H&R Block Chapter 1 fully solved graded A+ passed

H&R Block Chapter 1Income is financial gain derived from labor (work), capital (money), or a combination of the two. The financial gain derived from labor is generally referred to as wages. Unless specifically exempt or excluded by law, all income is subject to income tax and is reported on a tax return. Gross Income means all worldwide income from whatever source derived, unless specifically excluded from taxation by law. Gross income includes income realized in any form, whether in money, property, or services. Earned Income is received for services performed. Some examples are wages, commissions, tips, and generally farming and other business income. Unearned Income is taxable income that does not meet the definition of earned income. It includes money received for the investment of money or other property, such as interest, dividends, rents, and royalties. It also includes pensions, alimony, unemployment compensation, and other income that is not from performing services. Are Social Security benefits taxable income? may be included in taxable income. Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. You will learn more about social security benefits when you read about retirement distributions. Are disability retirement benefits earned income? qualify as earned income until the taxpayer reaches minimum retirement age. Minimum retirement age is the earliest age the taxpayer could have received a pension from their employer or an annuity if they did not have the disability. Social security disability payments, Social Security Disability Insurance (SSDI) payments, and military disability pension payments are not considered earned income. Mary Moore earned $95,000 as vice president of a local bank. Mary also earned $750 of interest from a certificate of deposit from the same bank where she worked. How much is Mary's gross income? $95,750 Mary Moore earned $95,000 as vice president of a local bank. Mary also earned $750 of interest from a certificate of deposit from the same bank where she worked. How much is Mary's unearned income? $750 What are fringe benefits? include sick leave, vacation pay, company cars, pension plans, and health plans that provide additional compensation to employees beyond base wages. Cafeteria-style fringe benefits plans let employees choose the benefits they want, up to a certain dollar amount. They are not taxable. Are gifts and inheritances included in gross income? No Are royalties included in gross income? Yes Are certain foster care payments included in gross income? No Is income in respect of a decedent include in gross income? Yes Is income from life insurance and endowment contracts included in gross income? Yes Are certain alimony and separate maintenance payments included in gross income? Yes Is distributive share of partnership gross income included in gross income? Yes Which taxpayer is Form 1040-SR used for? U.S. Tax Returns for Seniors, was also introduced for 2019. This was designed for use by taxpayers age 65 and over. Throughout this course, we will refer only to Form 1040; however, without exception, the same rules apply to Form 1040-SR. How many supporting schedules are there for Form 1040? 3 Schedules - Schedule 1, Additional Income and Adjustments to Income. Schedule 2, Additional Taxes. Schedule 3, Additional Credits and Payments. What are statements? may or may not be official IRS forms. They are attached to the return to explain various types of income, deductions, and credits reported either on a schedule or form, or directly on Form 1040. What is the IRS' stance on rounding? rounding cents to the nearest dollar on all individual income tax returns. A total of $23.50 is rounded up to $24; $23.49 is rounded down to $23. 3.454% rounds to 3.45% (or .0345 as a decimal); 3.456% rounds to 3.46% (or .0346 as a decimal). What is the deadline for employers to have Form W-2 to their employees? January 31st