HRB FINAL EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
What gis gthe gDifference gbetween gearned gincome gand gunearned gincome? g-
g✔✔Earned gincome gis greceived gfor gservices gperformed. gExamples gare gwages
gcommissions, gtips gand ggenerally gfarming gand gother gbusiness gincome g. gTaxable
gincome gother gthan gthat greceived gfor gservices gperformed. gUnearned gIncome
gincludes gmoney greceived gro gthe ginvestment gof gmoney gor gother gproperty, gsuch gas
ginterest, gdividends, gand groyalties. gIt galso gincludes gpensions galimony,
gunemployment gcompensation gand gother gincome gthat gis gnot gearned
If gan gemployee gthinks gtheir gForm gW2 gis gincorrect, gwhat gshould gthey gdo? g-
g✔✔Employee gshould gdiscuss gwith gemployer gwho gissued gthe gdocument gand
grequest ga gW2C. gIf gno ghelp gfrom gemployer, gnotify gIRS. gTax gprepaper gcan gthen
gfile ga gsubstitute.
What ginformation gdo gyou gneed gto gknow gto gdetermine gwhether ga gtaxpayer gis
grequired gto gfile ga greturn? g- g✔✔Gross gincome, gfiling gstatus, gage gand gif gthey gare
ga gdependent
For gtax gpurposes, gwhen gis ga gperson's gmarital gstatus gdetermined? g- g✔✔On gthe
glast gday gof gthe gtax gyear
Where gon gthe gtax gform gcan gyou gfind gthe gregular gstandard gdeduction gamounts? g-
g✔✔Line g22 gon g1040A, gIn gthe gleft gmargin gat gthe gtop gof gthe gpage g2 gof gforms
g1040 gand g1040A. gLook gat gactual gform gto glook gfor gline
How gmuch gis gadded gto gthe gstandard gdeduction gif gthe gtaxpayer g(or gspouse gis gage
g65 gor golder, gor gblind? g- g✔✔$1550 gif gunmarried, g$1250 gif gmarried
What gis gthe gpersonal gexemption gamount gfor g2016? g- g✔✔$4,050
What gtwo gamounts gare gcombined gto gmake gup gthe ggross gincome gfiling
grequirments gfor gmost gtaxpayers? g- g✔✔The gstandard gdeduction gand gthe gpersonal
gexemption gamounts
Under gwhat gcircumstances gmight ga gtaxpayer gbe grequired gto gfile ga greturn geven
gthough gthey gdo gnot gmeet gthe ggross gincome gfiling grequirements? g- g✔✔1. gHas gnet
gemployment gof g$400 gor gmore gnet gself gemployment g2. gYou ghad gunemployment
gincome gyou gowe gmedicare gAdvantage gMSA, greceive gHAS, gArcher, gMSA g3.
,gReeived gan gAdvanced gPremium gTax gcredit geven gif gthey gdidn't gotherwise ghave ga
gfiling grequirment gfor gthe gyear g*Tips, gHSA, gSE g$400, gPTC
What gis gthe gdifference gbetween ginjured gspouse gallocation gand ginnocent gspouse
grelief? g- g✔✔The gdifference gbetween ginjured gspouse gand ginnocent gspouse gis
gsignificant gin gthe geyes gof gthe gIRS. gBoth grelease gyou gfrom gan gincome gtax gliability
garising gfrom ga g"married gfiling gjointly" greturn gbut gdifferent goutcomes. gInnocent
gspouse gfiled ga gjoint greturn gbyt gwas gunaware gthat gtheir gspouse gdeliberately gunder
greported gtax gliability. gInjured gspouse gseeks gto gprotect ghis gor gher gshare gof gthe
grefund gin gcase git ggets gseized gor goffset gdue gto gthe gother gspouse's gdebts gor
gunpaid gobligations
CHAPTER g3: gDEPENDENT gEXEMPTIONS gAND gSUPPORT g- g✔✔
What gfour grequirements gmust gbe gmet gfor gan gindividual gto gbe gclaimed gas ga
gdependent g- g✔✔Must gpass gthe gdependent gtest, gjoint greturn gtest, gcitizenship,
gqualifying gchild gor grelative
What gare gthe gfive gtests gfor ga gqualifying gchild? g- g✔✔1. gRelationship g2. gAge g3.
