HR BLOCK Final Test Review Questions and Answers
Question 1
How much may an eligible educator deduct for qualified classroom expenses as an adjustment to income?
Correct Answer
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.
Question 2
Qualified business income (QBI) is derived from various trade or business net amounts. In general, QBI is the net amount of
what?
Correct Answer
Qualified business income (QBI) is the net amount of qualified items of income, gain, deductions, and losses with respect
to the taxpayer's qualified trade or business.
Page 1 of 40
,Question 3
What is the purpose of Form 2120, Multiple Support Declaration?
Correct Answer
If two or more persons combined provided over one-half of a person's support, they may together agree to allow any
one of them who contributed at least 10% of the support to claim the exemption. A statement waiving the right to claim
the dependency exemption should be signed by each contributor who is not claiming the exemption and retained by the
one who is. Form 2120 is attached to the return of the taxpayer claiming the exemption.
Question 4
In the case of divorced or separated parents, which parent generally gets to claim the qualifying child?
Correct Answer
The custodial parent, according to the IRS definition, which is the person with whom the child spent more nights during
the year.
Question 5
What options does a taxpayer have for depositing their refund?
Correct Answer
A taxpayer who will receive a refund can use Form 8888 to directly deposit their refund into two or three different
accounts. The account can be a checking or savings account, or it can be another type of account, such as an IRA, a
health savings account (HSA), or a Coverdell education savings account. A taxpayer also has the option to purchase up to
$5,000 in Series I U.S. Savings Bonds with a portion of their refund.
Page 2 of 40
,Question 6
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.
Question 7
How is the lifetime learning credit calculated?
Correct Answer
It is 20% of the first $10,000 of qualifying expenses per return, per year.
Question 8
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.
Page 3 of 40
, Question 9
How is the gross income filing requirement determined for most nondependent taxpayers?
Correct Answer
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.
Question 10
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.
Question 11
Determining if a trade or business is considered a specified service trade or business (SSTB) is significant for taxpayers that
have taxable income over the lowest thresholds. What type of trades or businesses are considered SSTBs?
Correct Answer
A specified service trade or business (SSTB) is any trade or business involving the performance of services in the fields of
health, law, consulting, athletics, financial services, brokerage services or any trade or business in which the principal
asset of the business is the reputation or skill of one or more of its owners or employees, or that involves the
performance of services that consist of investing and investment management, trading, or dealing in securities,
partnership interests, or commodities.
Page 4 of 40
Question 1
How much may an eligible educator deduct for qualified classroom expenses as an adjustment to income?
Correct Answer
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.
Question 2
Qualified business income (QBI) is derived from various trade or business net amounts. In general, QBI is the net amount of
what?
Correct Answer
Qualified business income (QBI) is the net amount of qualified items of income, gain, deductions, and losses with respect
to the taxpayer's qualified trade or business.
Page 1 of 40
,Question 3
What is the purpose of Form 2120, Multiple Support Declaration?
Correct Answer
If two or more persons combined provided over one-half of a person's support, they may together agree to allow any
one of them who contributed at least 10% of the support to claim the exemption. A statement waiving the right to claim
the dependency exemption should be signed by each contributor who is not claiming the exemption and retained by the
one who is. Form 2120 is attached to the return of the taxpayer claiming the exemption.
Question 4
In the case of divorced or separated parents, which parent generally gets to claim the qualifying child?
Correct Answer
The custodial parent, according to the IRS definition, which is the person with whom the child spent more nights during
the year.
Question 5
What options does a taxpayer have for depositing their refund?
Correct Answer
A taxpayer who will receive a refund can use Form 8888 to directly deposit their refund into two or three different
accounts. The account can be a checking or savings account, or it can be another type of account, such as an IRA, a
health savings account (HSA), or a Coverdell education savings account. A taxpayer also has the option to purchase up to
$5,000 in Series I U.S. Savings Bonds with a portion of their refund.
Page 2 of 40
,Question 6
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.
Question 7
How is the lifetime learning credit calculated?
Correct Answer
It is 20% of the first $10,000 of qualifying expenses per return, per year.
Question 8
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.
Page 3 of 40
, Question 9
How is the gross income filing requirement determined for most nondependent taxpayers?
Correct Answer
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.
Question 10
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.
Question 11
Determining if a trade or business is considered a specified service trade or business (SSTB) is significant for taxpayers that
have taxable income over the lowest thresholds. What type of trades or businesses are considered SSTBs?
Correct Answer
A specified service trade or business (SSTB) is any trade or business involving the performance of services in the fields of
health, law, consulting, athletics, financial services, brokerage services or any trade or business in which the principal
asset of the business is the reputation or skill of one or more of its owners or employees, or that involves the
performance of services that consist of investing and investment management, trading, or dealing in securities,
partnership interests, or commodities.
Page 4 of 40
