HR BLOCK FINAL PAPER TESTED
QUESTIONS WITH DETAILED SOLUTIONS
STUDY MATERIAL
●● 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:
●● Which of the following is NOT a percentage of social security
benefits subject to federal tax? Up to __________.
0%
50%
85%
100%
Answer: 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.
Answer: $2,000 per return.
QUESTIONS WITH DETAILED SOLUTIONS
STUDY MATERIAL
●● 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:
●● Which of the following is NOT a percentage of social security
benefits subject to federal tax? Up to __________.
0%
50%
85%
100%
Answer: 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.
Answer: $2,000 per return.