gResidency g4. gSupport g5. gJoint gReturn
How gcan ga gmarried gindividual gmeet gthe gjoint greturn gtest gto gremain ga gqualifying
gchild? g- g✔✔They gcan gmeet gthis gtest gby gnot gfiling ga gjoint greturn gwith gtheir
gspouse gor gthey gcan gfile ga gjoint greturn gwith gtheir gspouse gif gthey gare gfiling gonly gto
gclaim ga grefund gon gany gtaxes gwithheld
How gcan gyou gdetermine gwho gpaid gmore gthan ghalf gof ga gperson's gsupport? g-
g✔✔Total gsupport gis gdetermined gand greduced gby gthe gfunds greceived gby gand gfor
gthe gperson gfrom gall gsources gother gthan gthe gtaxpaer. gThe gremaining gsupport gis
gconsidered gto gbe gprovided gby gthe gtaxpayer. gOther gsources gmight ginclude
ggovernment gsupport gWorksheet gfor gDetermining gSupport
What ghappens gif gan gindividual gis ga gqualifying gchild gof gmore gthan gone gtaxpayer? g-
g✔✔Generally, gthe gcustodial gparent gis gthe gone gin gwhich gthe gchild gspent gthe gmost
gnights
What ghappens gwhen gmore gthan gone gtaxpayer gclaims gthe gsame gqualifying gchild? g-
g✔✔Tie gBreaker gRules gapply g: g1. gThe gparent, gif gonly gone gof gthe gpersons gis gthe
gchilds gparent g2. gThe gparent gwith gwhom gthe gchild glived gthe glongest gduring gthe
gtax g3. gThe gparents gwith gthe ghighest gAGI gif gno gparent gcan gclaim gthe gchild gas ga
gqualifying gchild
What gfour gtests gmust gbe gmet gfor gan gindividual gto gbe gconsidered ga gqualifying
grelative? g- g✔✔1. gNot gbe ga gqualifying gchild, gthe gperson gcannot gbe gthe gtaxpayers
gqualifying gchild gor gthe gqualifying gchild gof ganother gtaxpayer g2. gRelationship: gChild,
gbrother, gsister, gstep gsister, gstep gbrother, gstep gfather g, gstep gmother, gin-laws g3.
, gGross gIncome: ggross gincome gmust gbe gless gthan g$4050 g4. gSupport: gTaxpayer
gmust gprovide gmore gthan ghalf gthe gsupport
How gcan gthe ggross gincome gfor ga gqualifying grelative gtest gbe gsatisfied? g- g✔✔Gross
gincome gmust gbe gless gthan g$4050 g(Do gnot ginclude gtax gexempt gincome)
What gis gthe gpurpose gof gForm g2120 gMultiple gSupport gDeclaration? g- g✔✔You gonly
gneed g2120 gmultiple gsupport gdeclaration gif gyou gare gclaiming gsomeone gother gthan
ga gqualifying gchild gas ga gdependent gand gthere gare gtwo gor gmore gpeople gincluding
gyourself gwho gprovide gsupport gfor gthe gdependent
How gmuch gis gthe gchild gtax gcredit gworth? g- g✔✔$1,000
What gadditional grequirements gmust gbe gmet gfor ga gtaxpayer gto gbe geligible gto gclaim
gthe gChild gTax gCredit gfor gthe gqualifying gchild? g- g✔✔1. gTaxpayer g2. gChild gmust gbe
gunder17 gat gthe gend gof gthe gyear g3. gQualifying gchild gmust gbe gclaimed gon gtax
gpayer greturns g4. gQualifying gchild gmust gbe gUS gCitizen gUS gNational gor gresident gof
gUS
Is gthe gChild gTax gCredit grefundable gor gnonrefundable g- g✔✔CTC gis gnonrefundable
gthe gThe gadditional gchild gtax gcredit gis grefundable
How gmuch gis gthe gpenalty gif ga gpaid gprepaerer gfails gto gmeet gthe gchild gtax gcredit
gdue gdiligence grequirements g- g✔✔$510 gfor geach gfailure, gfor geach gcredit gon geach
greturn gTotal gPenalty gmax gfor greturn gis g$1530
What gis gthe gfirst gdue gdiligence grequirement gfor gthe gEITC, gCTC,ACTC, gAOTC gand
