HR BLOCK EXAMS SET VERIFIED
QUESTIONS AND ACCURATE ANSWERS
COMPLETE PREPARATION FILE
●● If an employee thinks their Form W-2 is incorrect, what should they
do?
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?
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
Answer: No, the federal government does not tax municipal bond
interest.
,●● How is interest income reported to the taxpayer?
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?
Answer: 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?
Answer: 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?
Answer: $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
Answer: 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 The Tax Cuts and Jobs Act of 2017 repealed this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
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.
●● What is the difference between injured spouse allocation and
innocent spouse relief?
Answer: 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?
Answer: Yes, unemployment compensation is fully taxable.
●● Are scholarships and fellowships taxable?
Answer: 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?
Answer: The income is reported on Form 1099-R
●● Under what circumstances can a disability pension qualify as earned
income for the EIC?
Answer: 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?
Answer: 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)?
Answer: Some examples of adjustments that can be claimed on Schedule
1 are:
Educator expense deduction.
QUESTIONS AND ACCURATE ANSWERS
COMPLETE PREPARATION FILE
●● If an employee thinks their Form W-2 is incorrect, what should they
do?
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?
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
Answer: No, the federal government does not tax municipal bond
interest.
,●● How is interest income reported to the taxpayer?
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?
Answer: 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?
Answer: 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?
Answer: $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
Answer: 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
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.
●● What is the difference between injured spouse allocation and
innocent spouse relief?
Answer: 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?
Answer: Yes, unemployment compensation is fully taxable.
●● Are scholarships and fellowships taxable?
Answer: 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?
Answer: The income is reported on Form 1099-R
●● Under what circumstances can a disability pension qualify as earned
income for the EIC?
Answer: 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?
Answer: 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)?
Answer: Some examples of adjustments that can be claimed on Schedule
1 are:
Educator expense deduction.
