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H&R Block Income Tax Course Exam With Complete Solution
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H&R Block Income Tax Course Exam With Complete Solution
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H&R Block Income Tax Course Exam WithComplete Solution
Circular 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 - ✔ANSWER ✔ - Status claimed on Form W-4 directing the employer not to withhold
federal income taxes from the employee.
,Underpayment Penalty - ✔ANSWER ✔ - If 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 - ✔ANSWER ✔ - An increase by which income tax withholding on certain income is
reduced.
Two Ways to Pay as You Go - ✔ANSWER ✔ - Withholding and Estimated Tax Payments
Form W-4 - ✔ANSWER ✔ - Employee's Withholding Allowance Certificate
Form 8815 - ✔ANSWER ✔ - Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
Form 2210 - ✔ANSWER ✔ - Underpayment of Estimated Tax by Individuals, Estates, and Trusts
Form 4868 - ✔ANSWER ✔ - Application for Automatic Extension of Time To File U.S. Individual Income Tax
Return
Form 8888 - ✔ANSWER ✔ - Allocation of Refund
Form 9465 - ✔ANSWER ✔ - Installment Agreement Request
Amended Return - ✔ANSWER ✔ - A tax return filed on Form 1040X after the original return has been filed.
Closed Year - ✔ANSWER ✔ - A tax year for which the statute of limitations has expired.
Open Year - ✔ANSWER ✔ - A taxable year for which the statute of limitations has not yet expired.
,Failure-to-File Penalty - ✔ANSWER ✔ - Generally 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 - ✔ANSWER ✔ - Taxpayer fails to file the return by the due date, and there is a balance due.
Failure to Pay - ✔ANSWER ✔ - Taxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty - ✔ANSWER ✔ - 0.5% 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 - ✔ANSWER ✔ - Taxpayer shows negligence or disregard of the rules or
regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty - ✔ANSWER ✔ - 20% of the underpayment.
Substantial Understatment - ✔ANSWER ✔ - Taxpayer understates their tax by the larger of $5,000 or 10% of the
correct tax.
Substantial-Understatement Penalty - ✔ANSWER ✔ - 20% of the underpayment.
Form 1040X - ✔ANSWER ✔ - Amended U.S. Individual Income Tax Return
When can an amended return be filed? - ✔ANSWER ✔ - Within 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? - ✔ANSWER ✔ - No.
Household Employee - ✔ANSWER ✔ - An individual who performs nonbusiness services in a taxpayer's home.
, Active Income and Losses - ✔ANSWER ✔ - Those for which a taxpayer performs services.
Partnership - ✔ANSWER ✔ - A 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 - ✔ANSWER ✔ - Those from business activities in which the taxpayer does not
materially participate, and all rental activities.
Portfolio Income and Losses - ✔ANSWER ✔ - Those from such sources as dividends, interest, capital gains and
losses, and royalties.
Rental Income - ✔ANSWER ✔ - Income 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 - ✔ANSWER ✔ - A 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 - ✔ANSWER ✔ - A tax entity that distributes all or part of its income to beneficiaries as instructed by the trust
agreement.
Requirements for a Real Estate Professional - ✔ANSWER ✔ - 1. 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.
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