ghow gdoes ga gpaid gpreparer gmeet gthis grequirement? g- g✔✔Complete gand gsubmit
gthe gform g8867. g1. gComplete gthe gform gthoroughly gand gconscientously gread gthe
gform gcarefully g2. gsubmit gthe gform gon gevery gclaim gfor geitc, gctc/actc gand gaotc
CHAPTER g4: gDEPENDENT-RELATED gFILING gSTATUS g- g✔✔
What gfiling gstatuses gare gavailable gto gtaxpayers gwho gare gunmarried g- g✔✔1. gSingle
g2. gHead gof gHousehold g3. gQualifying gwidow(er)
How gmay ga gmarried gtaxpayer gqualify gas gunmarried gfor gtax gpurposes? g- g✔✔Must
gbe glegally gseperated gunder ga gdecree gof gdivorce gor gseparate gmaintenance gor
gmeet gthese grequirements: g1. gmust gfile ga gseparate greturn g2. gmust ghave gprovided
gmore gthan ghalf gthe gcost gof gmaintaining ga ghousehold g3. gthe ghome gmust ghave
gbeen gthe gprinciple gplace gof gabode
What grequirements gmust gbe gmet gfor ga gtaxpayer gto gqualify gto gfile gas ghead gof
ghousehold g- g✔✔1. gunmarried gon gthe glast gday gof gyear g2. gpaid gmore gthan g1/2 gto
gmaintain ghome g3. gtaxpayer ghas gqualifying gchild gor grelative gor gparent
COMPLETE SOLUTIONS
What gis gthe gDifference gbetween gearned gincome gand gunearned gincome? g-
g✔✔Earned gincome gis greceived gfor gservices gperformed. gExamples gare gwages
gcommissions, gtips gand ggenerally gfarming gand gother gbusiness gincome g. gTaxable
gincome gother gthan gthat greceived gfor gservices gperformed. gUnearned gIncome
gincludes gmoney greceived gro gthe ginvestment gof gmoney gor gother gproperty, gsuch gas
ginterest, gdividends, gand groyalties. gIt galso gincludes gpensions galimony,
gunemployment gcompensation gand gother gincome gthat gis gnot gearned
If gan gemployee gthinks gtheir gForm gW2 gis gincorrect, gwhat gshould gthey gdo? g-
g✔✔Employee gshould gdiscuss gwith gemployer gwho gissued gthe gdocument gand
grequest ga gW2C. gIf gno ghelp gfrom gemployer, gnotify gIRS. gTax gprepaper gcan gthen
gfile ga gsubstitute.
What ginformation gdo gyou gneed gto gknow gto gdetermine gwhether ga gtaxpayer gis
grequired gto gfile ga greturn? g- g✔✔Gross gincome, gfiling gstatus, gage gand gif gthey gare
ga gdependent
For gtax gpurposes, gwhen gis ga gperson's gmarital gstatus gdetermined? g- g✔✔On gthe
glast gday gof gthe gtax gyear
Where gon gthe gtax gform gcan gyou gfind gthe gregular gstandard gdeduction gamounts? g-
g✔✔Line g22 gon g1040A, gIn gthe gleft gmargin gat gthe gtop gof gthe gpage g2 gof gforms
g1040 gand g1040A. gLook gat gactual gform gto glook gfor gline
How gmuch gis gadded gto gthe gstandard gdeduction gif gthe gtaxpayer g(or gspouse gis gage
g65 gor golder, gor gblind? g- g✔✔$1550 gif gunmarried, g$1250 gif gmarried
What gis gthe gpersonal gexemption gamount gfor g2016? g- g✔✔$4,050
What gtwo gamounts gare gcombined gto gmake gup gthe ggross gincome gfiling
grequirments gfor gmost gtaxpayers? g- g✔✔The gstandard gdeduction gand gthe gpersonal
gexemption gamounts
Under gwhat gcircumstances gmight ga gtaxpayer gbe grequired gto gfile ga greturn geven
gthough gthey gdo gnot gmeet gthe ggross gincome gfiling grequirements? g- g✔✔1. gHas gnet
gemployment gof g$400 gor gmore gnet gself gemployment g2. gYou ghad gunemployment
gincome gyou gowe gmedicare gAdvantage gMSA, greceive gHAS, gArcher, gMSA g3.
