Tax for HR Block Test Questions With All Correct Detailed Answers

Tax for HR Block Test Questions With All Correct Detailed Answers Describe Gross Income - ANSWER- All income from whatever source derived, unless excluded from taxation by law. Describe Earned Income - ANSWER- Income received for services performed, including wages, commissions, tips, and, generally, farming and other business income. Filling requirements differ based on the following - ANSWER- Nondependents. Dependents. Certain children under age 19 or full-time students under age 24. Self-employed individuals. Aliens. three factors determine the filing requirement for nondependents - ANSWER- Filing status. Age. Gross income. Common Law Marriage - ANSWER- The parties must have the legal capacity to marry. Single parties must have the current intent to marry. That is, they must intend to be married and must communicate that intent to one another. The couple must live together. The parties must publicly present themselves to others as a married couple. Divorce Final Dec 31 - ANSWER- Considered unmarried for the year 65 Birthday Jan 1, 2019 - ANSWER- Considered 65 for 2018 tax year Taxpayers age 65 or older and/or blind are entitled to the following increased standard deduction amounts - ANSWER- $1,600 (per condition) for singles and heads of households. $1,300 (per condition) for all married taxpayers and qualifying widow(er)s. A dependent taxpayer's standard deduction is equal to the greater of the following - ANSWER- $1,050. Their earned income plus $350. A parent can make this election if the following conditions are met (19 or full time student up to 24 - ANSWER- The child is under the age of 19; or under the age of 24 at the end of the tax year, if the dependent is a full-time student. The child had income only from interest and dividends. The child's gross income was less than $10,500. The child is required to file a return, unless the parent makes this election. The child does not file a joint return for the year. No federal income tax was withheld from the child's current-year income, no currentyear estimated tax payments were made by or for the child, and no previous-year overpayments were applied against the child's current-year tax liability Form 8862 - ANSWER- If your earned income credit (EIC), child tax credit (CTC)/additional child tax credit (ACTC), or American opportunity tax credit (AOTC) was disallowed by IRS, you must complete and file. Now you meet all the requirements and want to take the EITC, CTC/ACTC or AOTC for this tax year Schedule C - ANSWER- Profit or Loss From Business Form 4868 - ANSWER- Six month extension Form 8379 - ANSWER- Injured Spouse Allocation . Form 8857 - ANSWER- Request for Innocent Spouse Relief, can provide three types of relief from joint responsibility: Innocent spouse relief. Separation of liability. Equitable relief. For a taxpayer to claim a qualifying child or qualifying relative as a dependent, the following three tests must be met - ANSWER- Dependent taxpayer test. Joint return test. Citizen or resident test. Qualifying Child test - ANSWER- Relationship test. Age test. Residency test. Support test. Joint return test. Qualifying Relative Test - ANSWER- Not a qualifying child test. Relationship or member of the household test. Gross income test. Support test. A qualifying child for Child Tax Credit purposes is the same as a qualifying child for dependency purposes, except - ANSWER- They must be under age 17 at the end of the tax year. They must have a social security number valid for employment before the due date of the 2018 return. They must be a U.S. citizen, national, or resident alien of the United States A person qualifies a taxpayer for the Other Dependent Credit if the person meets all of the following conditions - ANSWER- The person is claimed as a dependent on the taxpayer's return. The person cannot be used by the taxpayer to qualify for the Child Tax Credit or the Additional Child Tax Credit. The person is a U.S. citizen, U.S. national, or U.S. resident alien. The person must have a social security number, individual taxpayer identification number, or an adoption tax identification number (ATIN) issued on or before the due date of the 2018 tax return (including extensions). Form 8867 - ANSWER- Due Diligence (Paid Preparer's Due Diligence Checklist) Due Diligence penalty - ANSWER- This is a $520 penalty against the preparer for each failure, for each credit, on each return. Assuming all of these items were claimed on a single return, failure to meet the due diligence requirements could result in a total penalty of $2,080 per return. Head of Household requirements - ANSWER- Unmarried or "considered unmarried" on the last day of the tax year. Paid more than half of the cost of maintaining the household for the year. Maintained a household for either of the following: A qualifying child or qualifying relative (see exceptions to the head of household requirements) who lived with the taxpayer for more than half the year. A parent, if the taxpayer paid more than half the cost of maintaining that parent's main home for the entire year and claimed the parent as a dependent on their return. Form 8332 - ANSWER- Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent