HRB FINAL EXAM QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE.
What is the Difference between earned income and unearned income? ANS >>
Earned income is received for services performed. Examples are wages
commissions, tips and generally farming and other business income. Taxable
income other than that received for services performed. Unearned Income
includes money received or the investment of money or other property, such as
interest, dividends, and royalties. It also includes pensions alimony,
unemployment compensation and other income that is not earned
If an employee thinks their Form W2 is incorrect, what should they do? ANS >>
Employee should discuss with employer who issued the document and request a
W2C. If no help from employer, notify IRS. Tax prepper can then file a substitute.
What information do you need to know to determine whether a taxpayer is
required to file a return? ANS >> Gross income, filing status, age and if they are a
dependent
,For tax purposes, when is a person's marital status determined? ANS >> On the
last day of the tax year
Where on the tax form can you find the regular standard deduction amounts? ANS
>> Line 22 on 1040A, In the left margin at the top of the page 2 of forms 1040 and
1040A. Look at actual form to look for line
How much is added to the standard deduction if the taxpayer (or spouse is age 65
or older, or blind? ANS >> $1550 if unmarried, $1250 if married
What is the personal exemption amount for 2016? ANS >> $4,050
What two amounts are combined to make up the gross income filing
requirements for most taxpayers? ANS >> The standard deduction and the
personal exemption amounts
Under what circumstances might a taxpayer be required to file a return even
though they do not meet the gross income filing requirements? ANS >> 1. Has net
employment of $400 or more net self employment 2. You had unemployment
income you owe Medicare Advantage MSA, receive HAS, Archer, MSA 3. Received
an Advanced Premium Tax credit even if they didn't otherwise have a filing
requirement for the year *Tips, HSA, SE $400, PTC
What is the difference between injured spouse allocation and innocent spouse
relief? ANS >> The difference between injured spouse and innocent spouse is
significant in the eyes of the IRS. Both release you from an income tax liability
arising from a "married filing jointly" return but different outcomes. Innocent
spouse filed a joint return bit was unaware that their spouse deliberately under
reported tax liability. Injured spouse seeks to protect his or her share of the refund
,in case it gets seized or offset due to the other spouse's debts or unpaid
obligations
CHAPTER 3: DEPENDENT EXEMPTIONS AND SUPPORT ANS >>
What four requirements must be met for an individual to be claimed as a
dependent ANS >> Must pass the dependent test, joint return test, citizenship,
qualifying child or relative
What are the five tests for a qualifying child? ANS >> 1. Relationship 2. Age 3.
Residency 4. Support 5. Joint Return
How can a married individual meet the joint return test to remain a qualifying
child? ANS >> They can meet this test by not filing a joint return with their spouse
or they can file a joint return with their spouse if they are filing only to claim a
refund on any taxes withheld
How can you determine who paid more than half of a person's support? ANS >>
Total support is determined and reduced by the funds received by and for the
person from all sources other than the taxpayer. The remaining support is
considered to be provided by the taxpayer. Other sources might include
government support Worksheet for Determining Support
What happens if an individual is a qualifying child of more than one taxpayer? ANS
>> Generally, the custodial parent is the one in which the child spent the most
nights
What happens when more than one taxpayer claims the same qualifying child?
ANS >> Tie Breaker Rules apply: 1. The parent, if only one of the persons is the
, child’s parent 2. The parent with whom the child lived the longest during the tax 3.
The parents with the highest AGI if no parent can claim the child as a qualifying
child
What four tests must be met for an individual to be considered a qualifying
relative? ANS >> 1. Not be a qualifying child, the person cannot be the taxpayers
qualifying child or the qualifying child of another taxpayer 2. Relationship: Child,
brother, sister, step sister, step brother, step father, step mother, in-laws 3. Gross
Income: gross income must be less than $4050 4. Support: Taxpayer must provide
more than half the support
How can the gross income for a qualifying relative test be satisfied? ANS >> Gross
income must be less than $4050 (Do not include tax exempt income)
What is the purpose of Form 2120 Multiple Support Declaration? ANS >> You only
need 2120 multiple support declaration if you are claiming someone other than a
qualifying child as a dependent and there are two or more people including
yourself who provide support for the dependent
How much is the child tax credit worth? ANS >> $1,000
What additional requirements must be met for a taxpayer to be eligible to claim
the Child Tax Credit for the qualifying child? ANS >> 1. Taxpayer 2. Child must be
under17 at the end of the year 3. Qualifying child must be claimed on tax payer
returns 4. Qualifying child must be US Citizen US National or resident of US
Is the Child Tax Credit refundable or nonrefundable ANS >> CTC is nonrefundable
the the additional child tax credit is refundable
GRADED A+ LATEST UPDATE.
