HR BLOCK Final Test Review (ITC) Questions and Answers 2025

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HR BLOCK Final Test Review (ITC)
Questions and Answers 2025
Which of the following is a requirement for all taxpayers who want to claim the EIC?

Live in the U.S. for more than half a year.
Have a valid social security number.
Have a qualifying child dependent.
Have AGI less than $21,430 ($27,380 MFJ). -Correct Answer ✅-Have a valid social
security number.

A combined due diligence penalty of $2,180 would indicate a penalty for which of the
following?

EIC, CTC/ODC/ACTC, and head of household.
EIC, AOTC, and CTC/ODC/ACTC.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
EIC, PTC, CTC/ODC/ACTC, and head of household. -Correct Answer ✅-EIC, AOTC,
CTC/ODC/ACTC, and head of household.

When dependent care benefits are withheld from a taxpayer's income, where are they
reported by the employer?

Form 2441.
Form 1040.
Box 10 of Form W-2.
The employer is not required to report them. -Correct Answer ✅-Box 10 of Form W-2.

All of the following are due diligence requirements a tax preparer must meet for EIC,
AOTC, CTC/ODC/ACTC, and HOH, EXCEPT:

Investigate and verify the accuracy of information the taxpayer provides to show
eligibility for EIC, AOTC, CTC/ODC/ACTC, and HOH.

Complete all worksheets used to compute the credits. If the worksheet is completed by
hand, keep a copy in the taxpayer's client file.

Maintain a copy of documents provided by the taxpayer that the tax preparer relied on
when determining credit eligibility. Then record the date the information was obtained
and the name of who provided the information.

When information provided by the taxpayer appears to be incorrect, inconsistent, or
incomplete, the tax preparer must make additional inquiries to determine if the taxpayer
is eligible for the benefit. Then document both the questions asked and responses


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provided. -Correct Answer ✅-Investigate and verify the accuracy of information the
taxpayer provides to show eligibility for EIC, AOTC, CTC/ODC/ACTC, and HOH.

When a taxpayer receives Form 1099-R with no amount entered in box 2a and code 7
entered in box 7, the entire distribution:

Could be partly or entirely taxable.
Is never taxable.
Is an early distribution and taxable.
Has been rolled into a traditional IRA or into another qualified plan. -Correct Answer ✅-
Is never taxable.

What is the maximum amount of the American Opportunity Tax Credit a taxpayer could
receive per student?
$1,650
$1,800
$2,000
$2,500 -Correct Answer ✅-$2,500

Which test for a qualifying child does NOT need to be met in order for the child to be a
qualifying person for purposes of Earned Income Credit (EIC)?
Age.
Relationship.
Residency.
Support. -Correct Answer ✅-Support.

Which of the following expenses qualifies for an education credit in 2021?
Tuition payments. The taxpayer didn't receive scholarships, grants, or other nontaxable
benefits.
Fees for an optional student activity.
Cost of student medical fees.
Tuition payments. The taxpayer received a nontaxable grant, which covered the entire
tuition expense. -Correct Answer ✅-

Employer-provided dependent care assistance:
May be used for the Child and Dependent Care Credit.
Is subtracted from the total expenses for child or dependent care on Form 2441.
Is included in wages on Form W-2.
Is not reported to the IRS. -Correct Answer ✅-

Which of the following is NOT a percentage of social security benefits subject to federal
tax? Up to __________.
0%
50%
85%



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100% -Correct Answer ✅-100%

What is the maximum amount of the lifetime learning credit?
$1,100 per return.
$1,650 per return.
$2,000 per return.
$2,500 per return. -Correct Answer ✅-$2,000 per return.

Employer-provided dependent care assistance:

It may be used for the Child and Dependent Care Credit.
It is subtracted from the total expenses for the child or dependent care on Form 2441.
It is included in wages on Form W-2.
It is not reported to the IRS. -Correct Answer ✅-

Earned Income -Correct Answer ✅-Any income (wages/salary) that is generated by
working

Unearned Income -Correct Answer ✅-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? -Correct
Answer ✅-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? -
Correct Answer ✅-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? -Correct Answer ✅-No, the
federal government does not tax municipal bond interest.

How is interest income reported to the taxpayer? -Correct Answer ✅-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? -Correct Answer ✅-

For tax purposes, when is a person's marital status determined? -Correct Answer ✅-
On the last day of the tax year, or the date of death.


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