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H&R Block Income Tax Course Questions and Answers 100% Solved
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H&R Block Income Tax Course
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H&R Block Income Tax CourseCircular 230 - answer Regulations governing the practice of attorneys, certified public
accountants, enrolled agents, enrolled actuaries, and appraisers before the IRS.
Disclosure - answer The release of tax information by an IRS employee.
Due Diligence - answer Requirements that tax professionals must follow when
preparing income tax returns.
Noncompliance - answer Failure or refusal to comply with the tax code.
Privilege - answer Protection from being required to disclose confidential
communications between two parties, such as attorney and client.
Estimated Tax - answer The amount of tax a taxpayer expects to owe for the year after
subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - answer A statement by an individual of (1) the amount of
income tax he estimates he will incur during the current taxable year on income that is
not subject to withholding, (2) the excess amount over that withheld on income which is
subject to withholding, and (3) his estimated self-employment tax.
Exemption from Withholding - answerStatus claimed on Form W-4 directing the
employer not to withhold federal income taxes from the employee.
Underpayment Penalty - answerIf a taxpayer did not pay enough tax on a timely basis
during the year, he may be required to pay an underpayment penalty.
Withholding Allowances - answerAn increase by which income tax withholding on
certain income is reduced.
Two Ways to Pay as You Go - answerWithholding and Estimated Tax Payments
Form W-4 - answerEmployee's Withholding Allowance Certificate
Form 8815 - answerExclusion of Interest From Series EE and I U.S. Savings Bonds
Issued After 1989
Form 2210 - answerUnderpayment of Estimated Tax by Individuals, Estates, and Trusts
,Form 4868 - answerApplication for Automatic Extension of Time To File U.S. Individual
Income Tax Return
Form 8888 - answerAllocation of Refund
Form 9465 - answerInstallment Agreement Request
Amended Return - answerA tax return filed on Form 1040X after the original return has
been filed.
Closed Year - answerA tax year for which the statute of limitations has expired.
Open Year - answerA taxable year for which the statute of limitations has not yet
expired.
Failure-to-File Penalty - answerGenerally 5% for each month or part of a month the
return is late, but not more than 25% of the tax not paid.
Failure to File - answerTaxpayer fails to file the return by the due date, and there is a
balance due.
Failure to Pay - answerTaxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty - answer0.5% of the unpaid taxes for each month or part of a
month after the due date, but not more than 25%.
Negligence or Intentional Disregard - answerTaxpayer shows negligence or disregard of
the rules or regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty - answer20% of the underpayment.
Substantial Understatment - answerTaxpayer understates their tax by the larger of
$5,000 or 10% of the correct tax.
Substantial-Understatement Penalty - answer20% of the underpayment.
Form 1040X - answerAmended U.S. Individual Income Tax Return
When can an amended return be filed? - answerWithin three years of the date the
original return was filed, or within two years of the date the tax was paid, whichever is
later.
Can the 1040X be e-filed? - answerNo.
Household Employee - answerAn individual who performs nonbusiness services in a
taxpayer's home.
,Active Income and Losses - answerThose for which a taxpayer performs services.
Partnership - answerA form of business in which two or more persons join their money
and skills in conducting the business as co-owners.
Passive Income and Losses - answerThose from business activities in which the
taxpayer does not materially participate, and all rental activities.
Portfolio Income and Losses - answerThose from such sources as dividends, interest,
capital gains and losses, and royalties.
Rental Income - answerIncome received by the taxpayer for allowing another person's
use of the taxpayer's property.
Royalty - answer(1) A payment received for the right to exploit a taxpayer's ownership of
natural resources or a taxpayer's literary, musical, or artistic creation. (2) An interest in
the oil and gas in place that entitles the holder to a specified fraction, in kind or in value,
of the total production from the property, free of any expenses of development and
operation.
S Corporation - answerA qualified small business corporation that has elected special
tax treatment under subchapter S of the Internal Revenue Code. S corporations pass
income, losses, and deductions through to shareholders to report on their individual
returns.
Trust - answerA tax entity that distributes all or part of its income to beneficiaries as
instructed by the trust agreement.
Requirements for a Real Estate Professional - answer1. More than half of the personal
services performed by the taxpayer in all trades or businesses during the tax year were
performed in real property trades or businesses in which the taxpayer materially
participated.
2. The taxpayer performed more than 750 hours of services during the year in real
property trades or businesses in which the taxpayer materially participated.
Trade or Business Activities - answerAny activity that: Involves the conduct of a trade or
business; is conducted in anticipation of starting a trade or business; Involves research
or experimental expenditures that are deductible under IRS Code 174.
Nonpassive Income - answerIncome derived from activities that are not passive.
Types of Nonpassive Income - answerPortfolio income; personal service income; other
income.
, Portfolio Income - answerIncludes interest, dividends, annuities, and royalties not
derived in the ordinary course of business.
Personal Service Income - answerSalaries, wages, commissions, self-employment
income from trade or business in which the taxpayer materially participates, deferred
compensation, taxable social security and other retirement benefits, and payments from
partnerships to partners for personal services.
Rent - answerIncome received for the use of property.
Is rent earned or unearned income? - answerUnearned.
Schedule E - answerSupplemental Income and Loss
Deductible Maintenance and Repairs - answerThose that do not appreciably add to the
value or useful life of the property.
Is the value of the owner's labor deductible when it comes to rental property? -
answerNo.
Rental Property Depreciable Basis - answerBasis MINUS land value TIMES the rental
use percentage.
Vacation home - answerA dwelling unit and may be a house, apartment, condominium,
mobile home, boat, or any other property that provides normal living accomodations.
Used as a Residence - answerA dwelling unit is used for personal purposes during the
year for whichever is greater: more than 14 days; more than 10% of the days the house
is rented at fair rental value.
Royalty - answerPayments received for the right to extract natural resources from the
taxpayer's property or to use a taxpayer's literary, musical, or artistic creation.
Economic Interest - answerOne acquired by investment, the return on which is
dependent upon the extraction of the natural deposit or cutting of the timber.
Two Methods of Computing Depletion - answerCost and Percentage
What tax form must estates and trusts file? - answerForm 1041
What tax form must partnerships file? - answerForm 1065
Do partnerships pay income taxes? - answerNo.
General Partner - answerOne who is personally responsible for partnership debts.
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