H&R BLOCK VIRTUAL INCOME TAX COURSE EXAM
ACTUAL QUESTIONS AND ANSWERS - LATEST AND
COMPLETE UPDATE WITH VERIFIED SOLUTIONS –
ASSURED PASS WITH INSTANT DOWNLOAD PDF.
1. Which of the following is considered taxable income for federal income tax
purposes?
A. Gifts received from a friend
B. Wages earned from employment
C. Life insurance proceeds received upon death of a parent
D. Child support payments
Rationale: Wages are considered taxable income under IRS guidelines.
Gifts, child support, and life insurance proceeds are generally not taxable.
2. John received a $1,000 bonus from his employer in December. For which
tax year should this income be reported?
A. The year he was promised the bonus
B. The year he received the bonus
C. The year his employer accrued the expense
D. The year he deposited it into a savings account
Rationale: The IRS requires income to be reported in the year it is actually
received (constructive receipt).
3. A taxpayer files as Head of Household. Which condition must be met?
A. Married and living apart from spouse for at least six months
B. Unmarried and paying more than half the cost of keeping up a home
for a qualifying dependent
C. Any unmarried individual with a dependent child
D. Single parent with custody of a child regardless of expenses
Rationale: Head of Household filing status requires the taxpayer to be
, unmarried and pay more than 50% of household costs for a qualifying
dependent.
4. Which form is used by employers to report wages and taxes withheld?
A. Form 1099-MISC
B. Form W-2
C. Form 1040
D. Form 1098
Rationale: Employers issue Form W-2 to report wages, tips, and other
compensation along with taxes withheld.
5. Which expense is deductible as a medical expense on Schedule A?
A. Gym membership
B. Cosmetic surgery for appearance
C. Prescription medication
D. Vitamins purchased without prescription
Rationale: Only medical expenses necessary to treat a medical condition are
deductible; cosmetic and general wellness expenses are not.
6. Which of the following qualifies for the Earned Income Tax Credit (EITC)?
A. A 22-year-old student with no income
B. A retired individual receiving Social Security
C. A single parent with earned income below the threshold
D. A taxpayer with investment income exceeding the limit
Rationale: EITC is available to low-to-moderate-income workers, especially
those with qualifying children, and subject to earned income and investment
income limits.
7. Michael sold stock for a gain of $2,500 held for 10 months. How is this gain
classified?
A. Long-term capital gain
, B. Short-term capital gain
C. Qualified dividend
D. Ordinary income
Rationale: Assets held for less than one year are considered short-term
capital gains and taxed at ordinary income rates.
8. Which of the following is not a requirement for a dependent child?
A. Must be under age 19 at year-end or under 24 if a full-time student
B. Must live with the taxpayer for more than half the year
C. Must provide more than half of their own support
D. Must be related to the taxpayer
Rationale: To claim a dependent child, the child cannot provide more than
half of their own support, but relationship and residency requirements must
be met.
9. Which tax form is used to report self-employment income?
A. Form 1040-EZ
B. W-2
C. Form 1099-INT
D. Schedule C (Form 1040)
Rationale: Self-employed taxpayers report income and expenses using
Schedule C.
10.A taxpayer contributes $5,000 to a traditional IRA. What is the immediate
effect on taxable income?
A. No effect
B. Reduces taxable income by $5,000
C. Increases taxable income by $5,000
D. Only affects state taxes
, Rationale: Traditional IRA contributions may be deductible, lowering
taxable income for the year contributed.
11.Which of the following is an example of tax fraud?
A. Claiming the Child Tax Credit for a qualifying child
B. Reporting income from a side job
C. Intentionally underreporting income to reduce taxes owed
D. Filing an extension to submit a return
Rationale: Tax fraud involves willful misrepresentation of income,
deductions, or credits to evade tax.
12.For which income source is the Form 1099-INT issued?
A. Wages from employer
B. Interest income from a bank account
C. Dividends from stock
D. Self-employment income
Rationale: Financial institutions issue Form 1099-INT to report interest
income earned by the account holder.
13.Which of the following is eligible for the American Opportunity Tax Credit
(AOTC)?
A. Tuition for graduate school
B. Non-credit online courses
C. First four years of post-secondary education
D. Room and board expenses
Rationale: AOTC applies to the first four years of higher education for
tuition and qualified fees, not living expenses or graduate studies.
14.What is the standard deduction for a single filer in tax year 2025?
