HR BLOCK FINAL Actual Exam Questions | 100%
Correct Answers | Verified 2024 Version
What is the difference between earned income and unearned income? - ✔✔Earned income is received
for services performed. Some examples of earned income include wages, commissions, tips, farming,
and other business income.
Unearned income is taxable income that does not meet the definition of earned income. Examples of
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.
Is interest received on U.S. Treasury obligations taxable on state and/or local returns? - ✔✔No. Interest
on U.S. Treasury obligations is exempt from state and local tax by federal law.
Is municipal bond interest taxable on a federal return - ✔✔No, the federal government does not tax
municipal bond interest.
How is interest income reported to the taxpayer? - ✔✔Interest income is reported to the taxpayer on
Form 1099-INT or a substitute statement.
What information do you need to know to determine whether a nondependent taxpayer is required to
file a return? - ✔✔The taxpayer's filing status, age at the end of the tax year, and gross income for the
year.
For tax purposes, when is a person's marital status determined? - ✔✔On the last day of the tax year, or
the date of death.
,How much is added to the standard deduction if the taxpayer (or spouse) is age 65 or older, or blind? -
✔✔$1,350 for married taxpayers and qualifying widow(er)s, or $1,700 for those filing single or head of
household.
What is the personal exemption amount for 2021 - ✔✔There is no personal exemption for 2021. A
personal exemption was an amount previously allowed by law to reduce income that would otherwise
be taxed. The Tax Cuts and Jobs Act of 2017 repealed this deduction beginning in 2018.
How is the gross income filing requirement determined for most nondependent taxpayers - ✔✔The
taxpayer's standard deduction, including the additional amounts for age. However, for married filing
separately, or married filing jointly when the spouses did not live together at the end of the year, the
amount is $5.
What is the difference between injured spouse allocation and innocent spouse relief? - ✔✔The IRS
provides an injured spouse allocation for the taxpayer to protect their portion of a refund from a
spouse's past-due federal income tax, unpaid student loans, unpaid child and spousal support, or state
income tax.
The IRS provides innocent spouse relief to taxpayers who file a joint return and later learn that their
spouse has underestimated income (or overstated a credit or deduction) on the return.
Is unemployment compensation taxable? - ✔✔Yes, unemployment compensation is fully taxable.
Are scholarships and fellowships taxable? - ✔✔Sometimes. Generally, scholarships and fellowships are
excluded from income by degree-seeking candidates to the extent that they are used to pay qualified
education expenses, such as tuition and course-related fees. However, if they are used to pay for room
and board or other expenses, they are taxable.
What document will the taxpayer receive from their employer reporting disability pension payments? -
✔✔The income is reported on Form 1099-R
, Under what circumstances can a disability pension qualify as earned income for the EIC? - ✔✔Disability
pension income received before the taxpayer attains minimum retirement age for their company is
reported as wage income. It is also considered earned income for purposes of EIC.
What types of income must be reported on Schedule 1 (Form 1040) and then reported on Form 1040? -
✔✔Gambling winnings, alimony, jury duty pay, canceled debts, and hobby income are some examples of
income that must be reported on Schedule 1 (Form 1040) and then reported on Form 1040.
What are the adjustments that can be claimed on Schedule 1 (Form 1040)? - ✔✔Some examples of
adjustments that can be claimed on Schedule 1 are:
Educator expense deduction.
The health savings account (HSA) deduction.
Moving expenses for members of the military.
Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty on early withdrawal of savings.
Alimony payments.
IRA deduction.
Student loan interest deduction.
How much may an eligible educator deduct for qualified classroom expenses as an adjustment to
income? - ✔✔Up to $250 per eligible educator.
Married taxpayers filing a joint return who are both eligible educators may each claim the $250
deduction, totaling $500.
Who is an eligible educator? - ✔✔Someone who worked at least 900 hours during the school year as a
teacher, teacher's aide, counselor, or principal in an elementary or secondary school.
Where is the educator expense deduction reported - ✔✔Educator expenses are reported on Schedule 1,
Additional Income and Adjustments to Income, line 11.
