HRB LATEST 2026 TEST PAPER QUESTIONS AND
ANSWERS GRADED A+
✔✔What is the maximum amount of contributions on which the Saver's Credit may be
based? - ✔✔$2,000 per individual or spouse (21.19)
✔✔What are the rates for the Saver's Credit? - ✔✔The rates are 10%, 20%, or 50%,
depending upon filing status and modified AGI. (21.17)
✔✔A taxpayer is building a new home and had a solar water heater installed in 2009,
but the home was not ready to be occupied until early 2010. Can they take the
residential energy credit? - ✔✔Yes, they can take the credit on their 2010 tax return.
(8.21)
✔✔How much may an eligible educator deduct for qualified classroom expenses as an
adjustment to income? - ✔✔Up to $250 (11.4)
✔✔Who is an eligible educator? - ✔✔Works at least 900 hours a year. (11.4)
✔✔Where is the educator expense deduction reported? - ✔✔Form 1040 Line 23.
✔✔Who may not claim a student loan interest deduction? - ✔✔Someone who is claimed
as a dependent may not claim the deduction in the current tax year, nor may someone
who uses the married filing separately filing status.(11.8)
✔✔What is a qualified student loan? - ✔✔• Any type of loan used to pay qualified
expenses. Credit card debt may be included, provided the card was used exclusively to
pay for qualified expenses.
• Money borrowed from a related person is not a qualified student loan. (11.5)
✔✔Where are moving expenses deducted on Form 1040? - ✔✔Line 26, from Form
3903
✔✔What are qualified medical expenses with regards to an HSA? - ✔✔Unreimbursed
medical expenses that would normally be deductible on Schedule A (11.16)
✔✔What form is used to report HSA contributions and determine any allowable
deduction? - ✔✔Form 8889. Reported on Form 1040 Line 25.
✔✔What is a qualified retirement plan? - ✔✔A plan which is eligible for favorable tax
treatment because it meets the requirements of IRC §401(a) and the Employment
Retirement Income Security Act of 1974 (ERISA) (21.2)
, ✔✔What is the 2009 contribution limit to 401(k) plans? - ✔✔• The maximum contribution
for 2009 is $16,500 (and 2010).
• Taxpayers age 50 and above are allowed a $5,500 annual "catch-up" contribution.
(21.4)
✔✔In tax terms, what is it called when a taxpayer puts money into an IRA? -
✔✔Contribution.
✔✔What is it called when a taxpayer takes money out of an IRA? - ✔✔Distribution.
✔✔What is it called if a taxpayer takes money out of one IRA and puts it into another
(and all requirements are met)? - ✔✔Roll-over.
✔✔What is the last date on which a contribution may be made and qualify as a
contribution for a given year? - ✔✔The due date (not including extensions) of the return
for that year.
✔✔Why is it important to distinguish between taxpayers who are active participants in
an employer-maintained retirement plan and those who are not? - ✔✔• Those who are
not active participants and whose spouses are not active participants may deduct the
full amount they contribute to a traditional IRA, assuming they stay within the
contribution limits.
• Those who are active participants or whose spouses are active participants may still
contribute within the limits but may find their allowable deduction reduced or eliminated.
(21.13)
✔✔What are the main differences between traditional IRAs and Roth IRAs? - ✔✔•
Contributions to a Roth IRA are never deductible, but qualified distributions are exempt
from tax.
• Participation in an employer-maintained retirement plan has no effect on Roth IRA
contributions, and contributions can be made after the taxpayer has reached age 70½.
