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HR BLOCK FINAL EXAM QUESTIONS WITH 100% VERIFIED ANSWERS
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HR BLOCK FINAL EXAM QUESTIONS WITH100% VERIFIED ANSWERS 2024-2025
What's the distinction between earned and unearned income? - ANSWER Earned
money is compensation for services rendered. Earned money might take the form
of salary, commissions, tips, farming, or other business income.
Unearned income is taxable income that does not fall under the definition of earned
income. Unearned income includes interest, dividends, rents and royalties,
pensions, alimony, and unemployment benefits.
If an employee believes their Form W-2 is wrong, what should they do? -
ANSWER If the taxpayer's name, social security number, earnings, or withholdings
are inaccurate, they should tell their employer and ask for a corrected Form W-2.
The employee should request that their employer update their records and check
that the earnings were appropriately credited to the Social Security Administration.
However, the taxpayer is still accountable for submitting a timely tax return. If the
employee's attempts to acquire a corrected Form W-2 from their employer are
unsuccessful, the taxpayer should contact the IRS. It may be essential to create a
substitute Form W-2.
Is there interest on U.S. Are Treasury obligations taxable on state and/or local
returns? - Answer No. Interest in U.S. Treasury obligations are exempt from state
and local taxes under federal law.
Is the municipal bond interest taxable on a federal return? ANSWER: No, the
federal government does not tax municipal bonds.
How is interest income disclosed to taxpayers? - ANSWER: Interest income is
reported to the taxpayer using Form 1099-INT or a replacement statement.
,What information do you need to know to establish if a non-dependent taxpayer
must file a return? - ANSWER The taxpayer's filing status, age after the tax year,
and total income for the year.
When does a person's marital status become known for tax purposes? - ANSWER:
On the last day of the tax year or death.
What amount is increased to the standard deduction if the taxpayer (or spouse) is
65 years or older or blind? - The answer is $1,350 for married taxpayers and
eligible widow(er)s, or $1,700 for individuals filing as single or head of household.
What is the personal exemption amount for 2021? ANSWER: There is no personal
exemption in 2021. A personal exemption was an amount historically permitted by
law to minimize taxable income. The Tax Cuts and Jobs Act of 2017 eliminated
this deduction effective in 2018.
How is the gross income filing requirement for most nondependent taxpayers
determined? ANSWER The taxpayer's standard deduction, plus any additional
amounts for age. However, if the spouses did not live together at the end of the year
and are filing separately or jointly, the amount is only $5.
What's the distinction between wounded spouse allocation and innocent spouse
relief? - ANSWER The IRS offers an injured spouse allocation, which allows
taxpayers to safeguard their portion of a refund from a spouse's past-due federal
income tax, outstanding student loans, unpaid child and spousal support, or state
income tax.
The IRS offers innocent spouse relief to taxpayers who file a combined return and
later discover that their spouse understated income (or inflated a credit or
deduction) on the return.
Is unemployment benefit taxable? - ANSWER: Yes, unemployment benefits are
fully taxed.
,Are scholarships and fellowships taxable? - Sometimes. Scholarships and
fellowships are generally excluded from income for degree-seeking candidates if
they are used to pay recognized educational expenditures such as tuition and
course-related fees. However, if they are used to cover room and board or other
expenditures, they are taxable.
What document will the taxpayer receive from their employer to record disability
pension payments? - ANSWER Income is reported on Form 1099-R.
Under what conditions does a disability pension constitute as earned income for the
EIC? - ANSWER: Disability pension income received before the taxpayer reaches
the minimum retirement age for their employer is recorded as wage income. It is
also considered earned income under EIC.
What types of income must be reported first on Schedule 1 (Form 1040) and
subsequently on Form 1040? - ANSWER Gambling winnings, alimony, jury duty
pay, canceled debts, and hobby income are examples of income that must be
reported on Schedule 1 (Form 1040) before being reported on Form 1040.
What adjustments can be claimed on Schedule 1 (Form 1040)? - ANSWER Here
are some instances of Schedule 1 adjustments:
Educators can deduct their expenses.
The Health Savings Account (HSA) deduction.
Moving fees for military personnel.
Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty for early withdrawal of deposits.
Alimony payments.
, IRA deduction.
Deduction for interest on student loans.
How much may an eligible instructor deduct for approved classroom expenditures
as an income adjustment? - ANSWER: Up to $250 per eligible educator.
Married taxpayers who file a joint return and are both eligible educators may claim
the $250 deduction, for a total of $500.
Who is an eligible educator? - ANSWER A teacher, teacher's assistant, counselor,
or principal who worked at least 900 hours each school year in an elementary or
secondary school.
Where is the educator expense deduction reported? ANSWER: On Schedule 1,
Additional Income and Adjustments to Income, Line 11.
Who cannot claim a student loan interest deduction? - ANSWER: A dependant
may not take the deduction in the current tax year, nor may a married filing
separately. The amount of income a taxpayer earns may also influence their
deduction. Taxpayers whose modified AGI exceeds a certain level for their filing
status may be unable to claim the deduction, or they may be eligible for a reduced
amount.
What is an eligible student loan? - ANSWER A loan used to cover qualifying
educational expenses. Credit card debt may be included if the card was only used to
pay for eligible costs. Money borrowed from a relative is not an eligible student
loan.
What three criteria must be met for an individual to be classified as a qualified
child or relative? - ANSWER To be a qualifying child or relative, they must be a
U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico;
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