,gReeived gan gAdvanced gPremium gTax gcredit geven gif gthey gdidn't gotherwise ghave ga
gfiling grequirment gfor gthe gyear g*Tips, gHSA, gSE g$400, gPTC
What gis gthe gdifference gbetween ginjured gspouse gallocation gand ginnocent gspouse
grelief? g- g✔✔The gdifference gbetween ginjured gspouse gand ginnocent gspouse gis
gsignificant gin gthe geyes gof gthe gIRS. gBoth grelease gyou gfrom gan gincome gtax gliability
garising gfrom ga g"married gfiling gjointly" greturn gbut gdifferent goutcomes. gInnocent
gspouse gfiled ga gjoint greturn gbyt gwas gunaware gthat gtheir gspouse gdeliberately gunder
greported gtax gliability. gInjured gspouse gseeks gto gprotect ghis gor gher gshare gof gthe
grefund gin gcase git ggets gseized gor goffset gdue gto gthe gother gspouse's gdebts gor
gunpaid gobligations
CHAPTER g3: gDEPENDENT gEXEMPTIONS gAND gSUPPORT g- g✔✔
What gfour grequirements gmust gbe gmet gfor gan gindividual gto gbe gclaimed gas ga
gdependent g- g✔✔Must gpass gthe gdependent gtest, gjoint greturn gtest, gcitizenship,
gqualifying gchild gor grelative
What gare gthe gfive gtests gfor ga gqualifying gchild? g- g✔✔1. gRelationship g2. gAge g3.
gResidency g4. gSupport g5. gJoint gReturn
How gcan ga gmarried gindividual gmeet gthe gjoint greturn gtest gto gremain ga gqualifying
gchild? g- g✔✔They gcan gmeet gthis gtest gby gnot gfiling ga gjoint greturn gwith gtheir
gspouse gor gthey gcan gfile ga gjoint greturn gwith gtheir gspouse gif gthey gare gfiling gonly gto
gclaim ga grefund gon gany gtaxes gwithheld
How gcan gyou gdetermine gwho gpaid gmore gthan ghalf gof ga gperson's gsupport? g-
g✔✔Total gsupport gis gdetermined gand greduced gby gthe gfunds greceived gby gand gfor
gthe gperson gfrom gall gsources gother gthan gthe gtaxpaer. gThe gremaining gsupport gis
gconsidered gto gbe gprovided gby gthe gtaxpayer. gOther gsources gmight ginclude
ggovernment gsupport gWorksheet gfor gDetermining gSupport
What ghappens gif gan gindividual gis ga gqualifying gchild gof gmore gthan gone gtaxpayer? g-
g✔✔Generally, gthe gcustodial gparent gis gthe gone gin gwhich gthe gchild gspent gthe gmost
gnights
What ghappens gwhen gmore gthan gone gtaxpayer gclaims gthe gsame gqualifying gchild? g-
g✔✔Tie gBreaker gRules gapply g: g1. gThe gparent, gif gonly gone gof gthe gpersons gis gthe
gchilds gparent g2. gThe gparent gwith gwhom gthe gchild glived gthe glongest gduring gthe
gtax g3. gThe gparents gwith gthe ghighest gAGI gif gno gparent gcan gclaim gthe gchild gas ga
gqualifying gchild
What gfour gtests gmust gbe gmet gfor gan gindividual gto gbe gconsidered ga gqualifying
grelative? g- g✔✔1. gNot gbe ga gqualifying gchild, gthe gperson gcannot gbe gthe gtaxpayers
gqualifying gchild gor gthe gqualifying gchild gof ganother gtaxpayer g2. gRelationship: gChild,
gbrother, gsister, gstep gsister, gstep gbrother, gstep gfather g, gstep gmother, gin-laws g3.
