HRB LATEST 2026 STUDY GUIDE QUESTIONS AND
ANSWERS GRADED A+
✔✔Under what circumstances may an employee claim exemption from withholding? -
✔✔Only if the employee had no federal income tax liability for the prior year and he
expects to have no tax liability for the current year. (24.)
✔✔A single self-employed taxpayer estimates that his 2009 tax will be $7,500. His 2008
tax was $7,000. How much must he prepay for 2009 in order to avoid an underpayment
penalty? - ✔✔$6,750; the lesser of 90% of his 2009 tax [$7,500 X 90% = $6,750] or
100% of his 2008 tax ($7,000). (24.)
✔✔What information do you need to know to determine whether a return is required? -
✔✔• Marital Status
• Age & Student Status
• Gross Income
• Over 65 and Blindness
• Dependent Status
(3.2)
✔✔For tax purposes, when is a person's marital status determined? - ✔✔On the last
day of the tax year. (3.2)
✔✔What two amounts combine to make up the gross income filing requirement for most
taxpayers? - ✔✔The Standard Deduction and the Personal Exemption amounts. (3.7)
✔✔How much is added to the standard deduction if the taxpayer (or spouse) is age 65
or older or blind? - ✔✔$1,400 per condition for S and HH
$1,100 per condition for MFS, MFJ and QW (3.6)
✔✔If one spouse refuses to file a joint return, can the other spouse do anything about
it? - ✔✔No Both will have to file using the married filing separately status unless one or
both qualifies to be considered unmarried.
✔✔What kinds of property may be expensed using the Section 179 deduction? -
✔✔New or used tangible personal property (usually equipment or office furniture)
purchased for use in a trade or business. (17.2)
✔✔How is the MACRS deduction computed in the year of disposition for property being
depreciated using the half-year convention? - ✔✔HALF of the normal depreciation is
allowed. (17.9)
, ✔✔How is the MACRS deduction for the year of disposition computed if the property is
being depreciated using the mid-quarter convention? - ✔✔Depreciation for the entire
year, multiplied by a PERCENTAGE for quarter of disposition:
12.5% First
37.5% Second
62.5% Third
87.5% Fourth
(17.9)
✔✔Which form is used to report the sale of a business asset? - ✔✔Form 4797 (17.10)
✔✔What special treatment is available to self-employed taxpayers with regard to health
insurance premiums they pay? - ✔✔They may deduct their premiums as an adjustment
to income, if they qualify. (17.17)
✔✔Carol has a home office. When she is not using the office, she lets her children play
video games on an old television she keeps there. Can Carol deduct home-office
expenses? - ✔✔No. The space must be used exclusively for the business. (17.21)
✔✔An employee has an office where he works, but his work load demands that he bring
home work on evenings and weekends. He uses a room of his home regularly and
exclusively for his work. May he deduct home-office expenses? - ✔✔No, the employer
provides a work office. (17.23)
✔✔What activities are considered farming activities? - ✔✔• Cultivating land, operating
dairy farms, fruit farms, nurseries, orchards, poultry farms, fish farms, plantations,
ranches, stock farms, truck farms;breeding and raising fur-bearing animals or laboratory
animals.
• Does NOT include breeding, raising dogs, cats or pets. (17.28)
✔✔Matthew breeds Cocker Spaniels for sale as pets. What schedule will Matthew use
to determine his profit or loss? - ✔✔Schedule C (17.28)
✔✔What are some general types of itemized deductions that are subject to the 2%-of-
AGI floor? - ✔✔• Transportation Expenses
• Education Expenses
• Job-Seeking Expenses
• Tax Preparation Fees
• Investment Expenses
• Hobby Expenses
(13.9)
✔✔What are some miscellaneous itemized deductions that are not subject to the 2%-of-
AGI limitation? - ✔✔• Gambling Losses
ANSWERS GRADED A+
✔✔Under what circumstances may an employee claim exemption from withholding? -
✔✔Only if the employee had no federal income tax liability for the prior year and he
expects to have no tax liability for the current year. (24.)
✔✔A single self-employed taxpayer estimates that his 2009 tax will be $7,500. His 2008
tax was $7,000. How much must he prepay for 2009 in order to avoid an underpayment
penalty? - ✔✔$6,750; the lesser of 90% of his 2009 tax [$7,500 X 90% = $6,750] or
100% of his 2008 tax ($7,000). (24.)
✔✔What information do you need to know to determine whether a return is required? -
✔✔• Marital Status
• Age & Student Status
• Gross Income
• Over 65 and Blindness
• Dependent Status
(3.2)
✔✔For tax purposes, when is a person's marital status determined? - ✔✔On the last
day of the tax year. (3.2)
✔✔What two amounts combine to make up the gross income filing requirement for most
taxpayers? - ✔✔The Standard Deduction and the Personal Exemption amounts. (3.7)
✔✔How much is added to the standard deduction if the taxpayer (or spouse) is age 65
or older or blind? - ✔✔$1,400 per condition for S and HH
$1,100 per condition for MFS, MFJ and QW (3.6)
✔✔If one spouse refuses to file a joint return, can the other spouse do anything about
it? - ✔✔No Both will have to file using the married filing separately status unless one or
both qualifies to be considered unmarried.
✔✔What kinds of property may be expensed using the Section 179 deduction? -
✔✔New or used tangible personal property (usually equipment or office furniture)
purchased for use in a trade or business. (17.2)
✔✔How is the MACRS deduction computed in the year of disposition for property being
depreciated using the half-year convention? - ✔✔HALF of the normal depreciation is
allowed. (17.9)
, ✔✔How is the MACRS deduction for the year of disposition computed if the property is
being depreciated using the mid-quarter convention? - ✔✔Depreciation for the entire
year, multiplied by a PERCENTAGE for quarter of disposition:
12.5% First
37.5% Second
62.5% Third
87.5% Fourth
(17.9)
✔✔Which form is used to report the sale of a business asset? - ✔✔Form 4797 (17.10)
✔✔What special treatment is available to self-employed taxpayers with regard to health
insurance premiums they pay? - ✔✔They may deduct their premiums as an adjustment
to income, if they qualify. (17.17)
✔✔Carol has a home office. When she is not using the office, she lets her children play
video games on an old television she keeps there. Can Carol deduct home-office
expenses? - ✔✔No. The space must be used exclusively for the business. (17.21)
✔✔An employee has an office where he works, but his work load demands that he bring
home work on evenings and weekends. He uses a room of his home regularly and
exclusively for his work. May he deduct home-office expenses? - ✔✔No, the employer
provides a work office. (17.23)
✔✔What activities are considered farming activities? - ✔✔• Cultivating land, operating
dairy farms, fruit farms, nurseries, orchards, poultry farms, fish farms, plantations,
ranches, stock farms, truck farms;breeding and raising fur-bearing animals or laboratory
animals.
• Does NOT include breeding, raising dogs, cats or pets. (17.28)
✔✔Matthew breeds Cocker Spaniels for sale as pets. What schedule will Matthew use
to determine his profit or loss? - ✔✔Schedule C (17.28)
✔✔What are some general types of itemized deductions that are subject to the 2%-of-
AGI floor? - ✔✔• Transportation Expenses
• Education Expenses
• Job-Seeking Expenses
• Tax Preparation Fees
• Investment Expenses
• Hobby Expenses
(13.9)
✔✔What are some miscellaneous itemized deductions that are not subject to the 2%-of-
AGI limitation? - ✔✔• Gambling Losses
