H&R Block Final Review Questions 2026 | 162 Verified
Q&A | Latest Update | 100% Pass Success
1. If a tax preparer fails to exercise due diligence and submits incorrect
information, what potential consequences could arise?
Immediate approval of the tax return
No consequences if the client approves the return
Legal penalties and fines
Increased tax refunds for clients
2. If a tax preparer discovers an error in a client's tax return after submission,
what due diligence action should they take?
They should correct the error and inform the client about the
necessary steps.
They should ignore the error if the client is unaware.
They should wait until the next tax season to address it.
They should only correct the error if the client requests it.
3. Describe the main difference between earned income and unearned income.
Unearned income is always less than earned income.
Earned income is taxed at a higher rate than unearned income.
Earned income can only be derived from self-employment.
Earned income comes from work or services, while unearned
income comes from investments or passive sources.
,4. In your own words, describe the importance of due diligence for tax
preparers.
Due diligence is crucial for tax preparers as it helps maintain the
integrity of the tax system by ensuring that taxpayers' information is
accurate and complete.
Due diligence is only important for tax preparers who work with high-
income clients.
Due diligence is a legal requirement that has no impact on the quality
of tax preparation.
Due diligence is primarily about maximizing deductions for clients.
5. Adjusted Gross Income (AGI) minus equals Taxable income.
The greater of the standard deductions or itemized deductions and
the qualified business income deduction.
The greater of the qualified business income deduction or itemized
deductions and the standard deduction.
The greater of the standard deduction or the qualified business
income deduction and itemized deductions.
6. Tax return information is typically confidential; disclosure of return
information is permitted to all of the following parties EXCEPT
A person designated by the taxpayer.
Congressional committees.
Relatives of the taxpayer.
State tax officials.
,7. If a tax preparer fails to maintain confidentiality and discloses a client's
information, what potential consequences could arise?
Increased client referrals
No significant consequences
Improved accuracy in tax filings
Loss of trust and potential legal repercussions
8. What is the primary function of Form 2120 in tax filing?
To apply for tax credits.
To report unearned income from investments.
To allow multiple contributors to agree on who can claim a
dependent exemption.
To correct errors on Form W-2.
9. Tax Credits are:
subtracted directly from the tax owed
added to income
added to the tax owed
deducted from income
10. What determines whether a taxpayer must file a tax return?
The number of dependents
The amount of deductions claimed
Income thresholds based on filing status and age
The type of income earned
, 11. What are some of the potential costs of owning a home? Monthly mortgage
payments, Annual property taxes, Monthly homeowners insurance premiums,
Random maintenance expenses
I, II, III, and IV
I, II, and III
II and III
II, III, and IV
12. Schedule B is required when interest income exceeds which of the following
thresholds?
Schedule B is always required
Schedule B is never required
$1000
$1500
13. Discuss the implications of breaching confidentiality in tax preparation.
Breaching confidentiality can improve the efficiency of tax filing.
Breaching confidentiality only affects the taxpayer's financial situation.
Breaching confidentiality is not a significant issue in tax preparation.
Breaching confidentiality can lead to loss of trust and potential
legal consequences for the tax preparer.
14. Describe the significance of the support test in determining a qualifying
child for tax purposes.
The support test applies only to children under 18.
The support test only considers the child's income.
Q&A | Latest Update | 100% Pass Success
1. If a tax preparer fails to exercise due diligence and submits incorrect
information, what potential consequences could arise?
Immediate approval of the tax return
No consequences if the client approves the return
Legal penalties and fines
Increased tax refunds for clients
2. If a tax preparer discovers an error in a client's tax return after submission,
what due diligence action should they take?
They should correct the error and inform the client about the
necessary steps.
They should ignore the error if the client is unaware.
They should wait until the next tax season to address it.
They should only correct the error if the client requests it.
3. Describe the main difference between earned income and unearned income.
Unearned income is always less than earned income.
Earned income is taxed at a higher rate than unearned income.
Earned income can only be derived from self-employment.
Earned income comes from work or services, while unearned
income comes from investments or passive sources.
,4. In your own words, describe the importance of due diligence for tax
preparers.
Due diligence is crucial for tax preparers as it helps maintain the
integrity of the tax system by ensuring that taxpayers' information is
accurate and complete.
Due diligence is only important for tax preparers who work with high-
income clients.
Due diligence is a legal requirement that has no impact on the quality
of tax preparation.
Due diligence is primarily about maximizing deductions for clients.
5. Adjusted Gross Income (AGI) minus equals Taxable income.
The greater of the standard deductions or itemized deductions and
the qualified business income deduction.
The greater of the qualified business income deduction or itemized
deductions and the standard deduction.
The greater of the standard deduction or the qualified business
income deduction and itemized deductions.
6. Tax return information is typically confidential; disclosure of return
information is permitted to all of the following parties EXCEPT
A person designated by the taxpayer.
Congressional committees.
Relatives of the taxpayer.
State tax officials.
,7. If a tax preparer fails to maintain confidentiality and discloses a client's
information, what potential consequences could arise?
Increased client referrals
No significant consequences
Improved accuracy in tax filings
Loss of trust and potential legal repercussions
8. What is the primary function of Form 2120 in tax filing?
To apply for tax credits.
To report unearned income from investments.
To allow multiple contributors to agree on who can claim a
dependent exemption.
To correct errors on Form W-2.
9. Tax Credits are:
subtracted directly from the tax owed
added to income
added to the tax owed
deducted from income
10. What determines whether a taxpayer must file a tax return?
The number of dependents
The amount of deductions claimed
Income thresholds based on filing status and age
The type of income earned
, 11. What are some of the potential costs of owning a home? Monthly mortgage
payments, Annual property taxes, Monthly homeowners insurance premiums,
Random maintenance expenses
I, II, III, and IV
I, II, and III
II and III
II, III, and IV
12. Schedule B is required when interest income exceeds which of the following
thresholds?
Schedule B is always required
Schedule B is never required
$1000
$1500
13. Discuss the implications of breaching confidentiality in tax preparation.
Breaching confidentiality can improve the efficiency of tax filing.
Breaching confidentiality only affects the taxpayer's financial situation.
Breaching confidentiality is not a significant issue in tax preparation.
Breaching confidentiality can lead to loss of trust and potential
legal consequences for the tax preparer.
14. Describe the significance of the support test in determining a qualifying
child for tax purposes.
The support test applies only to children under 18.
The support test only considers the child's income.
