H&R Block Final Review || Acknowledged Answers 100%.
What is the difference between earned income and unearned income? correct answers 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? correct answers If the
taxpayer's name, social security number, or 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.
What information do you need to know to determine whether a taxpayer is required to file a
return? correct answers The taxpayer's marital status, age at the end of the tax year, gross income
for the year, and if the taxpayer is a dependent.
Where on Form 1040 can you find the regular standard deduction amounts? correct answers In
the left-hand margin on page 1 of Form 1040. They are: single and married filing separately,
$12,200; married filing jointly and qualifying widow(er), $24,400; and head of household,
$18,350.
How much is added to the standard deduction if the taxpayer (or spouse) is age 65 or older, or
blind? correct answers $1,300 for married taxpayers and qualifying widow(er)s, or $1,650 for all
other unmarried taxpayers, is added for each condition.
What is the personal exemption amount for 2019? correct answers There is no personal
exemption for 2019. 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 The Tax Cuts and Jobs Act of 2017 repealed this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 taxpayers? correct answers The
taxpayer's standard deduction, including the additional amounts for age and blindness. However,
for MFS, the amount is $5.
What is the difference between injured spouse allocation and innocent spouse relief? correct
answers 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, or 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.
What is a thorough interview? correct answers A thorough interview consists of asking general
information questions, then asking additional questions whenever information is incomplete or
seems inaccurate or inconsistent
What is a conflict of interest? correct answers Circular 230 states that a conflict of interest exists
if the representation of one client will be directly adverse to another client, or if there is a
significant risk that the representation of one or more clients will be materially limited by the
practitioner's responsibilities to another client, a former client, or a third person, or by a personal
interest of the practitioner.
What actions can resolve a conflict of interest? correct answers A conflict of interest is resolved
when it is acknowledged, disclosed to all parties, and the parties have consented to waiving the
conflict.
What taxpayer information is confidential? correct answers Any information that could
potentially identify the taxpayer is confidential. Information includes (but is not limited to)
name, address and phone number, social security number, place of employment, and any
information from a tax return.
, What is a tax preparer's responsibility upon finding out that a taxpayer has not complied with one
or more tax laws? correct answers A tax preparer must only advise the taxpayer of the
noncompliance and the consequences for not correcting the situation. The taxpayer is the only
individual who can decide to make corrections to their return.
What action should a tax preparer take if a taxpayer insists on reporting information that is
inaccurate? correct answers A tax preparer may not sign a return reporting clearly inaccurate
information or otherwise assist a taxpayer in filing an inaccurate return.
A tax preparer may not sign a return reporting clearly inaccurate information or otherwise assist
a taxpayer in filing an inaccurate return. correct answers The dependent must be a qualifying
child or qualifying relative; they must be a U.S. citizen or a resident of the United States,
Canada, or Mexico; they cannot file a joint return (unless solely to claim a refund of taxes paid);
and the taxpayer claiming the dependent must not be a dependent of another taxpayer.
What are the five tests for a qualifying child? correct answers Relationship test.
Age test.
Residency test.
Support test.
Joint return test.
How can a married individual meet the joint return test to remain a qualifying child? correct
answers 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 of any taxes withheld.
How can you determine who paid more than half of a person's support? correct answers The
amount of total support is reduced by the funds received for the person from all sources other
than the taxpayer. Other sources of support might include relatives, government programs, and
the dependent's own income.
What is the difference between earned income and unearned income? correct answers 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? correct answers If the
taxpayer's name, social security number, or 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.
What information do you need to know to determine whether a taxpayer is required to file a
return? correct answers The taxpayer's marital status, age at the end of the tax year, gross income
for the year, and if the taxpayer is a dependent.
Where on Form 1040 can you find the regular standard deduction amounts? correct answers In
the left-hand margin on page 1 of Form 1040. They are: single and married filing separately,
$12,200; married filing jointly and qualifying widow(er), $24,400; and head of household,
$18,350.
How much is added to the standard deduction if the taxpayer (or spouse) is age 65 or older, or
blind? correct answers $1,300 for married taxpayers and qualifying widow(er)s, or $1,650 for all
other unmarried taxpayers, is added for each condition.
What is the personal exemption amount for 2019? correct answers There is no personal
exemption for 2019. 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 taxpayers? correct answers The
taxpayer's standard deduction, including the additional amounts for age and blindness. However,
for MFS, the amount is $5.
What is the difference between injured spouse allocation and innocent spouse relief? correct
answers 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, or 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.
What is a thorough interview? correct answers A thorough interview consists of asking general
information questions, then asking additional questions whenever information is incomplete or
seems inaccurate or inconsistent
What is a conflict of interest? correct answers Circular 230 states that a conflict of interest exists
if the representation of one client will be directly adverse to another client, or if there is a
significant risk that the representation of one or more clients will be materially limited by the
practitioner's responsibilities to another client, a former client, or a third person, or by a personal
interest of the practitioner.
What actions can resolve a conflict of interest? correct answers A conflict of interest is resolved
when it is acknowledged, disclosed to all parties, and the parties have consented to waiving the
conflict.
What taxpayer information is confidential? correct answers Any information that could
potentially identify the taxpayer is confidential. Information includes (but is not limited to)
name, address and phone number, social security number, place of employment, and any
information from a tax return.
, What is a tax preparer's responsibility upon finding out that a taxpayer has not complied with one
or more tax laws? correct answers A tax preparer must only advise the taxpayer of the
noncompliance and the consequences for not correcting the situation. The taxpayer is the only
individual who can decide to make corrections to their return.
What action should a tax preparer take if a taxpayer insists on reporting information that is
inaccurate? correct answers A tax preparer may not sign a return reporting clearly inaccurate
information or otherwise assist a taxpayer in filing an inaccurate return.
A tax preparer may not sign a return reporting clearly inaccurate information or otherwise assist
a taxpayer in filing an inaccurate return. correct answers The dependent must be a qualifying
child or qualifying relative; they must be a U.S. citizen or a resident of the United States,
Canada, or Mexico; they cannot file a joint return (unless solely to claim a refund of taxes paid);
and the taxpayer claiming the dependent must not be a dependent of another taxpayer.
What are the five tests for a qualifying child? correct answers Relationship test.
Age test.
Residency test.
Support test.
Joint return test.
How can a married individual meet the joint return test to remain a qualifying child? correct
answers 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 of any taxes withheld.
How can you determine who paid more than half of a person's support? correct answers The
amount of total support is reduced by the funds received for the person from all sources other
than the taxpayer. Other sources of support might include relatives, government programs, and
the dependent's own income.
