H&R Block Income Tax Course Complete Questions
with 100% Correct Answers
Circular 230
Regulations governing the practice of attorneys, certified public accountants, enrolled agents, enrolled
actuaries, and appraisers before the IRS.
Disclosure
The release of tax information by an IRS employee.
Due Diligence
Requirements that tax professionals must follow when preparing income tax returns.
Noncompliance
Failure or refusal to comply with the tax code.
Privilege
Protection from being required to disclose confidential communications between two parties, such as
attorney and client.
Estimated Tax
The amount of tax a taxpayer expects to owe for the year after subtracting expected amounts withheld
and certain refundable credits.
Estimated Tax Voucher
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
Status claimed on Form W-4 directing the employer not to withhold federal income taxes from the
employee.
Underpayment Penalty
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
An increase by which income tax withholding on certain income is reduced.
,Two Ways to Pay as You Go
Withholding and Estimated Tax Payments
Form W-4
Employee's Withholding Allowance Certificate
Form 8815
Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
Form 2210
Underpayment of Estimated Tax by Individuals, Estates, and Trusts
Form 4868
Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
Form 8888
Allocation of Refund
Form 9465
Installment Agreement Request
Amended Return
A tax return filed on Form 1040X after the original return has been filed.
Closed Year
A tax year for which the statute of limitations has expired.
Open Year
A taxable year for which the statute of limitations has not yet expired.
Failure-to-File Penalty
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
Taxpayer fails to file the return by the due date, and there is a balance due.
Failure to Pay
Taxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty
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
Taxpayer shows negligence or disregard of the rules or regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty
20% of the underpayment.
Substantial Understatment
Taxpayer understates their tax by the larger of $5,000 or 10% of the correct tax.
Substantial-Understatement Penalty
20% of the underpayment.
Form 1040X
Amended U.S. Individual Income Tax Return
When can an amended return be filed?
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?
No.
Household Employee
An individual who performs nonbusiness services in a taxpayer's home.
Active Income and Losses
Those for which a taxpayer performs services.
Partnership
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
Those from business activities in which the taxpayer does not materially participate, and all rental
activities.
Portfolio Income and Losses
Those from such sources as dividends, interest, capital gains and losses, and royalties.
Rental Income
Income received by the taxpayer for allowing another person's use of the taxpayer's property.
Royalty
, (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
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
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
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.
2. The taxpayer performed more than 750 hours of services during the year in real property trades or
businesses in which the taxpayer materially participated.
Trade or Business Activities
Any activity that: Involves the conduct of a trade or business; is conducted in anticipation of starting a
trade or business; Involves research or experimental expenditures that are deductible under IRS Code
174.
Nonpassive Income
Income derived from activities that are not passive.
Types of Nonpassive Income
Portfolio income; personal service income; other income.
Portfolio Income
Includes interest, dividends, annuities, and royalties not derived in the ordinary course of business.
Personal Service Income
Salaries, wages, commissions, self-employment income from trade or business in which the taxpayer
materially participates, deferred compensation, taxable social security and other retirement benefits,
and payments from partnerships to partners for personal services.
Rent
Income received for the use of property.
Is rent earned or unearned income?
with 100% Correct Answers
Circular 230
Regulations governing the practice of attorneys, certified public accountants, enrolled agents, enrolled
actuaries, and appraisers before the IRS.
Disclosure
The release of tax information by an IRS employee.
Due Diligence
Requirements that tax professionals must follow when preparing income tax returns.
Noncompliance
Failure or refusal to comply with the tax code.
Privilege
Protection from being required to disclose confidential communications between two parties, such as
attorney and client.
Estimated Tax
The amount of tax a taxpayer expects to owe for the year after subtracting expected amounts withheld
and certain refundable credits.
Estimated Tax Voucher
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
Status claimed on Form W-4 directing the employer not to withhold federal income taxes from the
employee.
Underpayment Penalty
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
An increase by which income tax withholding on certain income is reduced.
,Two Ways to Pay as You Go
Withholding and Estimated Tax Payments
Form W-4
Employee's Withholding Allowance Certificate
Form 8815
Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
Form 2210
Underpayment of Estimated Tax by Individuals, Estates, and Trusts
Form 4868
Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
Form 8888
Allocation of Refund
Form 9465
Installment Agreement Request
Amended Return
A tax return filed on Form 1040X after the original return has been filed.
Closed Year
A tax year for which the statute of limitations has expired.
Open Year
A taxable year for which the statute of limitations has not yet expired.
Failure-to-File Penalty
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
Taxpayer fails to file the return by the due date, and there is a balance due.
Failure to Pay
Taxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty
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
Taxpayer shows negligence or disregard of the rules or regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty
20% of the underpayment.
Substantial Understatment
Taxpayer understates their tax by the larger of $5,000 or 10% of the correct tax.
Substantial-Understatement Penalty
20% of the underpayment.
Form 1040X
Amended U.S. Individual Income Tax Return
When can an amended return be filed?
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?
No.
Household Employee
An individual who performs nonbusiness services in a taxpayer's home.
Active Income and Losses
Those for which a taxpayer performs services.
Partnership
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
Those from business activities in which the taxpayer does not materially participate, and all rental
activities.
Portfolio Income and Losses
Those from such sources as dividends, interest, capital gains and losses, and royalties.
Rental Income
Income received by the taxpayer for allowing another person's use of the taxpayer's property.
Royalty
, (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
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
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
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.
2. The taxpayer performed more than 750 hours of services during the year in real property trades or
businesses in which the taxpayer materially participated.
Trade or Business Activities
Any activity that: Involves the conduct of a trade or business; is conducted in anticipation of starting a
trade or business; Involves research or experimental expenditures that are deductible under IRS Code
174.
Nonpassive Income
Income derived from activities that are not passive.
Types of Nonpassive Income
Portfolio income; personal service income; other income.
Portfolio Income
Includes interest, dividends, annuities, and royalties not derived in the ordinary course of business.
Personal Service Income
Salaries, wages, commissions, self-employment income from trade or business in which the taxpayer
materially participates, deferred compensation, taxable social security and other retirement benefits,
and payments from partnerships to partners for personal services.
Rent
Income received for the use of property.
Is rent earned or unearned income?
