HR BLOCK Final Test Review (ITC 2025)
|| With 100% Accurate Answers
Which of the following is a requirement for all taxpayers who want to claim
the EIC? Live in the U.S. for more than half a year.
Have a valid social security number.
Have a qualifying child dependent.
Have AGI less than $21,430 ($27,380 MFJ). - ANSWER - Have a valid social
security number.
A combined due diligence penalty of $2,180 would indicate a penalty for
which of the following?
EIC, CTC/ODC/ACTC, and head of
household. EIC, AOTC, and CTC/ODC/ACTC.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
EIC, PTC, CTC/ODC/ACTC, and head of household. - ANSWER - EIC, AOTC,
CTC/ODC/ACTC, and head of household.
When dependent care benefits are withheld from a taxpayer's income,
where are they reported by the employer?
Form 2441.
Form 1040.
Box 10 of Form W-2.
The employer is not required to report them. - ANSWER - Box 10 of Form W-
2.
All of the following are due diligence requirements a tax preparer must
meet for EIC, AOTC, CTC/ODC/ACTC, and HOH, EXCEPT:
Investigate and verify the accuracy of information the taxpayer provides to
show eligibility for EIC, AOTC, CTC/ODC/ACTC, and HOH.
Complete all worksheets used to compute the credits. If the worksheet is
completed by hand, keep a copy in the taxpayer's client file.
Maintain a copy of documents provided by the taxpayer that the tax
preparer relied on when determining credit eligibility. Then record the date
the information was obtained and the name of who provided the
information.
When information provided by the taxpayer appears to be incorrect,
inconsistent, or incomplete, the tax preparer must make additional inquiries
to determine if the taxpayer is eligible for the benefit. Then document both
the questions asked and responses
,provided. - ANSWER - Investigate and verify the accuracy of information the
taxpayer provides to show eligibility for EIC, AOTC, CTC/ODC/ACTC, and
HOH.
When a taxpayer receives Form 1099-R with no amount entered in box 2a
and code 7 entered in box 7, the entire distribution:
Could be partly or entirely
taxable. Is never taxable.
Is an early distribution and taxable.
Has been rolled into a traditional IRA or into another qualified plan. -
ANSWER - Is never taxable.
What is the maximum amount of the American Opportunity Tax Credit a
taxpayer could receive per student?
$1,650
$1,800
$2,000
$2,500 - ANSWER - $2,500
Which test for a qualifying child does NOT need to be met in order for the
child to be a qualifying person for purposes of Earned Income Credit (EIC)?
Age.
Relationshi
p.
Residency.
Support. - ANSWER - Support.
Which of the following expenses qualifies for an education credit in 2021?
Tuition payments. The taxpayer didn't receive scholarships, grants, or other
nontaxable benefits.
Fees for an optional student
activity. Cost of student medical
fees.
Tuition payments. The taxpayer received a nontaxable grant, which
covered the entire tuition expense. - ANSWER -
Employer-provided dependent care assistance:
May be used for the Child and Dependent Care Credit.
Is subtracted from the total expenses for child or dependent care on
Form 2441. Is included in wages on Form W-2.
Is not reported to the IRS. - ANSWER -
Which of the following is NOT a percentage of social security benefits
subject to federal tax? Up to .
0%
50%
85%
100% - ANSWER - 100%
, What is the maximum amount of the lifetime learning credit?
$1,100 per return.
$1,650 per return.
$2,000 per return.
$2,500 per return. - ANSWER - $2,000 per
return. Employer-provided dependent care
assistance:
It may be used for the Child and Dependent Care Credit.
It is subtracted from the total expenses for the child or dependent care on
Form 2441. It is included in wages on Form W-2.
It is not reported to the IRS. - ANSWER -
Earned Income - ANSWER - Any income (wages/salary) that is generated by
working
Unearned Income - ANSWER - 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? -
ANSWER - If the taxpayer's name, social security number, 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.
Is interest received on U.S. Treasury obligations taxable on state and/or
local returns? - ANSWER - No. Interest on U.S. Treasury obligations is
exempt from state and local tax by federal law.
Is municipal bond interest taxable on a federal return? - ANSWER - No, the
federal government does not tax municipal bond interest.
How is interest income reported to the taxpayer? - ANSWER - Interest
income is reported to the taxpayer on Form 1099-INT or a substitute
statement.
What information do you need to know to determine whether a
nondependent taxpayer is required to file a return? - ANSWER -
For tax purposes, when is a person's marital status determined? - ANSWER -
On the last day of the tax year, or the date of death.
|| With 100% Accurate Answers
Which of the following is a requirement for all taxpayers who want to claim
the EIC? Live in the U.S. for more than half a year.
