, 2011. He has after-tax contributions in the plan. His 2023 Form 1099-R is shown below. Box 2a is blank. Which of the following statements is correct? A.$42, B.George is subject to a 10% additional tax. C.None of Georgia's distribution is taxable. D.The taxable distribution is figured using the Simplified Method Worksheet. ---------CORRECT ANSWER----------------- 27
Olga (68) and Galina (66) are married and file a joint return. Their gross income (including one-half of their social security) for 2023 was $48,650. Up to what amount of their social security benefits may be taxable? --------- CORRECT ANSWER-----------------85% What is the tax treatment of Canadian social security benefits in the United States? Canadian social security benefits are: a.Not taxable in the United States b.Taxed as a pension using the general rule. c.Taxed as a pension using the simplied method. d.The benefits are treated as paid under the social security legislation of the United States and reported as if they were United States social security benefits for a United States resident. ---------CORRECT ANSWER------------- ----Taxed as a pension using the general rule. Ashley, a 49-year-old single taxpayer, earned $94,000 in wages. She is not covered by an employer-sponsored retirement plan. What is her maximum allowable contribution to a traditional IRA for 2023? ---------CORRECT ANSWER-----------------$6, Hosea and Jocelyn are divorced. Their divorce settlement agreement signed on July 1, 2017, states Hosea must pay Jocelyn $2,000 per month for child support and $1,000 per month for alimony. Jocelyn's child support payments are: ---------CORRECT ANSWER----------- ------Nontaxable Peter and Kay are married and will file a joint return. Peter was unemployed for six months during 2023. They brought in the following tax documents to Jacob to prepare their return:
ANSWER-----------------Mr. Jackson is the eligible educator and may deduct up to $300 of his qualified expenses. Caleb and his wife were legally divorced in 2021. After the divorce, Caleb retained physical custody of their son. Caleb recieved the following amounts from his ex-wife, on behalf of their son or as ordered by the court through a divorce decree: Court-ordered child support of $1,000 per month. Court-ordered alimony of $500 per month. How much of this income is taxable and must be reported on his federal return? A.$ B.$6, C.$12, D.$18,000 ---------CORRECT ANSWER----------------- 35 Tiffany and her husband were legally divorced in 2017. After the divorce, Tiffany retained physical custody of their children. Tiffany received the following amounts from her ex-husband, on behalf of the children or as ordered by the court through a divorce decree: Court-ordered child support of $2,000 per month. Court-ordered alimony of $1,000 per month. How much of this income is taxable and must be reported on her federal return? A.$ B.$12, C.$24, D.$36,000 ---------CORRECT ANSWER----------------- 36
Latoya is single, 42 years old, and has an adjusted gross income of $70,000 for the tax year. She had the following medical expenses: Prescriptions: $1, Doctor copays: $ Dental bills: $2, Elective tummy tuck surgery:$6, Health insurance premiums (after tax): $1,800. What is the amount of allowable medical and dental expenses she can report on Schedule A (Form 1040), line 4? A.$1, B.$5, C.$7, D.$8,280 ---------CORRECT ANSWER----------------- 37 On the schedule A (Form 1040), Itemized Deductions, the deduction for state and local income taxes is limited to what amount? a) $10,000 ($5,000 if MFS). b) $50,000 ($25,000 if MFS). c) $100,000 ($50,000 if MFS). d) There is no limit on the deduction of state and local income taxes. --------
- CORRECT ANSWER-----------------a) $10,000 ($5,000 if MFS). Jamal is single. He borrowed $900,000 and purchased a new main home in March of 2020. He will be itemizing his deductions. On what portion of the acquistion debt will interest be deductible on Jamal's 2023 tax return? ------- --CORRECT ANSWER-----------------$750, Which of the following statements is CORRECT regarding the married filing separately filing status? When a couple decides to file married filing separately: ---------CORRECT ANSWER-----------------If one spouse