, gGross gIncome: ggross gincome gmust gbe gless gthan g$4050 g4. gSupport: gTaxpayer
gmust gprovide gmore gthan ghalf gthe gsupport
How gcan gthe ggross gincome gfor ga gqualifying grelative gtest gbe gsatisfied? g- g✔✔Gross
gincome gmust gbe gless gthan g$4050 g(Do gnot ginclude gtax gexempt gincome)
What gis gthe gpurpose gof gForm g2120 gMultiple gSupport gDeclaration? g- g✔✔You gonly
gneed g2120 gmultiple gsupport gdeclaration gif gyou gare gclaiming gsomeone gother gthan
ga gqualifying gchild gas ga gdependent gand gthere gare gtwo gor gmore gpeople gincluding
gyourself gwho gprovide gsupport gfor gthe gdependent
How gmuch gis gthe gchild gtax gcredit gworth? g- g✔✔$1,000
What gadditional grequirements gmust gbe gmet gfor ga gtaxpayer gto gbe geligible gto gclaim
gthe gChild gTax gCredit gfor gthe gqualifying gchild? g- g✔✔1. gTaxpayer g2. gChild gmust gbe
gunder17 gat gthe gend gof gthe gyear g3. gQualifying gchild gmust gbe gclaimed gon gtax
gpayer greturns g4. gQualifying gchild gmust gbe gUS gCitizen gUS gNational gor gresident gof
gUS
Is gthe gChild gTax gCredit grefundable gor gnonrefundable g- g✔✔CTC gis gnonrefundable
gthe gThe gadditional gchild gtax gcredit gis grefundable
How gmuch gis gthe gpenalty gif ga gpaid gprepaerer gfails gto gmeet gthe gchild gtax gcredit
gdue gdiligence grequirements g- g✔✔$510 gfor geach gfailure, gfor geach gcredit gon geach
greturn gTotal gPenalty gmax gfor greturn gis g$1530
What gis gthe gfirst gdue gdiligence grequirement gfor gthe gEITC, gCTC,ACTC, gAOTC gand
ghow gdoes ga gpaid gpreparer gmeet gthis grequirement? g- g✔✔Complete gand gsubmit
gthe gform g8867. g1. gComplete gthe gform gthoroughly gand gconscientously gread gthe
gform gcarefully g2. gsubmit gthe gform gon gevery gclaim gfor geitc, gctc/actc gand gaotc
CHAPTER g4: gDEPENDENT-RELATED gFILING gSTATUS g- g✔✔
What gfiling gstatuses gare gavailable gto gtaxpayers gwho gare gunmarried g- g✔✔1. gSingle
g2. gHead gof gHousehold g3. gQualifying gwidow(er)
How gmay ga gmarried gtaxpayer gqualify gas gunmarried gfor gtax gpurposes? g- g✔✔Must
gbe glegally gseperated gunder ga gdecree gof gdivorce gor gseparate gmaintenance gor
gmeet gthese grequirements: g1. gmust gfile ga gseparate greturn g2. gmust ghave gprovided
gmore gthan ghalf gthe gcost gof gmaintaining ga ghousehold g3. gthe ghome gmust ghave
gbeen gthe gprinciple gplace gof gabode
What grequirements gmust gbe gmet gfor ga gtaxpayer gto gqualify gto gfile gas ghead gof
ghousehold g- g✔✔1. gunmarried gon gthe glast gday gof gyear g2. gpaid gmore gthan g1/2 gto
gmaintain ghome g3. gtaxpayer ghas gqualifying gchild gor grelative gor gparent
