HR BLOCK FINAL TEST (ITC) 2 VERSIONS
ACTUAL EXAM 200 QUESTIONS AND CORRECT
DETAILED ANSWERS
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.
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.
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.
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.
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
$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.
Support.
Which of the following is NOT a percentage of social security benefits subject to
federal tax? Up to __________.
0%
50%
, 85%
100%
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.
$2,000 per return.
Earned Income
Any income (wages/salary) that is generated by working
Unearned Income
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?
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
ACTUAL EXAM 200 QUESTIONS AND CORRECT
DETAILED ANSWERS
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.
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.
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.
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.
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
$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.
Support.
Which of the following is NOT a percentage of social security benefits subject to
federal tax? Up to __________.
0%
50%
, 85%
100%
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.
$2,000 per return.
Earned Income
Any income (wages/salary) that is generated by working
Unearned Income
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?
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