Correct Answers | Verified 2024 Version
What is the difference between earned income and unearned income? - ✔✔Earned income is received
for services performed. Some examples of earned income include wages, commissions, tips, farming,
and other business income.
Unearned income is taxable income that does not meet the definition of earned income. Examples of
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.
Is interest received on U.S. Treasury obligations taxable on state and/or local returns? - ✔✔No. Interest
on U.S. Treasury obligations is exempt from state and local tax by federal law.
Is municipal bond interest taxable on a federal return - ✔✔No, the federal government does not tax
municipal bond interest.
How is interest income reported to the taxpayer? - ✔✔Interest income is reported to the taxpayer on
Form 1099-INT or a substitute statement.
What information do you need to know to determine whether a nondependent taxpayer is required to
file a return? - ✔✔The taxpayer's filing status, age at the end of the tax year, and gross income for the
year.
For tax purposes, when is a person's marital status determined? - ✔✔On the last day of the tax year, or
the date of death.
,How much is added to the standard deduction if the taxpayer (or spouse) is age 65 or older, or blind? -
✔✔$1,350 for married taxpayers and qualifying widow(er)s, or $1,700 for those filing single or head of
household.
What is the personal exemption amount for 2021 - ✔✔There is no personal exemption for 2021. A
personal exemption was an amount previously allowed by law to reduce income that would otherwise
be taxed. The Tax Cuts and Jobs Act of 2017 repealed this deduction beginning in 2018.
How is the gross income filing requirement determined for most nondependent taxpayers - ✔✔The
taxpayer's standard deduction, including the additional amounts for age. However, for married filing
separately, or married filing jointly when the spouses did not live together at the end of the year, the
amount is $5.
What is the difference between injured spouse allocation and innocent spouse relief? - ✔✔The IRS
provides an injured spouse allocation for the taxpayer to protect their portion of a refund from a
spouse's past-due federal income tax, unpaid student loans, unpaid child and spousal support, or state
income tax.
The IRS provides innocent spouse relief to taxpayers who file a joint return and later learn that their
spouse has underestimated income (or overstated a credit or deduction) on the return.
Is unemployment compensation taxable? - ✔✔Yes, unemployment compensation is fully taxable.
Are scholarships and fellowships taxable? - ✔✔Sometimes. Generally, scholarships and fellowships are
excluded from income by degree-seeking candidates to the extent that they are used to pay qualified
education expenses, such as tuition and course-related fees. However, if they are used to pay for room
and board or other expenses, they are taxable.
What document will the taxpayer receive from their employer reporting disability pension payments? -
✔✔The income is reported on Form 1099-R
, Under what circumstances can a disability pension qualify as earned income for the EIC? - ✔✔Disability
pension income received before the taxpayer attains minimum retirement age for their company is
reported as wage income. It is also considered earned income for purposes of EIC.
What types of income must be reported on Schedule 1 (Form 1040) and then reported on Form 1040? -
✔✔Gambling winnings, alimony, jury duty pay, canceled debts, and hobby income are some examples of
income that must be reported on Schedule 1 (Form 1040) and then reported on Form 1040.
What are the adjustments that can be claimed on Schedule 1 (Form 1040)? - ✔✔Some examples of
adjustments that can be claimed on Schedule 1 are:
Educator expense deduction.
The health savings account (HSA) deduction.
Moving expenses for members of the military.
Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty on early withdrawal of savings.
Alimony payments.
IRA deduction.
Student loan interest deduction.
How much may an eligible educator deduct for qualified classroom expenses as an adjustment to
income? - ✔✔Up to $250 per eligible educator.
Married taxpayers filing a joint return who are both eligible educators may each claim the $250
deduction, totaling $500.
Who is an eligible educator? - ✔✔Someone who worked at least 900 hours during the school year as a
teacher, teacher's aide, counselor, or principal in an elementary or secondary school.
Where is the educator expense deduction reported - ✔✔Educator expenses are reported on Schedule 1,
Additional Income and Adjustments to Income, line 11.
