HR BLOCK Final Test Review (ITC 2025)
UPDATED ACTUAL Exam Questions and
CORRECT Answers
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. - CORRECT 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. - 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 -
Which of the following is NOT a percentage of social security benefits subject to federal tax? Up
to __________.
0%
50%
85%
,100% - CORRECT 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. - CORRECT 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. - CORRECT ANSWER -
Earned Income - CORRECT ANSWER - Any income (wages/salary) that is generated by
working
Unearned Income - CORRECT ANSWER - 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? - CORRECT
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? -
CORRECT 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? - CORRECT ANSWER - No, the
federal government does not tax municipal bond interest.
How is interest income reported to the taxpayer? - CORRECT 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? - CORRECT ANSWER -
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 much is added to the standard deduction if the taxpayer (or spouse) is age 65 or older, or
blind? - CORRECT 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? - CORRECT 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? -
CORRECT 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? -
CORRECT ANSWER - The IRS provides an injured spouse allocation for the taxpayer to
UPDATED ACTUAL Exam Questions and
CORRECT Answers
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. - CORRECT 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. - 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 -
Which of the following is NOT a percentage of social security benefits subject to federal tax? Up
to __________.
0%
50%
85%
,100% - CORRECT 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. - CORRECT 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. - CORRECT ANSWER -
Earned Income - CORRECT ANSWER - Any income (wages/salary) that is generated by
working
Unearned Income - CORRECT ANSWER - 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? - CORRECT
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? -
CORRECT 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? - CORRECT ANSWER - No, the
federal government does not tax municipal bond interest.
How is interest income reported to the taxpayer? - CORRECT 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? - CORRECT ANSWER -
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 much is added to the standard deduction if the taxpayer (or spouse) is age 65 or older, or
blind? - CORRECT 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? - CORRECT 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? -
CORRECT 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? -
CORRECT ANSWER - The IRS provides an injured spouse allocation for the taxpayer to
