H&R Block Income Tax Course Questions 2026
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Circular 230 - correct AnswersRegulations governing the practice of attorneys, certified
public accountants, enrolled agents, enrolled actuaries, and appraisers before the IRS.
Disclosure - correct AnswersThe release of tax information by an IRS employee.
Due Diligence - correct AnswersRequirements that tax professionals must follow when
preparing income tax returns.
Noncompliance - correct AnswersFailure or refusal to comply with the tax code.
Privilege - correct AnswersProtection from being required to disclose confidential
communications between two parties, such as attorney and client.
Estimated Tax - correct AnswersThe amount of tax a taxpayer expects to owe for the
year after subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - correct AnswersA 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 - correct AnswersStatus claimed on Form W-4 directing the
employer not to withhold federal income taxes from the employee.
Underpayment Penalty - correct AnswersIf a taxpayer did not pay enough tax on a
timely basis during the year, he may be required to pay an underpayment penalty.
Withholding Allowances - correct AnswersAn increase by which income tax withholding
on certain income is reduced.
Two Ways to Pay as You Go - correct AnswersWithholding and Estimated Tax
Payments
Form W-4 - correct AnswersEmployee's Withholding Allowance Certificate
Form 8815 - correct AnswersExclusion of Interest From Series EE and I U.S. Savings
Bonds Issued After 1989
,Form 2210 - correct AnswersUnderpayment of Estimated Tax by Individuals, Estates,
and Trusts
Form 4868 - correct AnswersApplication for Automatic Extension of Time To File U.S.
Individual Income Tax Return
Form 8888 - correct AnswersAllocation of Refund
Form 9465 - correct AnswersInstallment Agreement Request
Amended Return - correct AnswersA tax return filed on Form 1040X after the original
return has been filed.
Closed Year - correct AnswersA tax year for which the statute of limitations has expired.
Open Year - correct AnswersA taxable year for which the statute of limitations has not
yet expired.
Failure-to-File Penalty - correct AnswersGenerally 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 - correct AnswersTaxpayer fails to file the return by the due date, and
there is a balance due.
Failure to Pay - correct AnswersTaxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty - correct Answers0.5% of the unpaid taxes for each month or
part of a month after the due date, but not more than 25%.
Negligence or Intentional Disregard - correct AnswersTaxpayer shows negligence or
disregard of the rules or regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty - correct Answers20% of the
underpayment.
Substantial Understatment - correct AnswersTaxpayer understates their tax by the
larger of $5,000 or 10% of the correct tax.
Substantial-Understatement Penalty - correct Answers20% of the underpayment.
Form 1040X - correct AnswersAmended U.S. Individual Income Tax Return
When can an amended return be filed? - correct AnswersWithin 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? - correct AnswersNo.
Household Employee - correct AnswersAn individual who performs nonbusiness
services in a taxpayer's home.
Active Income and Losses - correct AnswersThose for which a taxpayer performs
services.
Partnership - correct AnswersA form of business in which two or more persons join their
money and skills in conducting the business as co-owners.
Passive Income and Losses - correct AnswersThose from business activities in which
the taxpayer does not materially participate, and all rental activities.
Portfolio Income and Losses - correct AnswersThose from such sources as dividends,
interest, capital gains and losses, and royalties.
Rental Income - correct AnswersIncome received by the taxpayer for allowing another
person's use of the taxpayer's property.
Royalty - correct Answers(1) A payment received for the right to exploit a taxpayer's
ownership of natural resources or a taxpayer's literary, musical, or artistic creation. (2)
An interest in the oil and gas in place that entitles the holder to a specified fraction, in
kind or in value, of the total production from the property, free of any expenses of
development and operation.
S Corporation - correct AnswersA qualified small business corporation that has elected
special tax treatment under subchapter S of the Internal Revenue Code. S corporations
pass income, losses, and deductions through to shareholders to report on their
individual returns.
Trust - correct AnswersA tax entity that distributes all or part of its income to
beneficiaries as instructed by the trust agreement.
Requirements for a Real Estate Professional - correct Answers1. More than half of the
personal services performed by the taxpayer in all trades or businesses during the tax
year were performed in real property trades or businesses in which the taxpayer
materially participated.
