H&R BLOCK EXAMS PRACTICE QUESTIONS
AND DETAILED SOLUTIONS
◉ Distribution.
Answer: When a person takes or receives money from a retirement
plan.
◉ Pension.
Answer: Generally a series of definitely determinable payments
made to a taxpayer after retirement from work.
◉ Rollover.
Answer: A qualified transfer of funds from one tax-favored account
to another, usually of the same type.
◉ Roth IRA.
Answer: A type of individual retirement arrangement in which
contributions are not tax deductible, earnings grow tax deferred,
and qualified withdrawals are tax free.
◉ Traditional IRA.
,Answer: An individual retirement arrangement, contributions to
which may or may not be deductible depending on the taxpayer's
AGI and whether or not he is covered under an employer-sponsored
retirement plan.
◉ What is the full retirement age?.
Answer: For workers born before 1938, it is 65. For those born after
it is gradually being increased to 67.
◉ How much of a client's social security and equivalent tier 1 RR
benefits may be taxable?.
Answer: Up to 85%.
◉ Form SSA-1099.
Answer: Social Security Benefits
◉ Form RRB-1099.
Answer: Railroad Retirement Benefits
◉ None of Social Security Benefits Taxable.
Answer: Single, Head of Household, Qualified Widow - $0-$25,000;
Married Filing Jointly - $0-$32,000
,◉ Up to 50% of Social Security Benefits Taxable.
Answer: Single, Head of Household, Qualified Widow - $25,001-
$34,000; Married Filing Jointly - $32,001-$44,000
◉ Up to 85% of Social Security Benefits Taxable.
Answer: Single, Head of Household, Qualified Widow - $34,001+;
Married Filing Jointly - $44,001+; Married Filing Single - $1+
◉ Fully Taxable Pension.
Answer: Pensions to which the taxpayer did not make after-tax
contributions or from which all pre-tax amounts have been
recovered in previous years.
◉ Partly Taxable Pensions.
Answer: Those pensions funded through employer plans to which
the employee contributed some after-tax money.
◉ Form 1099-R.
Answer: Distributions from Pensions, Annuities, Retirement, or
Profit-Sharing Plans, IRAs, Insurance Contracts, Etc.
◉ Exceptions to the Early Withdrawal Penalty.
, Answer: 01 - The distribution was made to an employee who
separated from service during or after the year in which they
reached age 55.
02 - The distribution is part of a series of substantially equal
periodic payments, made at least annually for the life of the
participant or the life expenctancy of the participant.
03 - The distribution was made due to permanent and total
disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical
expenses exceeds 7.5% of AGI.
06 - The distribution was made to an alternate payee under a
qualified domestic relations order.
07 - The distribution was made in a year an unemployed taxpayer
paid health insurance premiums.
08 - The distribution was made to pay qualified higher education
expenses for the taxpayer, spouse, their child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-
buying expenses.
10 - The distribution was made due to an IRS levy of the qualified
plan.
11 - The distribution was made to a reservist while serving on active
duty for at least 180 days.
12 - Other.
AND DETAILED SOLUTIONS
◉ Distribution.
Answer: When a person takes or receives money from a retirement
plan.
◉ Pension.
Answer: Generally a series of definitely determinable payments
made to a taxpayer after retirement from work.
◉ Rollover.
Answer: A qualified transfer of funds from one tax-favored account
to another, usually of the same type.
◉ Roth IRA.
Answer: A type of individual retirement arrangement in which
contributions are not tax deductible, earnings grow tax deferred,
and qualified withdrawals are tax free.
◉ Traditional IRA.
,Answer: An individual retirement arrangement, contributions to
which may or may not be deductible depending on the taxpayer's
AGI and whether or not he is covered under an employer-sponsored
retirement plan.
◉ What is the full retirement age?.
Answer: For workers born before 1938, it is 65. For those born after
it is gradually being increased to 67.
◉ How much of a client's social security and equivalent tier 1 RR
benefits may be taxable?.
Answer: Up to 85%.
◉ Form SSA-1099.
Answer: Social Security Benefits
◉ Form RRB-1099.
Answer: Railroad Retirement Benefits
◉ None of Social Security Benefits Taxable.
Answer: Single, Head of Household, Qualified Widow - $0-$25,000;
Married Filing Jointly - $0-$32,000
,◉ Up to 50% of Social Security Benefits Taxable.
Answer: Single, Head of Household, Qualified Widow - $25,001-
$34,000; Married Filing Jointly - $32,001-$44,000
◉ Up to 85% of Social Security Benefits Taxable.
Answer: Single, Head of Household, Qualified Widow - $34,001+;
Married Filing Jointly - $44,001+; Married Filing Single - $1+
◉ Fully Taxable Pension.
Answer: Pensions to which the taxpayer did not make after-tax
contributions or from which all pre-tax amounts have been
recovered in previous years.
◉ Partly Taxable Pensions.
Answer: Those pensions funded through employer plans to which
the employee contributed some after-tax money.
◉ Form 1099-R.
Answer: Distributions from Pensions, Annuities, Retirement, or
Profit-Sharing Plans, IRAs, Insurance Contracts, Etc.
◉ Exceptions to the Early Withdrawal Penalty.
, Answer: 01 - The distribution was made to an employee who
separated from service during or after the year in which they
reached age 55.
02 - The distribution is part of a series of substantially equal
periodic payments, made at least annually for the life of the
participant or the life expenctancy of the participant.
03 - The distribution was made due to permanent and total
disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical
expenses exceeds 7.5% of AGI.
06 - The distribution was made to an alternate payee under a
qualified domestic relations order.
07 - The distribution was made in a year an unemployed taxpayer
paid health insurance premiums.
08 - The distribution was made to pay qualified higher education
expenses for the taxpayer, spouse, their child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-
buying expenses.
10 - The distribution was made due to an IRS levy of the qualified
plan.
11 - The distribution was made to a reservist while serving on active
duty for at least 180 days.
12 - Other.
