HR Block Chapter 1 Exam Questions and Answers

HR Block Chapter 1 Exam Questions and Answers Adjusted Gross Income (AGI) - ANS ️️ Adjusted gross income equals gross income less reductions that are allowable, regardless of whether personal deductions are itemized. Credits - ANS ️️ A direct reduction of tax liability allowed for various purposes to taxpayers who meet the qualifications. Some credits are refundable; that is, the IRS will send the taxpayer a refund for any amount in excess of the tax liability. Some credits are nonrefundable; that is, they can only reduce tax liability to zero. Some credits may be carried to other tax years. Deductions - ANS ️️ Amounts that may be subtracted from income that is otherwise taxable. Earned Income - ANS ️️ Income from personal services as distinguished from income generated by property or other sources. Earned income includes all amounts received as wages, tips, bonuses, other employee compensation, and self- employment income, whether in the form of money, services, or property. Exemption - ANS ️️ An amount ($4,050 for 2017) allowed by law as a reduction of income that would otherwise be taxed. See also Personal and Dependency Exemptions. Federal Income Tax Withheld - ANS ️️ The amount taken out of income by the payer and submitted to the IRS as an advance payment of the taxpayer's federal income tax.