HRB Final Exam with Questions and Answers

HRB Final Exam with Questions and Answers What is the Difference between earned income and unearned income? ANSWER Earned income is received for services performed. Examples are wages commissions, tips and generally farming and other business income . Taxable income other than that received for services performed. Unearned Income includes money received ro 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 If an employee thinks their Form W2 is incorrect, what should they do? ANSWER Employee should discuss with employer who issued the document and request a W2C. If no help from employer, notify IRS. Tax prepaper can then file a substitute. What information do you need to know to determine whether a taxpayer is required to file a return? ANSWER Gross income, filing status, age and if they are a dependent For tax purposes, when is a person's marital status determined? ANSWER On the last day of the tax year Where on the tax form can you find the regular standard deduction amounts? ANSWER Line 22 on 1040A, In the left margin at the top of the page 2 of forms 1040 and 1040A. Look at actual form to look for line How much is added to the standard deduction if the taxpayer (or spouse is age 65 or older, or blind? ANSWER $1550 if unmarried, $1250 if married What is the personal exemption amount for 2016? ANSWER $4,050