HRB Final Exam 2023/ 328 Questions
and Answers / Verified and Graded A+
What is the Difference between earned income and unearned income? - -Earned
income is received for services performed. Examples are wages commissions, tips and
generally farming and other business income . Taxable income other than that received
for services performed. Unearned Income includes money received ro the investment of
money or other property, such as interest, dividends, and royalties. It also includes
pensions alimony, unemployment compensation and other income that is not earned
-If an employee thinks their Form W2 is incorrect, what should they do? - -Employee
should discuss with employer who issued the document and request a W2C. If no help
from employer, notify IRS. Tax prepaper can then file a substitute.
-What information do you need to know to determine whether a taxpayer is required to
file a return? - -Gross income, filing status, age and if they are a dependent
-For tax purposes, when is a person's marital status determined? - -On the last day of
the tax year
-Where on the tax form can you find the regular standard deduction amounts? - -Line
22 on 1040A, In the left margin at the top of the page 2 of forms 1040 and 1040A. Look
at actual form to look for line
-How much is added to the standard deduction if the taxpayer (or spouse is age 65 or
older, or blind? - -$1550 if unmarried, $1250 if married
-What is the personal exemption amount for 2016? - -$4,050
,-What two amounts are combined to make up the gross income filing requirments for
most taxpayers? - -The standard deduction and the personal exemption amounts
-Under what circumstances might a taxpayer be required to file a return even though
they do not meet the gross income filing requirements? - -1. Has net employment of
$400 or more net self employment 2. You had unemployment income you owe medicare
Advantage MSA, receive HAS, Archer, MSA 3. Reeived an Advanced Premium Tax credit
even if they didn't otherwise have a filing requirment for the year *Tips, HSA, SE $400,
PTC
-What is the difference between injured spouse allocation and innocent spouse relief? -
-The difference between injured spouse and innocent spouse is significant in the eyes of
the IRS. Both release you from an income tax liability arising from a "married filing
jointly" return but different outcomes. Innocent spouse filed a joint return byt was
unaware that their spouse deliberately under reported tax liability. Injured spouse seeks
to protect his or her share of the refund in case it gets seized or offset due to the other
spouse's debts or unpaid obligations
-CHAPTER 3: DEPENDENT EXEMPTIONS AND SUPPORT - -
-What four requirements must be met for an individual to be claimed as a dependent -
-Must pass the dependent test, joint return test, citizenship, qualifying child or relative
-What are the five tests for a qualifying child? - -1. Relationship 2. Age 3. Residency 4.
Support 5. Joint Return
-How can a married individual meet the joint return test to remain a qualifying child? -
-They can meet this test by not filing a joint return with their spouse or they can file a
joint return with their spouse if they are filing only to claim a refund on any taxes
withheld
, -How can you determine who paid more than half of a person's support? - -Total
support is determined and reduced by the funds received by and for the person from all
sources other than the taxpaer. The remaining support is considered to be provided by
the taxpayer. Other sources might include government support Worksheet for
Determining Support
-What happens if an individual is a qualifying child of more than one taxpayer? - -
Generally, the custodial parent is the one in which the child spent the most nights
-What happens when more than one taxpayer claims the same qualifying child? - -Tie
Breaker Rules apply : 1. The parent, if only one of the persons is the childs parent 2. The
parent with whom the child lived the longest during the tax 3. The parents with the
highest AGI if no parent can claim the child as a qualifying child
-What four tests must be met for an individual to be considered a qualifying relative? -
-1. Not be a qualifying child, the person cannot be the taxpayers qualifying child or the
qualifying child of another taxpayer 2. Relationship: Child, brother, sister, step sister,
step brother, step father , step mother, in-laws 3. Gross Income: gross income must be
less than $4050 4. Support: Taxpayer must provide more than half the support
-How can the gross income for a qualifying relative test be satisfied? - -Gross income
must be less than $4050 (Do not include tax exempt income)
-What is the purpose of Form 2120 Multiple Support Declaration? - -You only need
2120 multiple support declaration if you are claiming someone other than a qualifying
child as a dependent and there are two or more people including yourself who provide
support for the dependent
-How much is the child tax credit worth? - -$1,000
-What additional requirements must be met for a taxpayer to be eligible to claim the
Child Tax Credit for the qualifying child? - -1. Taxpayer 2. Child must be under17 at the
, end of the year 3. Qualifying child must be claimed on tax payer returns 4. Qualifying
child must be US Citizen US National or resident of US
-Is the Child Tax Credit refundable or nonrefundable - -CTC is nonrefundable the The
additional child tax credit is refundable
-How much is the penalty if a paid prepaerer fails to meet the child tax credit due
diligence requirements - -$510 for each failure, for each credit on each return Total
Penalty max for return is $1530
-What is the first due diligence requirement for the EITC, CTC,ACTC, AOTC and how
does a paid preparer meet this requirement? - -Complete and submit the form 8867. 1.
Complete the form thoroughly and conscientously read the form carefully 2. submit the
form on every claim for eitc, ctc/actc and aotc
-CHAPTER 4: DEPENDENT-RELATED FILING STATUS - -
-What filing statuses are available to taxpayers who are unmarried - -1. Single 2. Head
of Household 3. Qualifying widow(er)
-How may a married taxpayer qualify as unmarried for tax purposes? - -Must be legally
seperated under a decree of divorce or separate maintenance or meet these
requirements: 1. must file a separate return 2. must have provided more than half the
cost of maintaining a household 3. the home must have been the principle place of
abode
-What requirements must be met for a taxpayer to qualify to file as head of household -
-1. unmarried on the last day of year 2. paid more than 1/2 to maintain home 3. taxpayer
has qualifying child or relative or parent
and Answers / Verified and Graded A+
What is the Difference between earned income and unearned income? - -Earned
income is received for services performed. Examples are wages commissions, tips and
generally farming and other business income . Taxable income other than that received
for services performed. Unearned Income includes money received ro the investment of
money or other property, such as interest, dividends, and royalties. It also includes
pensions alimony, unemployment compensation and other income that is not earned
-If an employee thinks their Form W2 is incorrect, what should they do? - -Employee
should discuss with employer who issued the document and request a W2C. If no help
from employer, notify IRS. Tax prepaper can then file a substitute.
