H&R Block Chapter 1 Exam Questions With
Solutions
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
, H&R Block Chapter 1 Exam Questions With
Solutions
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
Solutions
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
, H&R Block Chapter 1 Exam Questions With
Solutions
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
