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HRB FINAL EXAM QUESTIONS AND ANSWERS | LATEST
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HRB FINAL EXAM QUESTIONS AND ANSWERS | LATEST
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HRB FINAL EXAM QUESTIONS ANDANSWERS | LATEST
What is the Difference between earned income and unearned income? - Earned income
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is received for services performed. Examples are wages commissions, tips and generally
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farming and other business income . Taxable income other than that received for services
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performed. Unearned Income includes money received ro the investment of money or
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other property, such as interest, dividends, and royalties. It also includes pensions
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alimony, unemployment compensation and other income that is not earned
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If an employee thinks their Form W2 is incorrect, what should they do? - Employee
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should discuss with employer who issued the document and request a W2C. If no help
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from employer, notify IRS. Tax prepaper can then file a substitute.
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What information do you need to know to determine whether a taxpayer is required to file
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a return? - Gross income, filing status, age and if they are a dependent
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For tax purposes, when is a person's marital status determined? - On the last day of the
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tax year
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Where on the tax form can you find the regular standard deduction amounts? - Line 22
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on 1040A, In the left margin at the top of the page 2 of forms 1040 and 1040A. Look at
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actual form to look for line
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How much is added to the standard deduction if the taxpayer (or spouse is age 65 or
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older, or blind? - $1550 if unmarried, $1250 if married
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II What is the personal exemption amount for 2016? - $4,050
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What two amounts are combined to make up the gross income filing requirments for most
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taxpayers? - The standard deduction and the personal exemption amounts
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Under what circumstances might a taxpayer be required to file a return even though they
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do not meet the gross income filing requirements? - 1. Has net employment of $400 or
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more net self employment 2. You had unemployment income you owe medicare
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Advantage MSA, receive HAS, Archer, MSA 3. Reeived an Advanced Premium Tax credit
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even if they didn't otherwise have a filing requirment for the year *Tips, HSA, SE $400,
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PTC
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What is the difference between injured spouse allocation and innocent spouse relief? -
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The difference between injured spouse and innocent spouse is significant in the eyes of
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the IRS. Both release you from an income tax liability arising from a "married filing jointly"
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return but different outcomes. Innocent spouse filed a joint return byt was unaware that
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, their spouse deliberately under reported tax liability. Injured spouse seeks to protect his or
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her share of the refund in case it gets seized or offset due to the other spouse's debts or
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unpaid obligations
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II CHAPTER 3: DEPENDENT EXEMPTIONS AND SUPPORT - II II II II II II II II II
What four requirements must be met for an individual to be claimed as a dependent -
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Must pass the dependent test, joint return test, citizenship, qualifying child or relative
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What are the five tests for a qualifying child? - 1. Relationship 2. Age 3. Residency 4.
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Support 5. Joint Return
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How can a married individual meet the joint return test to remain a qualifying child? -
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They can meet this test by not filing a joint return with their spouse or they can file a joint
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return with their spouse if they are filing only to claim a refund on any taxes withheld
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How can you determine who paid more than half of a person's support? - Total support is
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determined and reduced by the funds received by and for the person from all sources
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other than the taxpaer. The remaining support is considered to be provided by the
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taxpayer. Other sources might include government support Worksheet for Determining
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Support
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What happens if an individual is a qualifying child of more than one taxpayer? -
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Generally, the custodial parent is the one in which the child spent the most nights
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What happens when more than one taxpayer claims the same qualifying child? - Tie
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Breaker Rules apply : 1. The parent, if only one of the persons is the childs parent 2. The
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parent with whom the child lived the longest during the tax 3. The parents with the highest
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AGI if no parent can claim the child as a qualifying child
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What four tests must be met for an individual to be considered a qualifying relative? - 1.
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Not be a qualifying child, the person cannot be the taxpayers qualifying child or the
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qualifying child of another taxpayer 2. Relationship: Child, brother, sister, step sister, step
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brother, step father , step mother, in-laws 3. Gross Income: gross income must be less
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than $4050 4. Support: Taxpayer must provide more than half the support
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How can the gross income for a qualifying relative test be satisfied? - Gross income must
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be less than $4050 (Do not include tax exempt income)
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What is the purpose of Form 2120 Multiple Support Declaration? - You only need 2120
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multiple support declaration if you are claiming someone other than a qualifying child as a
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dependent and there are two or more people including yourself who provide support for
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the dependent
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II How much is the child tax credit worth? - $1,000
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, What additional requirements must be met for a taxpayer to be eligible to claim the Child
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Tax Credit for the qualifying child? - 1. Taxpayer 2. Child must be under17 at the end of
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the year 3. Qualifying child must be claimed on tax payer returns 4. Qualifying child must
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be US Citizen US National or resident of US
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Is the Child Tax Credit refundable or nonrefundable - CTC is nonrefundable the The
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additional child tax credit is refundable
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How much is the penalty if a paid prepaerer fails to meet the child tax credit due diligence
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requirements - $510 for each failure, for each credit on each return Total Penalty max for
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return is $1530
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What is the first due diligence requirement for the EITC, CTC,ACTC, AOTC and how
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does a paid preparer meet this requirement? - Complete and submit the form 8867. 1.
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Complete the form thoroughly and conscientously read the form carefully 2. submit the
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form on every claim for eitc, ctc/actc and aotc
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II CHAPTER 4: DEPENDENT-RELATED FILING STATUS - II II II II II II II II
What filing statuses are available to taxpayers who are unmarried - 1. Single 2. Head of
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Household 3. Qualifying widow(er)
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How may a married taxpayer qualify as unmarried for tax purposes? - Must be legally
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seperated under a decree of divorce or separate maintenance or meet these
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requirements: 1. must file a separate return 2. must have provided more than half the cost
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of maintaining a household 3. the home must have been the principle place of abode
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What requirements must be met for a taxpayer to qualify to file as head of household - 1.
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unmarried on the last day of year 2. paid more than 1/2 to maintain home 3. taxpayer has
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qualifying child or relative or parent
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What are some of the costs of maintaining a home? - Rent, mortgage interest, real estate
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taxes, homeowner or renter insurance, repairs/maintenance, utilities, food eaten in home
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What requirements must be met for a taxpayer to use the qualifying wideo(er) status? -
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1. Taxpayer's spouse died in either of the two tax years immediately preceding the current
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tax year 2. Taxpayer paid over half the cost of maintaining the household wich is home of
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their dependent son , stepson or step daughter for the entire year and cannot remarry
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In the case of divorced or separated parents, which parent generally gets to claim the
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qualifying child? - Generally, the custodial parent is the one in which the child spent the
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most nights. If child lived equal nights, the parent with the higher AGI
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What is the exception to this rule? - Custodial parent may waive the right to claim
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dependency exemption (Form 8332)
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