A. $12,000
B. $13,850
ACTUAL QUESTIONS AND ANSWERS - LATEST AND
COMPLETE UPDATE WITH VERIFIED SOLUTIONS –
ASSURED PASS WITH INSTANT DOWNLOAD PDF.
1. Which of the following is considered taxable income for federal income tax
purposes?
A. Gifts received from a friend
B. Wages earned from employment
C. Life insurance proceeds received upon death of a parent
D. Child support payments
Rationale: Wages are considered taxable income under IRS guidelines.
Gifts, child support, and life insurance proceeds are generally not taxable.
2. John received a $1,000 bonus from his employer in December. For which
tax year should this income be reported?
A. The year he was promised the bonus
B. The year he received the bonus
C. The year his employer accrued the expense
D. The year he deposited it into a savings account
Rationale: The IRS requires income to be reported in the year it is actually
received (constructive receipt).
3. A taxpayer files as Head of Household. Which condition must be met?
A. Married and living apart from spouse for at least six months
B. Unmarried and paying more than half the cost of keeping up a home
for a qualifying dependent
C. Any unmarried individual with a dependent child
D. Single parent with custody of a child regardless of expenses
Rationale: Head of Household filing status requires the taxpayer to be
, unmarried and pay more than 50% of household costs for a qualifying
dependent.
4. Which form is used by employers to report wages and taxes withheld?
A. Form 1099-MISC
B. Form W-2
C. Form 1040
D. Form 1098
Rationale: Employers issue Form W-2 to report wages, tips, and other
compensation along with taxes withheld.
5. Which expense is deductible as a medical expense on Schedule A?
A. Gym membership
B. Cosmetic surgery for appearance
C. Prescription medication
D. Vitamins purchased without prescription
Rationale: Only medical expenses necessary to treat a medical condition are
deductible; cosmetic and general wellness expenses are not.
6. Which of the following qualifies for the Earned Income Tax Credit (EITC)?
A. A 22-year-old student with no income
B. A retired individual receiving Social Security
C. A single parent with earned income below the threshold
D. A taxpayer with investment income exceeding the limit
Rationale: EITC is available to low-to-moderate-income workers, especially
those with qualifying children, and subject to earned income and investment
income limits.
7. Michael sold stock for a gain of $2,500 held for 10 months. How is this gain
classified?
A. Long-term capital gain
, B. Short-term capital gain
C. Qualified dividend
D. Ordinary income
Rationale: Assets held for less than one year are considered short-term
capital gains and taxed at ordinary income rates.
8. Which of the following is not a requirement for a dependent child?
A. Must be under age 19 at year-end or under 24 if a full-time student
B. Must live with the taxpayer for more than half the year
C. Must provide more than half of their own support
D. Must be related to the taxpayer
Rationale: To claim a dependent child, the child cannot provide more than
half of their own support, but relationship and residency requirements must
be met.
9. Which tax form is used to report self-employment income?
A. Form 1040-EZ
B. W-2
C. Form 1099-INT
D. Schedule C (Form 1040)
Rationale: Self-employed taxpayers report income and expenses using
Schedule C.
10.A taxpayer contributes $5,000 to a traditional IRA. What is the immediate
effect on taxable income?
A. No effect
B. Reduces taxable income by $5,000
C. Increases taxable income by $5,000
D. Only affects state taxes
, Rationale: Traditional IRA contributions may be deductible, lowering
taxable income for the year contributed.
11.Which of the following is an example of tax fraud?
A. Claiming the Child Tax Credit for a qualifying child
B. Reporting income from a side job
C. Intentionally underreporting income to reduce taxes owed
D. Filing an extension to submit a return
Rationale: Tax fraud involves willful misrepresentation of income,
deductions, or credits to evade tax.
12.For which income source is the Form 1099-INT issued?
A. Wages from employer
B. Interest income from a bank account
C. Dividends from stock
D. Self-employment income
Rationale: Financial institutions issue Form 1099-INT to report interest
income earned by the account holder.
13.Which of the following is eligible for the American Opportunity Tax Credit
(AOTC)?
A. Tuition for graduate school
B. Non-credit online courses
C. First four years of post-secondary education
D. Room and board expenses
Rationale: AOTC applies to the first four years of higher education for
tuition and qualified fees, not living expenses or graduate studies.
14.What is the standard deduction for a single filer in tax year 2025?
A. $12,000
B. $13,850
