HRB TEST PAPER 2025/2026 QUESTIONS WITH ANSWERS
TAGGED A+
✔✔What filing statuses are available to taxpayers who are unmarried? - ✔✔Qualifying
widow(er), head of household, and single.
✔✔How may a married taxpayer qualify as unmarried for tax purposes? - ✔✔To qualify
as unmarried for the purpose of claiming the head of household filing status, a taxpayer
must meet all of the following:
- Not file a joint return with their spouse.
- Provide more than half the cost of maintaining their home.
- The home must be the main home for the taxpayer and their dependent child (or child
who would be a dependent except that the exemption was given to the noncustodial
parent) for more than six months of the tax year.
- The taxpayer's spouse must not have lived in the home during the last six months of
the year.
✔✔What requirements must be met for a taxpayer to qualify to file as head of
household? - ✔✔The taxpayer must be unmarried (or qualify as unmarried for tax
purposes) and must pay over half the cost of maintaining a home, which for over half
the year was the main home of the taxpayer and their qualifying child or qualifying
relative, or they paid over half the cost of maintaining their parent's home for the entire
year and claimed that parent on their return.
✔✔List at least four costs of maintaining a home. - ✔✔Among other things, mortgage
interest and real estate taxes (or rent), fire/casualty (or renter's) insurance, upkeep and
repairs, utilities, and food consumed in the home are all costs of maintaining a home.
✔✔What requirements must be met for a taxpayer to use the qualifying widow(er)
status? - ✔✔The death of the taxpayer's spouse must have occurred during one of the
two preceding tax years; the taxpayer must not have remarried and must have been
entitled to file a joint return for the year of death. The taxpayer must have paid over half
the cost of maintaining the home for the entire year, which was the main home of their
dependent son, daughter, stepson, or stepdaughter.
✔✔In the case of divorced or separated parents, which parent generally gets to claim
the qualifying child? - ✔✔The custodial parent.
✔✔What is the exception to this rule? - ✔✔If a decree of divorce or separate
maintenance or written separation agreement that became effective after October 4,
2004, and before January 1, 2009, states that the noncustodial parent is entitled to
claim the child's dependency exemption, or if the custodial parent executes a written
declaration that they will not claim the child as a dependent for that year, the
,noncustodial parent may claim the qualifying child. For divorces granted after December
31, 2008, Form 8332 must be filed if parents are separating tax benefits.
✔✔What happens when more than one taxpayer claims the same qualifying child (QC)?
- ✔✔The IRS will apply tiebreaker rules as follows:
1. If only one of the taxpayers is the child's parent, the child is treated as the qualifying
child (QC) of the parent.
2. If the parents do not file a joint return together, but both parents claim the child, the
IRS will treat the child as the QC of the parent with whom the child lived and stayed
over for the greater number of nights during the year. If the child lived with each parent
and stayed over the same number of nights during the year, the IRS will treat the child
as the QC of the parent with the highest AGI.
3. If no parent can claim the child as a QC, the child is treated as the QC of the taxpayer
with the highest AGI.
4. If a parent can claim the child, but no parent claims the child, the child is treated as
the QC of the taxpayer who had the highest AGI for the year, but only if that taxpayer's
AGI is higher than the highest AGI of either of the child's parents who can claim the
child. If the child's parents file a joint return with each other, this rule can be applied by
dividing the parents' combined AGI equally between the two.
✔✔How is interest income reported to the taxpayer? - ✔✔Interest income is reported to
the taxpayer on Form 1099-INT or a substitute statement.
✔✔What is dividend income, and how is it reported to the taxpayer? - ✔✔Dividends are
payments to shareholders (individuals who own stock) of corporations that represent the
shareholder's portion of the corporation's profits. Dividend income may consist of
ordinary dividends, capital gain distributions, or nontaxable (return of capital)
distributions. Dividend income is reported to the taxpayer on Form 1099-DIV or a
substitute statement.
✔✔At what threshold amount must interest or dividend income be reported on Schedule
B? - ✔✔When total taxable interest or ordinary dividend income exceeds $1,500.
✔✔Is interest received on U.S. Treasury obligations taxable on state and/or local
returns? - ✔✔No. Interest on U.S. Treasury obligations is exempt from state and local
tax by federal law.
✔✔Is municipal bond interest taxable on a federal return? - ✔✔No, the federal
government does not tax municipal bond interest.
✔✔What favorable tax treatment is received for qualified dividends and capital gain
distributions? - ✔✔Qualified dividends and capital gain distributions receive more
favorable tax treatment because they are treated as long-term capital gains. They are
taxed at lower rates than ordinary income and short-term capital gains.
, For 2018, the maximum rate of tax on qualified dividends is:
- 0% on taxable income less than $77,200 MFJ/QW, $51,700 HH, and $38,600 S/MFS
that otherwise would be taxed at higher tax rates.