2. The taxpayer performed more than 750 hours of services during the year in real
property trades or businesses in which the taxpayer materially participated.
Trade or Business Activities - correct AnswersAny activity that: Involves the conduct of
a trade or business; is conducted in anticipation of starting a trade or business; Involves
research or experimental expenditures that are deductible under IRS Code 174.
, Nonpassive Income - correct AnswersIncome derived from activities that are not
passive.
Types of Nonpassive Income - correct AnswersPortfolio income; personal service
income; other income.
Portfolio Income - correct AnswersIncludes interest, dividends, annuities, and royalties
not derived in the ordinary course of business.
Personal Service Income - correct AnswersSalaries, wages, commissions, self-
employment income from trade or business in which the taxpayer materially
participates, deferred compensation, taxable social security and other retirement
benefits, and payments from partnerships to partners for personal services.
Rent - correct AnswersIncome received for the use of property.
Is rent earned or unearned income? - correct AnswersUnearned.
Schedule E - correct AnswersSupplemental Income and Loss
Deductible Maintenance and Repairs - correct AnswersThose that do not appreciably
add to the value or useful life of the property.
Is the value of the owner's labor deductible when it comes to rental property? - correct
AnswersNo.
Rental Property Depreciable Basis - correct AnswersBasis MINUS land value TIMES
the rental use percentage.
Vacation home - correct AnswersA dwelling unit and may be a house, apartment,
condominium, mobile home, boat, or any other property that provides normal living
accomodations.
Used as a Residence - correct AnswersA dwelling unit is used for personal purposes
during the year for whichever is greater: more than 14 days; more than 10% of the days
the house is rented at fair rental value.
Royalty - correct AnswersPayments received for the right to extract natural resources
from the taxpayer's property or to use a taxpayer's literary, musical, or artistic creation.
Economic Interest - correct AnswersOne acquired by investment, the return on which is
dependent upon the extraction of the natural deposit or cutting of the timber.
Two Methods of Computing Depletion - correct AnswersCost and Percentage
What tax form must estates and trusts file? - correct AnswersForm 1041
| Verified Q&A | Latest Update | 100% Pass
Success
Circular 230 - correct AnswersRegulations governing the practice of attorneys, certified
public accountants, enrolled agents, enrolled actuaries, and appraisers before the IRS.
Disclosure - correct AnswersThe release of tax information by an IRS employee.
Due Diligence - correct AnswersRequirements that tax professionals must follow when
preparing income tax returns.
Noncompliance - correct AnswersFailure or refusal to comply with the tax code.
Privilege - correct AnswersProtection from being required to disclose confidential
communications between two parties, such as attorney and client.
Estimated Tax - correct AnswersThe amount of tax a taxpayer expects to owe for the
year after subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - correct AnswersA 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 - correct AnswersStatus claimed on Form W-4 directing the
employer not to withhold federal income taxes from the employee.
Underpayment Penalty - correct AnswersIf a taxpayer did not pay enough tax on a
timely basis during the year, he may be required to pay an underpayment penalty.
Withholding Allowances - correct AnswersAn increase by which income tax withholding
on certain income is reduced.
Two Ways to Pay as You Go - correct AnswersWithholding and Estimated Tax
Payments
Form W-4 - correct AnswersEmployee's Withholding Allowance Certificate
Form 8815 - correct AnswersExclusion of Interest From Series EE and I U.S. Savings
Bonds Issued After 1989
,Form 2210 - correct AnswersUnderpayment of Estimated Tax by Individuals, Estates,
and Trusts
Form 4868 - correct AnswersApplication for Automatic Extension of Time To File U.S.
Individual Income Tax Return
Form 8888 - correct AnswersAllocation of Refund
Form 9465 - correct AnswersInstallment Agreement Request
Amended Return - correct AnswersA tax return filed on Form 1040X after the original
return has been filed.
Closed Year - correct AnswersA tax year for which the statute of limitations has expired.
Open Year - correct AnswersA taxable year for which the statute of limitations has not
yet expired.
Failure-to-File Penalty - correct AnswersGenerally 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 - correct AnswersTaxpayer fails to file the return by the due date, and
there is a balance due.
