HRB Final Exam Study Guide | 100% Correct Answers | Verified | Latest 2024 Version,

What is the difference between earned income and unearned income? - Earned income is received for services performed. Some examples of earned income include wages, commissions, tips, farming, and other business income. Unearned income is taxable income that does not meet the definition of earned income. Examples of 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, or 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. What information do you need to know to determine whether a taxpayer is required to file a return? - The taxpayer's marital status, age at the end of the tax year, gross income for the year, and if the taxpayer is a dependent. For tax purposes, when is a person's marital status determined? - On the last day of the tax year. Where on the tax form can you find the regular standard deduction amounts? - In the left-hand margin at the top of page 2 of Form 1040. They are: single and married filing separately, $12,000; married filing jointly and qualifying widow(er), $24,000; and head of household, $18,000. How much is added to the standard deduction if the taxpayer (or spouse) is age 65 or older, or blind? - $1,300 for married taxpayers and qualifying widow(er)s, or $1,600 for all other unmarried taxpayers, is added for each condition.What is the personal exemption amoun