• As long as they have compensation, contributions to Roth IRAs are not reported on
the tax return. (21.15)
✔✔Under what circumstances do you need to determine whether a taxpayer paid over
half of the cost of maintaining his home? - ✔✔If you are determining if the taxpayer may
be considered unmarried, a qualifying widow(er), or head of household. (5.2)
✔✔What are some of the costs of maintaining a home? - ✔✔• Rent
• Mortgage interest
• Real Estate Taxes
• Homeowners Insurance
• Property Taxes
• Repairs
ANSWERS GRADED A+
✔✔What is the maximum amount of contributions on which the Saver's Credit may be
based? - ✔✔$2,000 per individual or spouse (21.19)
✔✔What are the rates for the Saver's Credit? - ✔✔The rates are 10%, 20%, or 50%,
depending upon filing status and modified AGI. (21.17)
✔✔A taxpayer is building a new home and had a solar water heater installed in 2009,
but the home was not ready to be occupied until early 2010. Can they take the
residential energy credit? - ✔✔Yes, they can take the credit on their 2010 tax return.
(8.21)
✔✔How much may an eligible educator deduct for qualified classroom expenses as an
adjustment to income? - ✔✔Up to $250 (11.4)
✔✔Who is an eligible educator? - ✔✔Works at least 900 hours a year. (11.4)
✔✔Where is the educator expense deduction reported? - ✔✔Form 1040 Line 23.
✔✔Who may not claim a student loan interest deduction? - ✔✔Someone who is claimed
as a dependent may not claim the deduction in the current tax year, nor may someone
who uses the married filing separately filing status.(11.8)
✔✔What is a qualified student loan? - ✔✔• Any type of loan used to pay qualified
expenses. Credit card debt may be included, provided the card was used exclusively to
pay for qualified expenses.
• Money borrowed from a related person is not a qualified student loan. (11.5)
✔✔Where are moving expenses deducted on Form 1040? - ✔✔Line 26, from Form
3903
✔✔What are qualified medical expenses with regards to an HSA? - ✔✔Unreimbursed
medical expenses that would normally be deductible on Schedule A (11.16)
✔✔What form is used to report HSA contributions and determine any allowable
deduction? - ✔✔Form 8889. Reported on Form 1040 Line 25.
✔✔What is a qualified retirement plan? - ✔✔A plan which is eligible for favorable tax
treatment because it meets the requirements of IRC §401(a) and the Employment
Retirement Income Security Act of 1974 (ERISA) (21.2)
, ✔✔What is the 2009 contribution limit to 401(k) plans? - ✔✔• The maximum contribution
for 2009 is $16,500 (and 2010).
• Taxpayers age 50 and above are allowed a $5,500 annual "catch-up" contribution.
(21.4)
✔✔In tax terms, what is it called when a taxpayer puts money into an IRA? -
✔✔Contribution.
✔✔What is it called when a taxpayer takes money out of an IRA? - ✔✔Distribution.
✔✔What is it called if a taxpayer takes money out of one IRA and puts it into another
(and all requirements are met)? - ✔✔Roll-over.
✔✔What is the last date on which a contribution may be made and qualify as a
contribution for a given year? - ✔✔The due date (not including extensions) of the return
for that year.
✔✔Why is it important to distinguish between taxpayers who are active participants in
an employer-maintained retirement plan and those who are not? - ✔✔• Those who are
not active participants and whose spouses are not active participants may deduct the
full amount they contribute to a traditional IRA, assuming they stay within the
contribution limits.
• Those who are active participants or whose spouses are active participants may still
contribute within the limits but may find their allowable deduction reduced or eliminated.
(21.13)
✔✔What are the main differences between traditional IRAs and Roth IRAs? - ✔✔•
Contributions to a Roth IRA are never deductible, but qualified distributions are exempt
from tax.
• Participation in an employer-maintained retirement plan has no effect on Roth IRA
contributions, and contributions can be made after the taxpayer has reached age 70½.
• As long as they have compensation, contributions to Roth IRAs are not reported on
the tax return. (21.15)
✔✔Under what circumstances do you need to determine whether a taxpayer paid over
half of the cost of maintaining his home? - ✔✔If you are determining if the taxpayer may
be considered unmarried, a qualifying widow(er), or head of household. (5.2)
✔✔What are some of the costs of maintaining a home? - ✔✔• Rent
• Mortgage interest
• Real Estate Taxes
• Homeowners Insurance
• Property Taxes
• Repairs