Have a valid social security number.
Have a qualifying child dependent.
Have AGI less than $21,430 ($27,380 MFJ). - ANSWER - Have a valid social
security number.
A combined due diligence penalty of $2,180 would indicate a penalty for
which of the following?
EIC, CTC/ODC/ACTC, and head of
household. EIC, AOTC, and CTC/ODC/ACTC.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
EIC, PTC, CTC/ODC/ACTC, and head of household. - ANSWER - EIC, AOTC,
CTC/ODC/ACTC, and head of household.
When dependent care benefits are withheld from a taxpayer's income,
where are they reported by the employer?
Form 2441.
Form 1040.
Box 10 of Form W-2.
The employer is not required to report them. - ANSWER - Box 10 of Form W-
2.
All of the following are due diligence requirements a tax preparer must
meet for EIC, AOTC, CTC/ODC/ACTC, and HOH, EXCEPT:
Investigate and verify the accuracy of information the taxpayer provides to
show eligibility for EIC, AOTC, CTC/ODC/ACTC, and HOH.
Complete all worksheets used to compute the credits. If the worksheet is
completed by hand, keep a copy in the taxpayer's client file.
Maintain a copy of documents provided by the taxpayer that the tax
preparer relied on when determining credit eligibility. Then record the date
the information was obtained and the name of who provided the
information.
When information provided by the taxpayer appears to be incorrect,
inconsistent, or incomplete, the tax preparer must make additional inquiries
to determine if the taxpayer is eligible for the benefit. Then document both
the questions asked and responses
,provided. - ANSWER - Investigate and verify the accuracy of information the
taxpayer provides to show eligibility for EIC, AOTC, CTC/ODC/ACTC, and
HOH.
When a taxpayer receives Form 1099-R with no amount entered in box 2a
and code 7 entered in box 7, the entire distribution:
Could be partly or entirely
taxable. Is never taxable.
Is an early distribution and taxable.
Has been rolled into a traditional IRA or into another qualified plan. -
ANSWER - Is never taxable.
What is the maximum amount of the American Opportunity Tax Credit a
taxpayer could receive per student?
$1,650
$1,800
$2,000
$2,500 - ANSWER - $2,500
Which test for a qualifying child does NOT need to be met in order for the
child to be a qualifying person for purposes of Earned Income Credit (EIC)?
Age.
Relationshi
p.
Residency.
Support. - ANSWER - Support.
Which of the following expenses qualifies for an education credit in 2021?
Tuition payments. The taxpayer didn't receive scholarships, grants, or other
nontaxable benefits.
Fees for an optional student
activity. Cost of student medical
fees.
Tuition payments. The taxpayer received a nontaxable grant, which
covered the entire tuition expense. - ANSWER -
Employer-provided dependent care assistance:
May be used for the Child and Dependent Care Credit.
Is subtracted from the total expenses for child or dependent care on
Form 2441. Is included in wages on Form W-2.
Is not reported to the IRS. - ANSWER -
Which of the following is NOT a percentage of social security benefits
subject to federal tax? Up to .
0%
50%
85%
100% - ANSWER - 100%
, What is the maximum amount of the lifetime learning credit?
$1,100 per return.
$1,650 per return.
$2,000 per return.
$2,500 per return. - ANSWER - $2,000 per
return. Employer-provided dependent care
assistance:
It may be used for the Child and Dependent Care Credit.
It is subtracted from the total expenses for the child or dependent care on
Form 2441. It is included in wages on Form W-2.
It is not reported to the IRS. - ANSWER -
Earned Income - ANSWER - Any income (wages/salary) that is generated by
working
Unearned Income - ANSWER - 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? -
ANSWER - If the taxpayer's name, social security number, 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.
Is interest received on U.S. Treasury obligations taxable on state and/or
local returns? - ANSWER - No. Interest on U.S. Treasury obligations is
exempt from state and local tax by federal law.
Is municipal bond interest taxable on a federal return? - ANSWER - No, the
federal government does not tax municipal bond interest.
How is interest income reported to the taxpayer? - ANSWER - Interest
income is reported to the taxpayer on Form 1099-INT or a substitute
statement.
What information do you need to know to determine whether a
nondependent taxpayer is required to file a return? - ANSWER -
For tax purposes, when is a person's marital status determined? - ANSWER -
On the last day of the tax year, or the date of death.
