HR Block Exam 2026 Question and Answer |
Newest Previously Tested Scripts | Verified
Solutions | A+ Verified
• 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 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. -✓✓
• 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. -✓✓
• 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.
• 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. -✓✓
• 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 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?
-✓✓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? -✓✓No, the federal government
does not tax municipal bond interest.
• How is interest income reported to the taxpayer? -✓✓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? -✓✓
• For tax purposes, when is a person's marital status determined? -✓✓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? -✓✓$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? -✓✓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? -✓✓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? -
✓✓The IRS provides an injured spouse allocation for the taxpayer to protect their
Newest Previously Tested Scripts | Verified
Solutions | A+ Verified
• 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 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. -✓✓
• 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. -✓✓
• 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.
• 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. -✓✓
• 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 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?
-✓✓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? -✓✓No, the federal government
does not tax municipal bond interest.
• How is interest income reported to the taxpayer? -✓✓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? -✓✓
• For tax purposes, when is a person's marital status determined? -✓✓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? -✓✓$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? -✓✓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? -✓✓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? -
✓✓The IRS provides an injured spouse allocation for the taxpayer to protect their
