HR BLOCK Final Test Review
Questions with Accurate Answers
A combined due diligence penalty of $2,180 would indicate a penalty for which of
the following?
EIC, CTC/ODC/ACTC, and head of household.
EIC, AOTC, and CTC/ODC/ACTC.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
EIC, PTC, CTC/ODC/ACTC, and head of household. correct answer EIC, AOTC,
CTC/ODC/ACTC, and head of household.
All of the following are due diligence requirements a tax preparer must meet for
EIC, AOTC, CTC/ODC/ACTC, and HOH, EXCEPT:
Investigate and verify the accuracy of information the taxpayer provides to show
eligibility for EIC, AOTC, CTC/ODC/ACTC, and HOH.
Complete all worksheets used to compute the credits. If the worksheet is
completed by hand, keep a copy in the taxpayer's client file.
Maintain a copy of documents provided by the taxpayer that the tax preparer
relied on when determining credit eligibility. Then record the date the
information was obtained and the name of who provided the information.
When information provided by the taxpayer appears to be incorrect, inconsistent,
or incomplete, the tax preparer must make additional inquiries to determine if
the taxpayer is eligible for the benefit. Then document both the questions asked
,and responses provided. correct answer Investigate and verify the accuracy of
information the taxpayer provides to show eligibility for EIC, AOTC,
CTC/ODC/ACTC, and HOH.
Define basis. correct answer Basis is a measure of the taxpayer's investment in
property, which is used to determine gain or loss for tax purposes
Determining if a trade or business is considered a specified service trade or
business (SSTB) is significant for taxpayers that have taxable income over the
lowest thresholds. What type of trades or businesses are considered SSTBs?
correct answer A specified service trade or business (SSTB) is any trade or
business involving the performance of services in the fields of health, law,
consulting, athletics, financial services, brokerage services or any trade or
business in which the principal asset of the business is the reputation or skill of
one or more of its owners or employees, or that involves the performance of
services that consist of investing and investment management, trading, or dealing
in securities, partnership interests, or commodities.
Does the fact that an employee is having income tax withheld from their paycheck
mean their tax liability will be covered? correct answer Not necessarily. If a
taxpayer experiences a change of circumstances with regard to their personal or
financial situation, such as the loss of a dependent, or if they have substantial
income that is not subject to withholding, they may owe additional taxes at the
end of the year. Taxpayers with more than one job may also owe additional taxes
Earned Income correct answer Any income (wages/salary) that is generated by
working
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. correct 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. correct answer
For MACRS purposes, you need to divide real property into two categories. What
are they? correct answer Land, which is not depreciated, and structures, which
are depreciated.
For tax purposes, when is a person's marital status determined? correct answer
On the last day of the tax year, or the date of death.
How are deductible property expenses determined if part is strictly rental and
part is strictly personal? correct answer Expenses must be divided between the
rental and personal portion. This can be done by any reasonable method. The
most common methods are by square footage or the number of rooms in the
house. If the taxpayer itemizes deductions, the personal portions of real estate
taxes, mortgage interest, and qualified casualty losses may be deducted on
Schedule A.
Questions with Accurate Answers
A combined due diligence penalty of $2,180 would indicate a penalty for which of
the following?
EIC, CTC/ODC/ACTC, and head of household.
EIC, AOTC, and CTC/ODC/ACTC.
EIC, AOTC, CTC/ODC/ACTC, and head of household.
EIC, PTC, CTC/ODC/ACTC, and head of household. correct answer EIC, AOTC,
CTC/ODC/ACTC, and head of household.
All of the following are due diligence requirements a tax preparer must meet for
EIC, AOTC, CTC/ODC/ACTC, and HOH, EXCEPT:
Investigate and verify the accuracy of information the taxpayer provides to show
eligibility for EIC, AOTC, CTC/ODC/ACTC, and HOH.
Complete all worksheets used to compute the credits. If the worksheet is
completed by hand, keep a copy in the taxpayer's client file.
Maintain a copy of documents provided by the taxpayer that the tax preparer
relied on when determining credit eligibility. Then record the date the
information was obtained and the name of who provided the information.
When information provided by the taxpayer appears to be incorrect, inconsistent,
or incomplete, the tax preparer must make additional inquiries to determine if
the taxpayer is eligible for the benefit. Then document both the questions asked
,and responses provided. correct answer Investigate and verify the accuracy of
information the taxpayer provides to show eligibility for EIC, AOTC,
CTC/ODC/ACTC, and HOH.
Define basis. correct answer Basis is a measure of the taxpayer's investment in
property, which is used to determine gain or loss for tax purposes
Determining if a trade or business is considered a specified service trade or
business (SSTB) is significant for taxpayers that have taxable income over the
lowest thresholds. What type of trades or businesses are considered SSTBs?
correct answer A specified service trade or business (SSTB) is any trade or
business involving the performance of services in the fields of health, law,
consulting, athletics, financial services, brokerage services or any trade or
business in which the principal asset of the business is the reputation or skill of
one or more of its owners or employees, or that involves the performance of
services that consist of investing and investment management, trading, or dealing
in securities, partnership interests, or commodities.
Does the fact that an employee is having income tax withheld from their paycheck
mean their tax liability will be covered? correct answer Not necessarily. If a
taxpayer experiences a change of circumstances with regard to their personal or
financial situation, such as the loss of a dependent, or if they have substantial
income that is not subject to withholding, they may owe additional taxes at the
end of the year. Taxpayers with more than one job may also owe additional taxes
Earned Income correct answer Any income (wages/salary) that is generated by
working
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. correct 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. correct answer
For MACRS purposes, you need to divide real property into two categories. What
are they? correct answer Land, which is not depreciated, and structures, which
are depreciated.
For tax purposes, when is a person's marital status determined? correct answer
On the last day of the tax year, or the date of death.
How are deductible property expenses determined if part is strictly rental and
part is strictly personal? correct answer Expenses must be divided between the
rental and personal portion. This can be done by any reasonable method. The
most common methods are by square footage or the number of rooms in the
house. If the taxpayer itemizes deductions, the personal portions of real estate
taxes, mortgage interest, and qualified casualty losses may be deducted on
Schedule A.