Failure to Pay - correct AnswersTaxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty - correct Answers0.5% of the unpaid taxes for each month or
part of a month after the due date, but not more than 25%.
Negligence or Intentional Disregard - correct AnswersTaxpayer shows negligence or
disregard of the rules or regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty - correct Answers20% of the
underpayment.
Substantial Understatment - correct AnswersTaxpayer understates their tax by the
larger of $5,000 or 10% of the correct tax.
Substantial-Understatement Penalty - correct Answers20% of the underpayment.
Form 1040X - correct AnswersAmended U.S. Individual Income Tax Return
When can an amended return be filed? - correct AnswersWithin 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? - correct AnswersNo.
Household Employee - correct AnswersAn individual who performs nonbusiness
services in a taxpayer's home.
Active Income and Losses - correct AnswersThose for which a taxpayer performs
services.
Partnership - correct AnswersA form of business in which two or more persons join their
money and skills in conducting the business as co-owners.
Passive Income and Losses - correct AnswersThose from business activities in which
the taxpayer does not materially participate, and all rental activities.
Portfolio Income and Losses - correct AnswersThose from such sources as dividends,
interest, capital gains and losses, and royalties.
Rental Income - correct AnswersIncome received by the taxpayer for allowing another
person's use of the taxpayer's property.
Royalty - correct Answers(1) A payment received for the right to exploit a taxpayer's
ownership of natural resources or a taxpayer's literary, musical, or artistic creation. (2)
An interest in the oil and gas in place that entitles the holder to a specified fraction, in
kind or in value, of the total production from the property, free of any expenses of
development and operation.
S Corporation - correct AnswersA qualified small business corporation that has elected
special tax treatment under subchapter S of the Internal Revenue Code. S corporations
pass income, losses, and deductions through to shareholders to report on their
individual returns.
Trust - correct AnswersA tax entity that distributes all or part of its income to
beneficiaries as instructed by the trust agreement.
Requirements for a Real Estate Professional - correct Answers1. More than half of the
personal services performed by the taxpayer in all trades or businesses during the tax
year were performed in real property trades or businesses in which the taxpayer
materially participated.
2. The taxpayer performed more than 750 hours of services during the year in real
property trades or businesses in which the taxpayer materially participated.
Trade or Business Activities - correct AnswersAny activity that: Involves the conduct of
a trade or business; is conducted in anticipation of starting a trade or business; Involves
research or experimental expenditures that are deductible under IRS Code 174.
, Nonpassive Income - correct AnswersIncome derived from activities that are not
passive.
Types of Nonpassive Income - correct AnswersPortfolio income; personal service
income; other income.
Portfolio Income - correct AnswersIncludes interest, dividends, annuities, and royalties
not derived in the ordinary course of business.
Personal Service Income - correct AnswersSalaries, wages, commissions, self-
employment income from trade or business in which the taxpayer materially
participates, deferred compensation, taxable social security and other retirement
benefits, and payments from partnerships to partners for personal services.
Rent - correct AnswersIncome received for the use of property.
Is rent earned or unearned income? - correct AnswersUnearned.
Schedule E - correct AnswersSupplemental Income and Loss
Deductible Maintenance and Repairs - correct AnswersThose that do not appreciably
add to the value or useful life of the property.
Is the value of the owner's labor deductible when it comes to rental property? - correct
AnswersNo.
Rental Property Depreciable Basis - correct AnswersBasis MINUS land value TIMES
the rental use percentage.
Vacation home - correct AnswersA dwelling unit and may be a house, apartment,
condominium, mobile home, boat, or any other property that provides normal living
accomodations.
Used as a Residence - correct AnswersA dwelling unit is used for personal purposes
during the year for whichever is greater: more than 14 days; more than 10% of the days
the house is rented at fair rental value.
Royalty - correct AnswersPayments received for the right to extract natural resources
from the taxpayer's property or to use a taxpayer's literary, musical, or artistic creation.
Economic Interest - correct AnswersOne acquired by investment, the return on which is
dependent upon the extraction of the natural deposit or cutting of the timber.
Two Methods of Computing Depletion - correct AnswersCost and Percentage
What tax form must estates and trusts file? - correct AnswersForm 1041