-What information do you need to know to determine whether a taxpayer is required to
file a return? - -Gross income, filing status, age and if they are a dependent
-For tax purposes, when is a person's marital status determined? - -On the last day of
the tax year
-Where on the tax form can you find the regular standard deduction amounts? - -Line
22 on 1040A, In the left margin at the top of the page 2 of forms 1040 and 1040A. Look
at actual form to look for line
-How much is added to the standard deduction if the taxpayer (or spouse is age 65 or
older, or blind? - -$1550 if unmarried, $1250 if married
-What is the personal exemption amount for 2016? - -$4,050
,-What two amounts are combined to make up the gross income filing requirments for
most taxpayers? - -The standard deduction and the personal exemption amounts
-Under what circumstances might a taxpayer be required to file a return even though
they do not meet the gross income filing requirements? - -1. Has net employment of
$400 or more net self employment 2. You had unemployment income you owe medicare
Advantage MSA, receive HAS, Archer, MSA 3. Reeived an Advanced Premium Tax credit
even if they didn't otherwise have a filing requirment for the year *Tips, HSA, SE $400,
PTC
-What is the difference between injured spouse allocation and innocent spouse relief? -
-The difference between injured spouse and innocent spouse is significant in the eyes of
the IRS. Both release you from an income tax liability arising from a "married filing
jointly" return but different outcomes. Innocent spouse filed a joint return byt was
unaware that their spouse deliberately under reported tax liability. Injured spouse seeks
to protect his or her share of the refund in case it gets seized or offset due to the other
spouse's debts or unpaid obligations
-CHAPTER 3: DEPENDENT EXEMPTIONS AND SUPPORT - -
-What four requirements must be met for an individual to be claimed as a dependent -
-Must pass the dependent test, joint return test, citizenship, qualifying child or relative
-What are the five tests for a qualifying child? - -1. Relationship 2. Age 3. Residency 4.
Support 5. Joint Return
-How can a married individual meet the joint return test to remain a qualifying child? -
-They can meet this test by not filing a joint return with their spouse or they can file a
joint return with their spouse if they are filing only to claim a refund on any taxes
withheld
, -How can you determine who paid more than half of a person's support? - -Total
support is determined and reduced by the funds received by and for the person from all
sources other than the taxpaer. The remaining support is considered to be provided by
the taxpayer. Other sources might include government support Worksheet for
Determining Support
-What happens if an individual is a qualifying child of more than one taxpayer? - -
Generally, the custodial parent is the one in which the child spent the most nights
-What happens when more than one taxpayer claims the same qualifying child? - -Tie
Breaker Rules apply : 1. The parent, if only one of the persons is the childs parent 2. The
parent with whom the child lived the longest during the tax 3. The parents with the
highest AGI if no parent can claim the child as a qualifying child
-What four tests must be met for an individual to be considered a qualifying relative? -
-1. Not be a qualifying child, the person cannot be the taxpayers qualifying child or the
qualifying child of another taxpayer 2. Relationship: Child, brother, sister, step sister,
step brother, step father , step mother, in-laws 3. Gross Income: gross income must be
less than $4050 4. Support: Taxpayer must provide more than half the support
-How can the gross income for a qualifying relative test be satisfied? - -Gross income
must be less than $4050 (Do not include tax exempt income)
-What is the purpose of Form 2120 Multiple Support Declaration? - -You only need
2120 multiple support declaration if you are claiming someone other than a qualifying
child as a dependent and there are two or more people including yourself who provide
support for the dependent
-How much is the child tax credit worth? - -$1,000
-What additional requirements must be met for a taxpayer to be eligible to claim the
Child Tax Credit for the qualifying child? - -1. Taxpayer 2. Child must be under17 at the
, end of the year 3. Qualifying child must be claimed on tax payer returns 4. Qualifying
child must be US Citizen US National or resident of US
-Is the Child Tax Credit refundable or nonrefundable - -CTC is nonrefundable the The
additional child tax credit is refundable
-How much is the penalty if a paid prepaerer fails to meet the child tax credit due
diligence requirements - -$510 for each failure, for each credit on each return Total
Penalty max for return is $1530
-What is the first due diligence requirement for the EITC, CTC,ACTC, AOTC and how
does a paid preparer meet this requirement? - -Complete and submit the form 8867. 1.
Complete the form thoroughly and conscientously read the form carefully 2. submit the
form on every claim for eitc, ctc/actc and aotc
-CHAPTER 4: DEPENDENT-RELATED FILING STATUS - -
-What filing statuses are available to taxpayers who are unmarried - -1. Single 2. Head
of Household 3. Qualifying widow(er)
-How may a married taxpayer qualify as unmarried for tax purposes? - -Must be legally
seperated under a decree of divorce or separate maintenance or meet these
requirements: 1. must file a separate return 2. must have provided more than half the
cost of maintaining a household 3. the home must have been the principle place of
abode
-What requirements must be met for a taxpayer to qualify to file as head of household -
-1. unmarried on the last day of year 2. paid more than 1/2 to maintain home 3. taxpayer
has qualifying child or relative or parent
