H&R Block Income Tax Course Questions and Answers
100% Correct
Due Diligence - ANSWER Requirements that tax professionals must follow when
preparing income tax returns.
Estimated Tax - ANSWER The amount of tax a taxpayer expects to owe for the
year after subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - ANSWER 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 - ANSWER Status claimed on Form W-4 directing the
employer not to withhold federal income taxes from the employee.
Underpayment Penalty - ANSWER If a taxpayer did not pay enough tax on a timely
basis during the year, he may be required to pay an underpayment penalty.
Two Ways to Pay as You Go - ANSWER Withholding and Estimated Tax Payments
Form W-4 - ANSWER Employee's Withholding Allowance Certificate
Form 4868 - ANSWER Application for Automatic Extension of Time To File U.S.
Individual Income Tax Return
Amended Return - ANSWER A tax return filed on Form 1040X after the original
return has been filed.
Closed Year - ANSWER A tax year for which the statute of limitations has expired.
Open Year - ANSWER A taxable year for which the statute of limitations has not yet
expired.
Failure-to-File Penalty - ANSWER 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 - ANSWER Taxpayer fails to file the return by the due date, and there
is a balance due.
Form 1040X - ANSWER Amended U.S. Individual Income Tax Return
When can an amended return be filed? - ANSWER 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? - ANSWER No.
Portfolio Income and Losses - ANSWER Those from such sources as dividends,
interest, capital gains and losses, and royalties.
Schedule E - ANSWER Supplemental Income and Loss
Royalty - ANSWER Payments received for the right to extract natural resources
from the taxpayer's property or to use a taxpayer's literary, musical, or artistic
creation.
Annuity - ANSWER A series of payments under a contract made at regular intervals
over a period of more than one year.
Beneficiary - ANSWER The owner or recipient of funds in an account, such as an
IRA, or from an insurance policy or will.
Contribution - ANSWER When a person puts money into a retirement plan.
Defined Benefit Plan - ANSWER An employee benefit plan that provides
determinable benefits not based on employer profits.
Defined Contribution Plan - ANSWER An employee benefit plan that provides a
separate account for each person covered and pays benefits based on account
earnings.
Disability Pension - ANSWER A taxable pension from an employer-funded disability
plan or a disability provision of a retirement plan.
Distribution - ANSWER When a person takes or receives money from a retirement
plan.
Pension - ANSWER Generally a series of definitely determinable payments made
to a taxpayer after retirement from work.
Rollover - ANSWER A qualified transfer of funds from one tax-favored account to
another, usually of the same type.
Roth IRA - ANSWER A type of individual retirement arrangement in which
contributions are not tax deductible, earnings grow tax deferred, and qualified
withdrawals are tax free.
Traditional IRA - ANSWER An individual retirement arrangement, contributions to
which may or may not be deductible depending on the taxpayer's AGI and whether
or not he is covered under an employer-sponsored retirement plan.
What is the full retirement age? - ANSWER For workers born before 1938, it is 65.
For those born after it is gradually being increased to 67.
, How much of a client's social security and equivalent tier 1 RR benefits may be
taxable? - ANSWER Up to 85%.
Form SSA-1099 - ANSWER Social Security Benefits
Form RRB-1099 - ANSWER Railroad Retirement Benefits
None of Social Security Benefits Taxable - ANSWER Single, Head of Household,
Qualified Widow - $0-$25,000; Married Filing Jointly - $0-$32,000
Up to 50% of Social Security Benefits Taxable - ANSWER Single, Head of
Household, Qualified Widow - $25,001-$34,000; Married Filing Jointly - $32,001-
$44,000
Up to 85% of Social Security Benefits Taxable - ANSWER Single, Head of
Household, Qualified Widow - $34,001+; Married Filing Jointly - $44,001+; Married
Filing Single - $1+
Fully Taxable Pension - ANSWER Pensions to which the taxpayer did not make
after-tax contributions or from which all pre-tax amounts have been recovered in
previous years.
Partly Taxable Pensions - ANSWER Those pensions funded through employer
plans to which the employee contributed some after-tax money.
Form 1099-R - ANSWER Distributions from Pensions, Annuities, Retirement, or
Profit-Sharing Plans, IRAs, Insurance Contracts, Etc.
Exceptions to the Early Withdrawal Penalty - ANSWER 01 - The distribution was
made to an employee who separated from service during or after the year in which
they reached age 55.
02 - The distribution is part of a series of substantially equal periodic payments,
made at least annually for the life of the participant or the life expenctancy of the
participant.
03 - The distribution was made due to permanent and total disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical expenses
exceeds 7.5% of AGI.
06 - The distribution was made to an alternate payee under a qualified domestic
relations order.
07 - The distribution was made in a year an unemployed taxpayer paid health
insurance premiums.
08 - The distribution was made to pay qualified higher education expenses for the
taxpayer, spouse, their child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-buying expenses.
10 - The distribution was made due to an IRS levy of the qualified plan.
11 - The distribution was made to a reservist while serving on active duty for at least
180 days.
