HR BLOCK Final Test Review (ITC 2025)
Questions And Answers With Verified
Solutions 100% Correct!!!
1. Requirement for all taxpayers to claim the EIC
ANSWER: Have a valid social security number.
2. Combined due diligence penalty of $2,180 would indicate a penalty for
ANSWER: EIC, AOTC, CTC/ODC/ACTC, and head of household.
3. When dependent care benefits are withheld from a taxpayer's income,
where are they reported by the employer?
ANSWER: Box 10 of Form W-2.
4. Due diligence requirements a tax preparer must meet for EIC, AOTC,
CTC/ODC/ACTC, and HOH, EXCEPT
ANSWER: Investigate and verify the accuracy of information the
taxpayer provides to show eligibility for EIC, AOTC,
CTC/ODC/ACTC, and HOH.
5. When a taxpayer receives Form 1099-R with no amount entered in box
2a and code 7 entered in box 7, the entire distribution
ANSWER: Could be partly or entirely taxable.
Has been rolled into a traditional IRA or into another qualified plan. -
ANSWER✔✔ Is never taxable.
What is the maximum amount of the American Opportunity Tax Credit a taxpayer
could receive per student?
$1,650
,$1,800
$2,000
$2,500 - ANSWER✔✔ $2,500
Which test for a qualifying child does NOT need to be met in order for the child to
be a qualifying person for purposes of Earned Income Credit (EIC)?
Age.
Relationship.
Residency.
Support. - ANSWER✔✔ Support.
Which of the following expenses qualifies for an education credit in 2021?
Tuition payments. The taxpayer didn't receive scholarships, grants, or other
nontaxable benefits.
Fees for an optional student activity.
Cost of student medical fees.
Tuition payments. The taxpayer received a nontaxable grant, which covered the
entire tuition expense. - ANSWER✔✔
Employer-provided dependent care assistance:
May be used for the Child and Dependent Care Credit.
Is subtracted from the total expenses for child or dependent care on Form 2441.
Is included in wages on Form W-2.
Is not reported to the IRS. - ANSWER✔✔
, Which of the following is NOT a percentage of social security benefits subject to
federal tax? Up to __________.
0%
50%
85%
100% - ANSWER✔✔ 100%
What is the maximum amount of the lifetime learning credit?
$1,100 per return.
$1,650 per return.
$2,000 per return.
$2,500 per return. - ANSWER✔✔ $2,000 per return.
Employer-provided dependent care assistance:
It may be used for the Child and Dependent Care Credit.
It is subtracted from the total expenses for the child or dependent care on Form
2441.
It is included in wages on Form W-2.
It is not reported to the IRS. - ANSWER✔✔
Earned Income - ANSWER✔✔ Any income (wages/salary) that is generated by
working
Unearned Income - ANSWER✔✔ include interest income, dividends, rents and
royalties, pensions, alimony, and unemployment income.
Questions And Answers With Verified
Solutions 100% Correct!!!
1. Requirement for all taxpayers to claim the EIC
ANSWER: Have a valid social security number.
2. Combined due diligence penalty of $2,180 would indicate a penalty for
ANSWER: EIC, AOTC, CTC/ODC/ACTC, and head of household.
3. When dependent care benefits are withheld from a taxpayer's income,
where are they reported by the employer?
ANSWER: Box 10 of Form W-2.
4. Due diligence requirements a tax preparer must meet for EIC, AOTC,
CTC/ODC/ACTC, and HOH, EXCEPT
ANSWER: Investigate and verify the accuracy of information the
taxpayer provides to show eligibility for EIC, AOTC,
CTC/ODC/ACTC, and HOH.
5. When a taxpayer receives Form 1099-R with no amount entered in box
2a and code 7 entered in box 7, the entire distribution
ANSWER: Could be partly or entirely taxable.
Has been rolled into a traditional IRA or into another qualified plan. -
ANSWER✔✔ Is never taxable.
What is the maximum amount of the American Opportunity Tax Credit a taxpayer
could receive per student?
$1,650
,$1,800
$2,000
$2,500 - ANSWER✔✔ $2,500
Which test for a qualifying child does NOT need to be met in order for the child to
be a qualifying person for purposes of Earned Income Credit (EIC)?
Age.
Relationship.
Residency.
Support. - ANSWER✔✔ Support.
Which of the following expenses qualifies for an education credit in 2021?
Tuition payments. The taxpayer didn't receive scholarships, grants, or other
nontaxable benefits.
Fees for an optional student activity.
Cost of student medical fees.
Tuition payments. The taxpayer received a nontaxable grant, which covered the
entire tuition expense. - ANSWER✔✔
Employer-provided dependent care assistance:
May be used for the Child and Dependent Care Credit.
Is subtracted from the total expenses for child or dependent care on Form 2441.
Is included in wages on Form W-2.
Is not reported to the IRS. - ANSWER✔✔
, Which of the following is NOT a percentage of social security benefits subject to
federal tax? Up to __________.
0%
50%
85%
100% - ANSWER✔✔ 100%
What is the maximum amount of the lifetime learning credit?
$1,100 per return.
$1,650 per return.
$2,000 per return.
$2,500 per return. - ANSWER✔✔ $2,000 per return.
Employer-provided dependent care assistance:
It may be used for the Child and Dependent Care Credit.
It is subtracted from the total expenses for the child or dependent care on Form
2441.
It is included in wages on Form W-2.
It is not reported to the IRS. - ANSWER✔✔
Earned Income - ANSWER✔✔ Any income (wages/salary) that is generated by
working
Unearned Income - ANSWER✔✔ include interest income, dividends, rents and
royalties, pensions, alimony, and unemployment income.
