HRB FINAL EXAM NEWEST 2024 QUESTIONS WITH
UPDATED ANSWERS...ALREADY PASSED(GRADE A+)
What is the Difference between earned income and unearned income? - (correct answer) 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? - (correct answer) 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? -
(correct answer) Gross income, filing status, age and if they are a dependent
For tax purposes, when is a person's marital status determined? - (correct answer) On the last day of
the tax year
Where on the tax form can you find the regular standard deduction amounts? - (correct answer) 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? -
(correct answer) $1550 if unmarried, $1250 if married
What is the personal exemption amount for 2016? - (correct answer) $4,050
What two amounts are combined to make up the gross income filing requirments for most taxpayers? -
(correct answer) 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? - (correct answer) 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? - (correct
answer) 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 - (correct answer)
What four requirements must be met for an individual to be claimed as a dependent - (correct answer)
Must pass the dependent test, joint return test, citizenship, qualifying child or relative
What are the five tests for a qualifying child? - (correct answer) 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? - (correct answer)
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? - (correct answer) 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? - (correct answer)
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? - (correct answer) 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? - (correct answer)
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? - (correct answer) Gross income
must be less than $4050 (Do not include tax exempt income)
What is the purpose of Form 2120 Multiple Support Declaration? - (correct answer) 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? - (correct answer) $1,000
What additional requirements must be met for a taxpayer to be eligible to claim the Child Tax Credit for
the qualifying child? - (correct answer) 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 - (correct answer) 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
- (correct answer) $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? - (correct answer) 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 - (correct answer)
, What filing statuses are available to taxpayers who are unmarried - (correct answer) 1. Single 2. Head
of Household 3. Qualifying widow(er)
How may a married taxpayer qualify as unmarried for tax purposes? - (correct answer) 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 - (correct
answer) 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
What are some of the costs of maintaining a home? - (correct answer) Rent, mortgage interest, real
estate taxes, homeowner or renter insurance, repairs/maintenance, utilities, food eaten in home
What requirements must be met for a taxpayer to use the qualifying wideo(er) status? - (correct
answer) 1. Taxpayer's spouse died in either of the two tax years immediately preceding the current tax
year 2. Taxpayer paid over half the cost of maintaining the household wich is home of their dependent
son , stepson or step daughter for the entire year and cannot remarry
In the case of divorced or separated parents, which parent generally gets to claim the qualifying child? -
(correct answer) Generally, the custodial parent is the one in which the child spent the most nights. If
child lived equal nights, the parent with the higher AGI
What is the exception to this rule? - (correct answer) Custodial parent may waive the right to claim
dependency exemption (Form 8332)
What happens when more than one taxpayer claims the same qualifying child? - (correct answer) The
IRS will apply the TIE BREAKER RULES
CHAPTER 6: ITEMIZED DEDUCTIONS - (correct answer)
UPDATED ANSWERS...ALREADY PASSED(GRADE A+)
What is the Difference between earned income and unearned income? - (correct answer) 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? - (correct answer) 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? -
(correct answer) Gross income, filing status, age and if they are a dependent
For tax purposes, when is a person's marital status determined? - (correct answer) On the last day of
the tax year
Where on the tax form can you find the regular standard deduction amounts? - (correct answer) 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? -
(correct answer) $1550 if unmarried, $1250 if married
What is the personal exemption amount for 2016? - (correct answer) $4,050
What two amounts are combined to make up the gross income filing requirments for most taxpayers? -
(correct answer) 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? - (correct answer) 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? - (correct
answer) 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 - (correct answer)
What four requirements must be met for an individual to be claimed as a dependent - (correct answer)
Must pass the dependent test, joint return test, citizenship, qualifying child or relative
What are the five tests for a qualifying child? - (correct answer) 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? - (correct answer)
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? - (correct answer) 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? - (correct answer)
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? - (correct answer) 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? - (correct answer)
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? - (correct answer) Gross income
must be less than $4050 (Do not include tax exempt income)
What is the purpose of Form 2120 Multiple Support Declaration? - (correct answer) 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? - (correct answer) $1,000
What additional requirements must be met for a taxpayer to be eligible to claim the Child Tax Credit for
the qualifying child? - (correct answer) 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 - (correct answer) 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
- (correct answer) $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? - (correct answer) 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 - (correct answer)
, What filing statuses are available to taxpayers who are unmarried - (correct answer) 1. Single 2. Head
of Household 3. Qualifying widow(er)
How may a married taxpayer qualify as unmarried for tax purposes? - (correct answer) 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 - (correct
answer) 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
What are some of the costs of maintaining a home? - (correct answer) Rent, mortgage interest, real
estate taxes, homeowner or renter insurance, repairs/maintenance, utilities, food eaten in home
What requirements must be met for a taxpayer to use the qualifying wideo(er) status? - (correct
answer) 1. Taxpayer's spouse died in either of the two tax years immediately preceding the current tax
year 2. Taxpayer paid over half the cost of maintaining the household wich is home of their dependent
son , stepson or step daughter for the entire year and cannot remarry
In the case of divorced or separated parents, which parent generally gets to claim the qualifying child? -
(correct answer) Generally, the custodial parent is the one in which the child spent the most nights. If
child lived equal nights, the parent with the higher AGI
What is the exception to this rule? - (correct answer) Custodial parent may waive the right to claim
dependency exemption (Form 8332)
What happens when more than one taxpayer claims the same qualifying child? - (correct answer) The
IRS will apply the TIE BREAKER RULES
CHAPTER 6: ITEMIZED DEDUCTIONS - (correct answer)
