H&R Block Final Review Questions With
Correct Answers
What is the difference between earned income and unearned income? -
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CORRECT ANSWER✔✔-Earned income is received for services
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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?
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|- CORRECT ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-$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
| | | | | | | | | |
ANSWER✔✔-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 ANSWER✔✔-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 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, 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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-
| | | | | | | | | |
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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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. | | | | | | | |
Correct Answers
What is the difference between earned income and unearned income? -
| | | | | | | | | |
CORRECT ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-$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
| | | | | | | | | |
ANSWER✔✔-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 ANSWER✔✔-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 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, 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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-
| | | | | | | | | |
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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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. | | | | | | | |