- 15% on taxable income greater than the amounts listed above and below $479,000
MFJ/QW, $452,400 HH, $425,800 S, and $239,500 MFS.
- 20% on any amount above the maximum 15% rate amount.
✔✔Which taxpayers will use the Qualified Dividends and Capital Gain Tax Worksheet?
- ✔✔Taxpayers will use the Qualified Dividend and Capital Gain Tax Worksheet to
compute their tax when they receive qualified dividends (shown in box 1b of Form 1099-
DIV) and/or "normal" capital gain distributions (shown in box 2a of Form 1099-DIV) from
mutual funds or regulated investment companies.
✔✔Who may qualify for the Additional Child Tax Credit? - ✔✔Taxpayers who qualify for
the Child Tax Credit and have earned income in excess of $2,500 for 2018, or those
with three or more qualifying children for Child Tax Credit purposes whose Child Tax
Credit was limited by their tax liabilities.
✔✔What is the second due diligence requirement for the EITC, CTC/ODC/ACTC, and
AOTC, and how does a paid preparer meet this requirement for EITC and CTC/ACTC?
- ✔✔Complete and keep all worksheets used to compute any of these four credits.
The CTC has a worksheet that needs to be completed, and the ACTC is calculated
using Schedule 8812. The EITC has several worksheets that need to be completed that
tie to Schedule EITC.
✔✔If a taxpayer has no qualifying children, what are the five qualifications they must
meet to receive the Earned Income Tax Credit? - ✔✔The five qualifications are:
1. Be at least 25 years old, but younger than age 65, on January 1, 2019.
2. Not be able to be claimed as a dependent on another taxpayer's return.
3. Not be a qualifying child of another person.
4. Live in the United States more than half the year.
5. Have earned income and AGI of less than $15,270 ($20,950 if married filing jointly).
✔✔If a taxpayer has one or more qualifying children, what are the four specific
qualifications they must meet to receive the Earned Income Tax Credit? - ✔✔The four
qualifications are:
1. Have a qualifying child who meets the relationship, age, residency, and joint return
tests.
2. Have a qualifying child who is not used by another person to claim EITC.
3. Not be the qualifying child of another person.
4. Have earned income and AGI that is less than one of the following:
- $40,320 ($46,010 if married filing jointly) with one qualifying child.
- $45,802 ($51,492 if married filing jointly) with two qualifying children.
TAGGED A+
✔✔What filing statuses are available to taxpayers who are unmarried? - ✔✔Qualifying
widow(er), head of household, and single.
✔✔How may a married taxpayer qualify as unmarried for tax purposes? - ✔✔To qualify
as unmarried for the purpose of claiming the head of household filing status, a taxpayer
must meet all of the following:
- Not file a joint return with their spouse.
- Provide more than half the cost of maintaining their home.
- The home must be the main home for the taxpayer and their dependent child (or child
who would be a dependent except that the exemption was given to the noncustodial
parent) for more than six months of the tax year.
- The taxpayer's spouse must not have lived in the home during the last six months of
the year.
✔✔What requirements must be met for a taxpayer to qualify to file as head of
household? - ✔✔The taxpayer must be unmarried (or qualify as unmarried for tax
purposes) and must pay over half the cost of maintaining a home, which for over half
the year was the main home of the taxpayer and their qualifying child or qualifying
relative, or they paid over half the cost of maintaining their parent's home for the entire
year and claimed that parent on their return.
✔✔List at least four costs of maintaining a home. - ✔✔Among other things, mortgage
interest and real estate taxes (or rent), fire/casualty (or renter's) insurance, upkeep and
repairs, utilities, and food consumed in the home are all costs of maintaining a home.
✔✔What requirements must be met for a taxpayer to use the qualifying widow(er)
status? - ✔✔The death of the taxpayer's spouse must have occurred during one of the
two preceding tax years; the taxpayer must not have remarried and must have been
entitled to file a joint return for the year of death. The taxpayer must have paid over half
the cost of maintaining the home for the entire year, which was the main home of their
dependent son, daughter, stepson, or stepdaughter.
✔✔In the case of divorced or separated parents, which parent generally gets to claim
the qualifying child? - ✔✔The custodial parent.
✔✔What is the exception to this rule? - ✔✔If a decree of divorce or separate
maintenance or written separation agreement that became effective after October 4,
2004, and before January 1, 2009, states that the noncustodial parent is entitled to
claim the child's dependency exemption, or if the custodial parent executes a written
declaration that they will not claim the child as a dependent for that year, the
,noncustodial parent may claim the qualifying child. For divorces granted after December
31, 2008, Form 8332 must be filed if parents are separating tax benefits.
✔✔What happens when more than one taxpayer claims the same qualifying child (QC)?
