HR BLOCK Final Test Review (ITC
2025)Latest Update
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.
Relationship.
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
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.
How much is added to the standard deduction if the taxpayer (or spouse) is age 65 or
older, or blind? - ANSWER $1,350 for married taxpayers and qualifying widow(er)s, or
$1,700 for those filing single or head of household.
, What is the personal exemption amount for 2021? - ANSWER There is no personal
exemption for 2021. 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 nondependent
taxpayers? - ANSWER The taxpayer's standard deduction, including the additional
amounts for age. However, for married filing separately, or married filing jointly when the
spouses did not live together at the end of the year, the amount is $5.
What is the difference between injured spouse allocation and innocent spouse relief? -
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,
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 document will the taxpayer receive from their employer reporting disability pension
payments? - ANSWER The income is reported on Form 1099-R.
What types of income must be reported on Schedule 1 (Form 1040) and then reported
on Form 1040? - ANSWER Gambling winnings, alimony, jury duty pay, canceled debts,
and hobby income are some examples of income that must be reported on Schedule 1
(Form 1040) and then reported on Form 1040.
What are the adjustments that can be claimed on Schedule 1 (Form 1040)? - ANSWER
Some examples of adjustments that can be claimed on Schedule 1 are:
Educator expense deduction.
The health savings account (HSA) deduction.
Moving expenses for members of the military.
Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty on early withdrawal of savings.
Alimony payments.
IRA deduction.
Student loan interest deduction.
How much may an eligible educator deduct for qualified classroom expenses as an
adjustment to income? - ANSWER Up to $250 per eligible educator.
Married taxpayers filing a joint return who are both eligible educators may each claim
the $250 deduction, totaling $500.
2025)Latest Update
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.
Relationship.
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
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.
How much is added to the standard deduction if the taxpayer (or spouse) is age 65 or
older, or blind? - ANSWER $1,350 for married taxpayers and qualifying widow(er)s, or
$1,700 for those filing single or head of household.
, What is the personal exemption amount for 2021? - ANSWER There is no personal
exemption for 2021. 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 nondependent
taxpayers? - ANSWER The taxpayer's standard deduction, including the additional
amounts for age. However, for married filing separately, or married filing jointly when the
spouses did not live together at the end of the year, the amount is $5.
What is the difference between injured spouse allocation and innocent spouse relief? -
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,
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 document will the taxpayer receive from their employer reporting disability pension
payments? - ANSWER The income is reported on Form 1099-R.
What types of income must be reported on Schedule 1 (Form 1040) and then reported
on Form 1040? - ANSWER Gambling winnings, alimony, jury duty pay, canceled debts,
and hobby income are some examples of income that must be reported on Schedule 1
(Form 1040) and then reported on Form 1040.
What are the adjustments that can be claimed on Schedule 1 (Form 1040)? - ANSWER
Some examples of adjustments that can be claimed on Schedule 1 are:
Educator expense deduction.
The health savings account (HSA) deduction.
Moving expenses for members of the military.
Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty on early withdrawal of savings.
Alimony payments.
IRA deduction.
Student loan interest deduction.
How much may an eligible educator deduct for qualified classroom expenses as an
adjustment to income? - ANSWER Up to $250 per eligible educator.
Married taxpayers filing a joint return who are both eligible educators may each claim
the $250 deduction, totaling $500.
