H&R Block Income Tax Course
Due Diligence - correct answer Requirements that tax professionals must follow when preparing income
tax returns.
Estimated Tax - correct answer The amount of tax a taxpayer expects to owe for the year after
subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - correct answer A statement by an individual of (1) the amount of income tax he
estimates he will incur during the current taxable year on income that is not subject to withholding, (2)
the excess amount over that withheld on income which is subject to withholding, and (3) his estimated
self-employment tax.
Exemption from Withholding - correct answer Status claimed on Form W-4 directing the employer not to
withhold federal income taxes from the employee.
Underpayment Penalty - correct answer If a taxpayer did not pay enough tax on a timely basis during the
year, he may be required to pay an underpayment penalty.
Two Ways to Pay as You Go - correct answer Withholding and Estimated Tax Payments
Form W-4 - correct answer Employee's Withholding Allowance Certificate
Form 4868 - correct answer Application for Automatic Extension of Time To File U.S. Individual Income
Tax Return
Amended Return - correct answer A tax return filed on Form 1040X after the original return has been
filed.
Closed Year - correct answer A tax year for which the statute of limitations has expired.
,Open Year - correct answer A taxable year for which the statute of limitations has not yet expired.
Failure-to-File Penalty - correct answer Generally 5% for each month or part of a month the return is
late, but not more than 25% of the tax not paid.
Failure to File - correct answer Taxpayer fails to file the return by the due date, and there is a balance
due.
Form 1040X - correct answer Amended U.S. Individual Income Tax Return
When can an amended return be filed? - correct answer Within three years of the date the original
return was filed, or within two years of the date the tax was paid, whichever is later.
Can the 1040X be e-filed? - correct answer No.
Portfolio Income and Losses - correct answer Those from such sources as dividends, interest, capital
gains and losses, and royalties.
Schedule E - correct answer Supplemental Income and Loss
Royalty - correct answer Payments received for the right to extract natural resources from the taxpayer's
property or to use a taxpayer's literary, musical, or artistic creation.
Annuity - correct answer A series of payments under a contract made at regular intervals over a period
of more than one year.
Beneficiary - correct answer The owner or recipient of funds in an account, such as an IRA, or from an
insurance policy or will.
Contribution - correct answer When a person puts money into a retirement plan.
,Defined Benefit Plan - correct answer An employee benefit plan that provides determinable benefits not
based on employer profits.
Defined Contribution Plan - correct answer An employee benefit plan that provides a separate account
for each person covered and pays benefits based on account earnings.
Disability Pension - correct answer A taxable pension from an employer-funded disability plan or a
disability provision of a retirement plan.
Distribution - correct answer When a person takes or receives money from a retirement plan.
Pension - correct answer Generally a series of definitely determinable payments made to a taxpayer
after retirement from work.
Rollover - correct answer A qualified transfer of funds from one tax-favored account to another, usually
of the same type.
Roth IRA - correct answer A type of individual retirement arrangement in which contributions are not tax
deductible, earnings grow tax deferred, and qualified withdrawals are tax free.
Traditional IRA - correct answer An individual retirement arrangement, contributions to which may or
may not be deductible depending on the taxpayer's AGI and whether or not he is covered under an
employer-sponsored retirement plan.
What is the full retirement age? - correct answer For workers born before 1938, it is 65. For those born
after it is gradually being increased to 67.
How much of a client's social security and equivalent tier 1 RR benefits may be taxable? - correct answer
Up to 85%.
Form SSA-1099 - correct answer Social Security Benefits
, Form RRB-1099 - correct answer Railroad Retirement Benefits
None of Social Security Benefits Taxable - correct answer Single, Head of Household, Qualified Widow -
$0-$25,000; Married Filing Jointly - $0-$32,000
Up to 50% of Social Security Benefits Taxable - correct answer Single, Head of Household, Qualified
Widow - $25,001-$34,000; Married Filing Jointly - $32,001-$44,000
Up to 85% of Social Security Benefits Taxable - correct answer Single, Head of Household, Qualified
Widow - $34,001+; Married Filing Jointly - $44,001+; Married Filing Single - $1+
Fully Taxable Pension - correct answer Pensions to which the taxpayer did not make after-tax
contributions or from which all pre-tax amounts have been recovered in previous years.
Partly Taxable Pensions - correct answer Those pensions funded through employer plans to which the
employee contributed some after-tax money.
Form 1099-R - correct answer Distributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans,
IRAs, Insurance Contracts, Etc.
Exceptions to the Early Withdrawal Penalty - correct answer 01 - The distribution was made to an
employee who separated from service during or after the year in which they reached age 55.
02 - The distribution is part of a series of substantially equal periodic payments, made at least annually
for the life of the participant or the life expenctancy of the participant.
03 - The distribution was made due to permanent and total disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical expenses exceeds 7.5% of AGI.
06 - The distribution was made to an alternate payee under a qualified domestic relations order.
07 - The distribution was made in a year an unemployed taxpayer paid health insurance premiums.
08 - The distribution was made to pay qualified higher education expenses for the taxpayer, spouse, their
child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-buying expenses.