12 - Other.
100% Correct
Due Diligence - ANSWER Requirements that tax professionals must follow when
preparing income tax returns.
Estimated Tax - ANSWER The amount of tax a taxpayer expects to owe for the
year after subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - ANSWER 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 - ANSWER Status claimed on Form W-4 directing the
employer not to withhold federal income taxes from the employee.
Underpayment Penalty - ANSWER If a taxpayer did not pay enough tax on a timely
basis during the year, he may be required to pay an underpayment penalty.
Two Ways to Pay as You Go - ANSWER Withholding and Estimated Tax Payments
Form W-4 - ANSWER Employee's Withholding Allowance Certificate
Form 4868 - ANSWER Application for Automatic Extension of Time To File U.S.
Individual Income Tax Return
Amended Return - ANSWER A tax return filed on Form 1040X after the original
return has been filed.
Closed Year - ANSWER A tax year for which the statute of limitations has expired.
Open Year - ANSWER A taxable year for which the statute of limitations has not yet
expired.
Failure-to-File Penalty - ANSWER 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 - ANSWER Taxpayer fails to file the return by the due date, and there
is a balance due.
Form 1040X - ANSWER Amended U.S. Individual Income Tax Return
When can an amended return be filed? - ANSWER 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? - ANSWER No.
Portfolio Income and Losses - ANSWER Those from such sources as dividends,
interest, capital gains and losses, and royalties.
Schedule E - ANSWER Supplemental Income and Loss
Royalty - ANSWER Payments received for the right to extract natural resources
from the taxpayer's property or to use a taxpayer's literary, musical, or artistic
creation.
Annuity - ANSWER A series of payments under a contract made at regular intervals
over a period of more than one year.
Beneficiary - ANSWER The owner or recipient of funds in an account, such as an
IRA, or from an insurance policy or will.
Contribution - ANSWER When a person puts money into a retirement plan.
Defined Benefit Plan - ANSWER An employee benefit plan that provides
determinable benefits not based on employer profits.
Defined Contribution Plan - ANSWER An employee benefit plan that provides a
separate account for each person covered and pays benefits based on account
earnings.
Disability Pension - ANSWER A taxable pension from an employer-funded disability
plan or a disability provision of a retirement plan.
Distribution - ANSWER When a person takes or receives money from a retirement
plan.
Pension - ANSWER Generally a series of definitely determinable payments made
to a taxpayer after retirement from work.
Rollover - ANSWER A qualified transfer of funds from one tax-favored account to
another, usually of the same type.
Roth IRA - ANSWER A type of individual retirement arrangement in which
contributions are not tax deductible, earnings grow tax deferred, and qualified
withdrawals are tax free.
Traditional IRA - ANSWER An individual retirement arrangement, contributions to
which may or may not be deductible depending on the taxpayer's AGI and whether
or not he is covered under an employer-sponsored retirement plan.
What is the full retirement age? - ANSWER For workers born before 1938, it is 65.
For those born after it is gradually being increased to 67.
, How much of a client's social security and equivalent tier 1 RR benefits may be
taxable? - ANSWER Up to 85%.
Form SSA-1099 - ANSWER Social Security Benefits
Form RRB-1099 - ANSWER Railroad Retirement Benefits
None of Social Security Benefits Taxable - ANSWER Single, Head of Household,
Qualified Widow - $0-$25,000; Married Filing Jointly - $0-$32,000
Up to 50% of Social Security Benefits Taxable - ANSWER Single, Head of
Household, Qualified Widow - $25,001-$34,000; Married Filing Jointly - $32,001-
$44,000
Up to 85% of Social Security Benefits Taxable - ANSWER Single, Head of
Household, Qualified Widow - $34,001+; Married Filing Jointly - $44,001+; Married
Filing Single - $1+
Fully Taxable Pension - ANSWER Pensions to which the taxpayer did not make
after-tax contributions or from which all pre-tax amounts have been recovered in
previous years.
Partly Taxable Pensions - ANSWER Those pensions funded through employer
plans to which the employee contributed some after-tax money.
Form 1099-R - ANSWER Distributions from Pensions, Annuities, Retirement, or
Profit-Sharing Plans, IRAs, Insurance Contracts, Etc.
Exceptions to the Early Withdrawal Penalty - ANSWER 01 - The distribution was
made to an employee who separated from service during or after the year in which
they reached age 55.
02 - The distribution is part of a series of substantially equal periodic payments,
made at least annually for the life of the participant or the life expenctancy of the
participant.
03 - The distribution was made due to permanent and total disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical expenses
exceeds 7.5% of AGI.
06 - The distribution was made to an alternate payee under a qualified domestic
relations order.
07 - The distribution was made in a year an unemployed taxpayer paid health
insurance premiums.
08 - The distribution was made to pay qualified higher education expenses for the
taxpayer, spouse, their child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-buying expenses.
10 - The distribution was made due to an IRS levy of the qualified plan.
11 - The distribution was made to a reservist while serving on active duty for at least
180 days.
12 - Other.
