HR BLOCK FINAL TEST (ITC 2026)
QUESTIONS AND ANSWERS GRADED A+
When a taxpayer receives Form 1099-R with no amount entered in box 2a and
code 7 entered in box 7, the entire distribution:
Could be partly or entirely taxable.
Is never taxable.
Is an early distribution and taxable.
Has been rolled into a traditional IRA or into another qualified plan.
Is never taxable.
What is the maximum amount of the American Opportunity Tax Credit a taxpayer
could receive per student?
$1,650
$1,800
$2,000
$2,500
$2,500
Which test for a qualifying child does NOT need to be met in order for the child to
be a qualifying person for purposes of Earned Income Credit (EIC)?
Age.
,Relationship.
Residency.
Support.
Support.
Which of the following expenses qualifies for an education credit in 2021?
Tuition payments. The taxpayer didn't receive scholarships, grants, or other
nontaxable benefits.
Fees for an optional student activity.
Cost of student medical fees.
Tuition payments. The taxpayer received a nontaxable grant, which covered the
entire tuition expense.
Employer-provided dependent care assistance:
May be used for the Child and Dependent Care Credit.
Is subtracted from the total expenses for child or dependent care on Form 2441.
Is included in wages on Form W-2.
Is not reported to the IRS.
Which of the following is NOT a percentage of social security benefits subject to
federal tax? Up to __________.
0%
50%
,85%
100%
100%
What is the maximum amount of the lifetime learning credit?
$1,100 per return.
$1,650 per return.
$2,000 per return.
$2,500 per return.
$2,000 per return.
Employer-provided dependent care assistance:
It may be used for the Child and Dependent Care Credit.
It is subtracted from the total expenses for the child or dependent care on Form
2441.
It is included in wages on Form W-2.
It is not reported to the IRS.
Earned Income
Any income (wages/salary) that is generated by working
, Unearned Income
include interest income, dividends, rents and royalties, pensions, alimony, and
unemployment income.
If an employee thinks their Form W-2 is incorrect, what should they do?
If the taxpayer's name, social security number, earnings, or withholdings are
incorrect, the taxpayer should notify their employer and request a corrected Form
W-2. The employee should request that the employer update their records and
verify that the earnings were properly credited with the Social Security
Administration. However, the taxpayer is still responsible for filing a timely tax
return. If the employee's attempts to obtain a corrected Form W-2 from their
employer are not successful, the taxpayer should notify the IRS. It may be
necessary to prepare a substitute Form W-2.
A combined due diligence penalty of $2,180 would indicate a penalty for which of
the following?
EIC, CTC/ODC/ACTC, and head of household.
EIC, AOTC, and CTC/ODC/ACTC.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
EIC, PTC, CTC/ODC/ACTC, and head of household.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
When dependent care benefits are withheld from a taxpayer's income, where are
they reported by the employer?
QUESTIONS AND ANSWERS GRADED A+
When a taxpayer receives Form 1099-R with no amount entered in box 2a and
code 7 entered in box 7, the entire distribution:
Could be partly or entirely taxable.
Is never taxable.
Is an early distribution and taxable.
Has been rolled into a traditional IRA or into another qualified plan.
Is never taxable.
What is the maximum amount of the American Opportunity Tax Credit a taxpayer
could receive per student?
$1,650
$1,800
$2,000
$2,500
$2,500
Which test for a qualifying child does NOT need to be met in order for the child to
be a qualifying person for purposes of Earned Income Credit (EIC)?
Age.
,Relationship.
Residency.
Support.
Support.
Which of the following expenses qualifies for an education credit in 2021?
Tuition payments. The taxpayer didn't receive scholarships, grants, or other
nontaxable benefits.
Fees for an optional student activity.
Cost of student medical fees.
Tuition payments. The taxpayer received a nontaxable grant, which covered the
entire tuition expense.
Employer-provided dependent care assistance:
May be used for the Child and Dependent Care Credit.
Is subtracted from the total expenses for child or dependent care on Form 2441.
Is included in wages on Form W-2.
Is not reported to the IRS.
Which of the following is NOT a percentage of social security benefits subject to
federal tax? Up to __________.
0%
50%
,85%
100%
100%
What is the maximum amount of the lifetime learning credit?
$1,100 per return.
$1,650 per return.
$2,000 per return.
$2,500 per return.
$2,000 per return.
Employer-provided dependent care assistance:
It may be used for the Child and Dependent Care Credit.
It is subtracted from the total expenses for the child or dependent care on Form
2441.
It is included in wages on Form W-2.
It is not reported to the IRS.
Earned Income
Any income (wages/salary) that is generated by working
, Unearned Income
include interest income, dividends, rents and royalties, pensions, alimony, and
unemployment income.
If an employee thinks their Form W-2 is incorrect, what should they do?
If the taxpayer's name, social security number, earnings, or withholdings are
incorrect, the taxpayer should notify their employer and request a corrected Form
W-2. The employee should request that the employer update their records and
verify that the earnings were properly credited with the Social Security
Administration. However, the taxpayer is still responsible for filing a timely tax
return. If the employee's attempts to obtain a corrected Form W-2 from their
employer are not successful, the taxpayer should notify the IRS. It may be
necessary to prepare a substitute Form W-2.
A combined due diligence penalty of $2,180 would indicate a penalty for which of
the following?
EIC, CTC/ODC/ACTC, and head of household.
EIC, AOTC, and CTC/ODC/ACTC.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
EIC, PTC, CTC/ODC/ACTC, and head of household.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
When dependent care benefits are withheld from a taxpayer's income, where are
they reported by the employer?