Due Diligence - correct answer Requirements that tax professionals must follow when preparing income
tax returns.
Estimated Tax - correct answer The amount of tax a taxpayer expects to owe for the year after
subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - correct answer A statement by an individual of (1) the amount of income tax he
estimates he will incur during the current taxable year on income that is not subject to withholding, (2)
the excess amount over that withheld on income which is subject to withholding, and (3) his estimated
self-employment tax.
Exemption from Withholding - correct answer Status claimed on Form W-4 directing the employer not to
withhold federal income taxes from the employee.
Underpayment Penalty - correct answer If a taxpayer did not pay enough tax on a timely basis during the
year, he may be required to pay an underpayment penalty.
Two Ways to Pay as You Go - correct answer Withholding and Estimated Tax Payments
Form W-4 - correct answer Employee's Withholding Allowance Certificate
Form 4868 - correct answer Application for Automatic Extension of Time To File U.S. Individual Income
Tax Return
Amended Return - correct answer A tax return filed on Form 1040X after the original return has been
filed.
Closed Year - correct answer A tax year for which the statute of limitations has expired.
,Open Year - correct answer A taxable year for which the statute of limitations has not yet expired.
Failure-to-File Penalty - correct answer Generally 5% for each month or part of a month the return is
late, but not more than 25% of the tax not paid.
Failure to File - correct answer Taxpayer fails to file the return by the due date, and there is a balance
due.
Form 1040X - correct answer Amended U.S. Individual Income Tax Return
When can an amended return be filed? - correct answer Within three years of the date the original
return was filed, or within two years of the date the tax was paid, whichever is later.
Can the 1040X be e-filed? - correct answer No.
Portfolio Income and Losses - correct answer Those from such sources as dividends, interest, capital
gains and losses, and royalties.
Schedule E - correct answer Supplemental Income and Loss
Royalty - correct answer Payments received for the right to extract natural resources from the taxpayer's
property or to use a taxpayer's literary, musical, or artistic creation.
Annuity - correct answer A series of payments under a contract made at regular intervals over a period
of more than one year.
Beneficiary - correct answer The owner or recipient of funds in an account, such as an IRA, or from an
insurance policy or will.
Contribution - correct answer When a person puts money into a retirement plan.
,Defined Benefit Plan - correct answer An employee benefit plan that provides determinable benefits not
based on employer profits.
Defined Contribution Plan - correct answer An employee benefit plan that provides a separate account
for each person covered and pays benefits based on account earnings.
Disability Pension - correct answer A taxable pension from an employer-funded disability plan or a
disability provision of a retirement plan.
Distribution - correct answer When a person takes or receives money from a retirement plan.
Pension - correct answer Generally a series of definitely determinable payments made to a taxpayer
after retirement from work.
Rollover - correct answer A qualified transfer of funds from one tax-favored account to another, usually
of the same type.
Roth IRA - correct answer A type of individual retirement arrangement in which contributions are not tax
deductible, earnings grow tax deferred, and qualified withdrawals are tax free.
Traditional IRA - correct answer An individual retirement arrangement, contributions to which may or
may not be deductible depending on the taxpayer's AGI and whether or not he is covered under an
employer-sponsored retirement plan.
What is the full retirement age? - correct answer For workers born before 1938, it is 65. For those born
after it is gradually being increased to 67.
How much of a client's social security and equivalent tier 1 RR benefits may be taxable? - correct answer
Up to 85%.
Form SSA-1099 - correct answer Social Security Benefits
, Form RRB-1099 - correct answer Railroad Retirement Benefits
None of Social Security Benefits Taxable - correct answer Single, Head of Household, Qualified Widow -
$0-$25,000; Married Filing Jointly - $0-$32,000
Up to 50% of Social Security Benefits Taxable - correct answer Single, Head of Household, Qualified
Widow - $25,001-$34,000; Married Filing Jointly - $32,001-$44,000
Up to 85% of Social Security Benefits Taxable - correct answer Single, Head of Household, Qualified
Widow - $34,001+; Married Filing Jointly - $44,001+; Married Filing Single - $1+
Fully Taxable Pension - correct answer Pensions to which the taxpayer did not make after-tax
contributions or from which all pre-tax amounts have been recovered in previous years.
Partly Taxable Pensions - correct answer Those pensions funded through employer plans to which the
employee contributed some after-tax money.
Form 1099-R - correct answer Distributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans,
IRAs, Insurance Contracts, Etc.
Exceptions to the Early Withdrawal Penalty - correct answer 01 - The distribution was made to an
employee who separated from service during or after the year in which they reached age 55.
02 - The distribution is part of a series of substantially equal periodic payments, made at least annually
for the life of the participant or the life expenctancy of the participant.
03 - The distribution was made due to permanent and total disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical expenses exceeds 7.5% of AGI.
06 - The distribution was made to an alternate payee under a qualified domestic relations order.
07 - The distribution was made in a year an unemployed taxpayer paid health insurance premiums.
08 - The distribution was made to pay qualified higher education expenses for the taxpayer, spouse, their
child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-buying expenses.
