H&R Block Income Tax Course Final Test || Complete Questions & Answers (Graded A+)

H&R Block Income Tax Course Final Test || Complete Questions & Answers (Graded A+) H&R Block Income Tax Course Final Test || Complete Questions & Answers (Graded A+) Due Diligence - ANSWER - Requirements that tax professionals must follow when preparing income tax returns. Estimated Tax - 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 - 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 - ANSWER - Status claimed on Form W-4 directing the employer not to withhold federal income taxes from the employee. Underpayment Penalty - 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 - ANSWER - Withholding and Estimated Tax Payments Form W-4 - ANSWER - Employee's Withholding Allowance Certificate Form 4868 - ANSWER - Application for Automatic Extension of Time To File U.S. Individual Income Tax Return Amended Return - ANSWER - A tax return filed on Form 1040X after the original return has been filed. Closed Year - ANSWER - A tax year for which the statute of limitations has expired. Open Year - ANSWER - A taxable year for which the statute of limitations has not yet expired. Failure-to-File Penalty - 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 - ANSWER - Taxpayer fails to file the return by the due date, and there is a balance due. Form 1040X - ANSWER - Amended U.S. Individual Income Tax Return When can an amended return be filed? - 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? - ANSWER - No. Portfolio Income and Losses - ANSWER - Those from such sources as dividends, interest, capital gains and losses, and royalties. Schedule E - ANSWER - Supplemental Income and Loss Royalty - 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 - ANSWER - A series of payments under a contract made at regular intervals over a period of more than one year. Beneficiary - ANSWER - The owner or recipient of funds in an account, such as an IRA, or from an insurance policy or will. Contribution - ANSWER - When a person puts money into a retirement plan. Defined Benefit Plan - ANSWER - An employee benefit plan that provides determinable benefits not based on employer profits. Defined Contribution Plan - ANSWER - An employee benefit plan that provides a separate account for each person covered and pays benefits based on account earnings. Disability Pension - ANSWER - A taxable pension from an employer-funded disability plan or a disability provision of a retirement plan. Distribution - ANSWER - When a person takes or receives money from a retirement plan. Pension - ANSWER - Generally a series of definitely determinable payments made to a taxpayer after retirement from work. Rollover - ANSWER - A qualified transfer of funds from one tax-favored account to another, usually of the same type. Roth IRA - 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 - 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? - 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? - ANSWER - Up to 85%. Form SSA-1099 - ANSWER - Social Security Benefits Form RRB-1099 - ANSWER - Railroad Retirement Benefits None of Social Security Benefits Taxable - ANSWER - Single, Head of Household, Qualified Widow - $0-$25,000; Married Filing Jointly - $0-$32,000 Up to 50% of Social Security Benefits Taxable - 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 - ANSWER - Single, Head of Household, Qualified Widow - $34,001+; Married Filing Jointly - $44,001+; Married Filing Single - $1+ Fully Taxable Pension - 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 - ANSWER - Those pensions funded through employer plans to which the employee contributed some after-tax money. Form 1099-R - ANSWER - Distributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc. Exceptions to the Early Withdrawal Penalty - 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. 10 - The distribution was made due to an IRS levy of the qualified plan. 11 - The distribution was made to a reservist while serving on active duty for at least 180 days. 12 - Other.