What is the Difference between earned income and unearned income? ANS >>
Earned income is received for services performed. Examples are wages
commissions, tips and generally farming and other business income. Taxable
income other than that received for services performed. Unearned Income
includes money received or the investment of money or other property, such as
interest, dividends, and royalties. It also includes pensions alimony,
unemployment compensation and other income that is not earned
If an employee thinks their Form W2 is incorrect, what should they do? ANS >>
Employee should discuss with employer who issued the document and request a
W2C. If no help from employer, notify IRS. Tax prepper can then file a substitute.
What information do you need to know to determine whether a taxpayer is
required to file a return? ANS >> Gross income, filing status, age and if they are a
dependent
,For tax purposes, when is a person's marital status determined? ANS >> On the
last day of the tax year
Where on the tax form can you find the regular standard deduction amounts? ANS
>> Line 22 on 1040A, In the left margin at the top of the page 2 of forms 1040 and
1040A. Look at actual form to look for line
How much is added to the standard deduction if the taxpayer (or spouse is age 65
or older, or blind? ANS >> $1550 if unmarried, $1250 if married
What is the personal exemption amount for 2016? ANS >> $4,050
What two amounts are combined to make up the gross income filing
requirements for most taxpayers? ANS >> The standard deduction and the
personal exemption amounts
Under what circumstances might a taxpayer be required to file a return even
though they do not meet the gross income filing requirements? ANS >> 1. Has net
employment of $400 or more net self employment 2. You had unemployment
income you owe Medicare Advantage MSA, receive HAS, Archer, MSA 3. Received
an Advanced Premium Tax credit even if they didn't otherwise have a filing
requirement for the year *Tips, HSA, SE $400, PTC
What is the difference between injured spouse allocation and innocent spouse
relief? ANS >> The difference between injured spouse and innocent spouse is
significant in the eyes of the IRS. Both release you from an income tax liability
arising from a "married filing jointly" return but different outcomes. Innocent
spouse filed a joint return bit was unaware that their spouse deliberately under
reported tax liability. Injured spouse seeks to protect his or her share of the refund
,in case it gets seized or offset due to the other spouse's debts or unpaid
obligations
CHAPTER 3: DEPENDENT EXEMPTIONS AND SUPPORT ANS >>
What four requirements must be met for an individual to be claimed as a
dependent ANS >> Must pass the dependent test, joint return test, citizenship,
qualifying child or relative
What are the five tests for a qualifying child? ANS >> 1. Relationship 2. Age 3.
Residency 4. Support 5. Joint Return
How can a married individual meet the joint return test to remain a qualifying
child? ANS >> They can meet this test by not filing a joint return with their spouse
or they can file a joint return with their spouse if they are filing only to claim a
refund on any taxes withheld
How can you determine who paid more than half of a person's support? ANS >>
Total support is determined and reduced by the funds received by and for the
person from all sources other than the taxpayer. The remaining support is
considered to be provided by the taxpayer. Other sources might include
government support Worksheet for Determining Support
What happens if an individual is a qualifying child of more than one taxpayer? ANS
>> Generally, the custodial parent is the one in which the child spent the most
nights
What happens when more than one taxpayer claims the same qualifying child?
ANS >> Tie Breaker Rules apply: 1. The parent, if only one of the persons is the
, child’s parent 2. The parent with whom the child lived the longest during the tax 3.
The parents with the highest AGI if no parent can claim the child as a qualifying
child
What four tests must be met for an individual to be considered a qualifying
relative? ANS >> 1. Not be a qualifying child, the person cannot be the taxpayers
qualifying child or the qualifying child of another taxpayer 2. Relationship: Child,
brother, sister, step sister, step brother, step father, step mother, in-laws 3. Gross
Income: gross income must be less than $4050 4. Support: Taxpayer must provide
more than half the support
How can the gross income for a qualifying relative test be satisfied? ANS >> Gross
income must be less than $4050 (Do not include tax exempt income)
What is the purpose of Form 2120 Multiple Support Declaration? ANS >> You only
need 2120 multiple support declaration if you are claiming someone other than a
qualifying child as a dependent and there are two or more people including
yourself who provide support for the dependent
How much is the child tax credit worth? ANS >> $1,000
What additional requirements must be met for a taxpayer to be eligible to claim
the Child Tax Credit for the qualifying child? ANS >> 1. Taxpayer 2. Child must be
under17 at the end of the year 3. Qualifying child must be claimed on tax payer
returns 4. Qualifying child must be US Citizen US National or resident of US
Is the Child Tax Credit refundable or nonrefundable ANS >> CTC is nonrefundable
the the additional child tax credit is refundable
