HR BLOCK FINAL EXAM ACTUAL 2025/2026 QUESTIONS AND 100% CORRECT ANSWERS

HR BLOCK FINAL EXAM ACTUAL 2025/2026 QUESTIONS AND 100% CORRECT ANSWERS What is the difference between earned income and unearned income? - Answer -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? - Answer -If the taxpayer's name, social security number, 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.Is interest received on U.S. Treasury obligations taxable on state and/or local returns? - Answer -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 - Answer -No, the federal government does not tax municipal bond interest. How is interest income reported to the taxpayer? - Answer -Interest income is reported to the taxpayer on Form 1099-INT or a substitute statement. What information do you need to know to determine whether a nondependent taxpayer is required to file a return? - Answer -The taxpayer's filing status, age at the end of the tax year, and gross income for the year. For tax purposes, when is a person's marital status determined? - Answer -On the last day of the tax year, or the date of death. How much is added to the standard deduction if the taxpayer (or spouse) is age 65 or older, or blind? - Answer -$1,350 for married taxpayers and qualifying widow(er)s, or $1,700 for those filing single or head of household. What is the personal exemption amount for 2021 - Answer -There is no personal exemption for 2021. A personal exemption was an amount previously allowed by law to reduce income that would otherwise be taxed. The Tax Cuts and Jobs Act of 2017 repealed this deduction beginning in 2018. How is the gross income filing requirement determined for most nondependent taxpayers - Answer -The taxpayer's standard deduction,including the additional amounts for age. However, for married filing separately, or married filing jointly when the spouses did not live together at the end of the year, the amount is $5. What is the difference between injured spouse allocation and innocent spouse relief? - Answer -The IRS provides an injured spouse allocation for the taxpayer to protect their portion of a refund from a spouse's past-due federal income tax, unpaid student loans, unpaid child and spousal support, or state income tax. The IRS provides innocent spouse relief to taxpayers who file a joint return and later learn that their spouse has underestimated income (or overstated a credit or deduction) on the return.