HRB 2024 UPDATE COMPREHENSIVE QUESTIONS
AND CORRECT ANSWERS FINAL EXAM
PRACTICE/STUDY GUIDE GRADE A+
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 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 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
What are some of the costs of maintaining a home?
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?
, 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?
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?
Custodial parent may waive the right to claim dependency exemption (Form 8332)
What happens when more than one taxpayer claims the same qualifying child?
The IRS will apply the TIE BREAKER RULES
CHAPTER 6: ITEMIZED DEDUCTIONS
When is it considered advantageous for a taxpayer to itemize?
When allowable expenses for things like home mortgage interest and property taxes, state income taxes
or sales taxes, medical expenses, charitable contributions that exceed the standard deduction
Is the deduction for medical expenses limited?
You can deduct such costs only to the extent that unreimbursed expenses exceed 10% of your AGI 7.5%
if 65 years old or older
What types of taxes are deductible?
State and local taxes Real Property tax Personal Property Tax Foreign income tax (withheld during the
year)
What are some common types of itemized deductions that are subject to the 2% -of-AGI floor?
Tax preperation fees- Unreimbursed ordinary and necessay employment expenses, gambling losses to
the extent of winnings, hobby losses to extent of hobby income, tax advice and preperation fees,
investment expenses
What are some miscellaneous itemized deductions that are not subject to the 2%-of-AGI limitation?
Gambling losses, impairment related expenses for handicap, decedents remaining basis, federal estate
tax in respect of a decedent
A taxpayer wrote a check for a $500 donation to their mosque. Is their canceled check sufficient
documentation to support the deduction?
No, the gift exceeded $249 must obtain written substantation from the donee organization
CHAPTER 11: EITC AND ACTC
Who may qualify for the Additional Child Tax Credit?
AND CORRECT ANSWERS FINAL EXAM
PRACTICE/STUDY GUIDE GRADE A+
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 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 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
What are some of the costs of maintaining a home?
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?
, 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?
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?
Custodial parent may waive the right to claim dependency exemption (Form 8332)
What happens when more than one taxpayer claims the same qualifying child?
The IRS will apply the TIE BREAKER RULES
CHAPTER 6: ITEMIZED DEDUCTIONS
When is it considered advantageous for a taxpayer to itemize?
When allowable expenses for things like home mortgage interest and property taxes, state income taxes
or sales taxes, medical expenses, charitable contributions that exceed the standard deduction
Is the deduction for medical expenses limited?
You can deduct such costs only to the extent that unreimbursed expenses exceed 10% of your AGI 7.5%
if 65 years old or older
What types of taxes are deductible?
State and local taxes Real Property tax Personal Property Tax Foreign income tax (withheld during the
year)
What are some common types of itemized deductions that are subject to the 2% -of-AGI floor?
Tax preperation fees- Unreimbursed ordinary and necessay employment expenses, gambling losses to
the extent of winnings, hobby losses to extent of hobby income, tax advice and preperation fees,
investment expenses
What are some miscellaneous itemized deductions that are not subject to the 2%-of-AGI limitation?
Gambling losses, impairment related expenses for handicap, decedents remaining basis, federal estate
tax in respect of a decedent
A taxpayer wrote a check for a $500 donation to their mosque. Is their canceled check sufficient
documentation to support the deduction?
No, the gift exceeded $249 must obtain written substantation from the donee organization
CHAPTER 11: EITC AND ACTC
Who may qualify for the Additional Child Tax Credit?