- ✔✔The IRS will apply tiebreaker rules as follows:
1. If only one of the taxpayers is the child's parent, the child is treated as the qualifying
child (QC) of the parent.
2. If the parents do not file a joint return together, but both parents claim the child, the
IRS will treat the child as the QC of the parent with whom the child lived and stayed
over for the greater number of nights during the year. If the child lived with each parent
and stayed over the same number of nights during the year, the IRS will treat the child
as the QC of the parent with the highest AGI.
3. If no parent can claim the child as a QC, the child is treated as the QC of the taxpayer
with the highest AGI.
4. If a parent can claim the child, but no parent claims the child, the child is treated as
the QC of the taxpayer who had the highest AGI for the year, but only if that taxpayer's
AGI is higher than the highest AGI of either of the child's parents who can claim the
child. If the child's parents file a joint return with each other, this rule can be applied by
dividing the parents' combined AGI equally between the two.
✔✔How is interest income reported to the taxpayer? - ✔✔Interest income is reported to
the taxpayer on Form 1099-INT or a substitute statement.
✔✔What is dividend income, and how is it reported to the taxpayer? - ✔✔Dividends are
payments to shareholders (individuals who own stock) of corporations that represent the
shareholder's portion of the corporation's profits. Dividend income may consist of
ordinary dividends, capital gain distributions, or nontaxable (return of capital)
distributions. Dividend income is reported to the taxpayer on Form 1099-DIV or a
substitute statement.
✔✔At what threshold amount must interest or dividend income be reported on Schedule
B? - ✔✔When total taxable interest or ordinary dividend income exceeds $1,500.
✔✔Is interest received on U.S. Treasury obligations taxable on state and/or local
returns? - ✔✔No. Interest on U.S. Treasury obligations is exempt from state and local
tax by federal law.
✔✔Is municipal bond interest taxable on a federal return? - ✔✔No, the federal
government does not tax municipal bond interest.
✔✔What favorable tax treatment is received for qualified dividends and capital gain
distributions? - ✔✔Qualified dividends and capital gain distributions receive more
favorable tax treatment because they are treated as long-term capital gains. They are
taxed at lower rates than ordinary income and short-term capital gains.
, For 2018, the maximum rate of tax on qualified dividends is:
- 0% on taxable income less than $77,200 MFJ/QW, $51,700 HH, and $38,600 S/MFS
that otherwise would be taxed at higher tax rates.
- 15% on taxable income greater than the amounts listed above and below $479,000
MFJ/QW, $452,400 HH, $425,800 S, and $239,500 MFS.
- 20% on any amount above the maximum 15% rate amount.
✔✔Which taxpayers will use the Qualified Dividends and Capital Gain Tax Worksheet?
- ✔✔Taxpayers will use the Qualified Dividend and Capital Gain Tax Worksheet to
compute their tax when they receive qualified dividends (shown in box 1b of Form 1099-
DIV) and/or "normal" capital gain distributions (shown in box 2a of Form 1099-DIV) from
mutual funds or regulated investment companies.
✔✔Who may qualify for the Additional Child Tax Credit? - ✔✔Taxpayers who qualify for
the Child Tax Credit and have earned income in excess of $2,500 for 2018, or those
with three or more qualifying children for Child Tax Credit purposes whose Child Tax
Credit was limited by their tax liabilities.
✔✔What is the second due diligence requirement for the EITC, CTC/ODC/ACTC, and
AOTC, and how does a paid preparer meet this requirement for EITC and CTC/ACTC?
- ✔✔Complete and keep all worksheets used to compute any of these four credits.
The CTC has a worksheet that needs to be completed, and the ACTC is calculated
using Schedule 8812. The EITC has several worksheets that need to be completed that
tie to Schedule EITC.
✔✔If a taxpayer has no qualifying children, what are the five qualifications they must
meet to receive the Earned Income Tax Credit? - ✔✔The five qualifications are:
1. Be at least 25 years old, but younger than age 65, on January 1, 2019.
2. Not be able to be claimed as a dependent on another taxpayer's return.
3. Not be a qualifying child of another person.
4. Live in the United States more than half the year.
5. Have earned income and AGI of less than $15,270 ($20,950 if married filing jointly).
✔✔If a taxpayer has one or more qualifying children, what are the four specific
qualifications they must meet to receive the Earned Income Tax Credit? - ✔✔The four
qualifications are:
1. Have a qualifying child who meets the relationship, age, residency, and joint return
tests.
2. Have a qualifying child who is not used by another person to claim EITC.
3. Not be the qualifying child of another person.
4. Have earned income and AGI that is less than one of the following:
- $40,320 ($46,010 if married filing jointly) with one qualifying child.
- $45,802 ($51,492 if married filing jointly) with two qualifying children.
