H&R Block Specialist Test| Complete Questions with 100% Correct Answers

H&R Block Specialist Test| Complete Questions with 100% Correct Answers Sam pays his 19 yr. old son, Joshua, $550/month to maintain the lawn & garden at the family residence. Sam is subject to what household employment tax rules for Joshua? A. Since Joshua is not performing any child case services, the household tax rules do not apply. B. Since Joshua is the taxpayer's child under age 21, the household employment tax rules do not apply. C. Since no evidence is given that Joshua is a student, he is considered to be Sam's household employee. D. Since Joshua's wages are over $2,100 for the yr., Sam is subject to the household employment tax rules for Joshua. Answer: B A taxpayer should include which of the following when figuring their federal gross income? A. Prior-year federal income tax refund. B. Ordinary dividends. C. Personal injury compensation. D. Qualified disaster relief payments. Answer: B A taxpayer is required to file Schedule 1 (Form 1040) when claiming which of the following? A. Retirement savings contributions credit. B. Health savings account deduction C. Education credit D. Excess advance premium tax credit repayment Answer: B In 2018, the excise tax for excess contributions to a health savings account is _____________. A. 0% B. 6% C. 10% D. 20% Answer: B In 2018, the additional excise tax for non-qualified distributions from a health savings account is ____________. A. 0% B. 6% C. 10% D. 20% Answer: D Cynthia works full-time as a teacher's aide at an elementary school. In 2018, she paid $250 to participate in a professional development course, hoping to upgrade her job skills. Since she was no reimbursed for this expense, she would like to claim the educator expense deduction. As Cynthia's Tax Pro, what advice would you offer her? A. She may not claim the deduction b/c she is not considered an eligible educator. B. Since she spent the $250 on professional development rather than classroom supplies, she is not eligible for this deduction. C. She may claim the deduction since she is an eligible educator and the professional development course is a qualified expense. D. Since employee business expenses are no longer deductible on SCH A, she may not claim a deduction for the cost of the professional development course. Answer: C Major Winters, a member of the Army Reserve, traveled to a location 250 miles from his home to perform his work in the reserve in June 2018. His unreimbursed expenses consisted of $195 for lodging and $268 for mileage. In addition, he incurred mileage expenses of $235 throughout the yr. for trips to a location 20 miles from his home. How much is Major Winters eligible to deduct on SCH 1 (Form 1040), line 24, as an above-the-line adjustment? A. $0 B. $268 C. $463 D. $698 Answer: C Kimberly originally files her 2017 return on February 19, 2018. Under ordinary circumstances, what is the last day she can file an amended 2017 return? A. April 15, 2021 B. February 19, 2021 C. April 15, 2020 D. April 17, 2018 Answer: A All of the following issues may be corrected or changed by filing Form 1040X, Amended U.S. Individual Income Tax Return, EXCEPT: A. The amount of deductible medical expenses was reported incorrectly on the original return B. An error that was made on a trust return needs to be corrected C. Wages for a 2nd job were not initially reported D. A taxpayer who filed as a non-resident qualified for U.S. resident status Answer: B Michelle converted her personal residence to rental property in 2018. She purchased the property in 2014 for $110,000 of which $10,000 was allocable to the land. Unfortunately, property values in her neighborhood have declined over the past few yrs. On the date of conversion, the FMV of the property was $98,000; $10,000 was allocated to the land. Michelle's basis for depreciation in the property is: A. $88,000 B. $98,000 C. $100,000 D. $110,000 Answer: A Greg purchased a new machine for use in his business. He incurred the following costs with the purchase; $2,000 cash paid, $10,000 financed, a $500 delivery charge, and a $200 installation charge. Greg's basis on the machine is _____________. A. $2,000 B. $2,700 C. $12,000 D. $12,700 Answer: D All of the following decrease basis; EXCEPT: A. Casualty restoration beyond bringing the property to pre-casualty condition B. Insurance payments for a casualty loss C. Depreciation D. Cancelled debt Answer: A Wyatt, who is employed full-time as a software engineer, sometimes uses his time and talent to assist worthy causes. In 2018, he helped a local non-profit organization create a new website. Although his primary object was to help the organization, the directors insisted on compensating him. He received a Form 1099-MISC from the organization reporting non-employee compensation of $2,800 in box 7. How should Wyatt report this on his tax return? A. As other income on SCH 1 (Form 1040), line 21. He should deduct any applicable expenses on SCH A B. He should report income, less applicable expenses, as other income on SCH 1 (Form 1040), line 21 C. He should report this as self-employment income and deduct any eligible expenses on SCH C or SCH C-EZ D. Wyatt does not need to report this income since he performed the work for a non-profit organization Answer:C What is the max amount of lifetime learning credit that can be claimed on a tax return? A. $2,000 in total for the return B. $2,000 per eligible student claimed on the return C. $10,000 in total for the return D. $10,000 per eligible student claimed on the return Answer: A Which statement about education credits is FALSE? A. A student may qualify for the lifetime learning credit if they have a felony drug conviction B. Only 4-yr. colleges are eligible institutions for the American Opportunity Credit C. A taxpayer can claim the American Opportunity Credit for only 4 tax yrs. D. A taxpayer enrolled as a part-time student is eligible for the lifetime learning credit Answer: B A child no longer qualifies a taxpayer for the Child Tax Credit in the yr. the child reaches _______________ A. Age 17 B. Majority, which is 18 in most states C. Age 19 D. Age 19, or age 24 if the child is a full-time student at least five month of the yr. Answer: A How much of the American Opportunity Credit (AOC) may be refundable? A. 10% B. 25% C. 40% D. 55% Answer: C The 2 factors that may limit the max Child Tax Credit of $2,000 per qualifying child are ________________ A. Tax liability and earned income above the phase-out threshold for 3 or more children B. Earned income above the phase-out thresholds and taxpayer filing status C. Tax liability and modified adjusted gross income (MAGI) above the phase-out threshold D. Modified adjusted gross income (MAGI) above the phase-out threshold and 3 or more children Answer: C The portion of the American Opportunity Credit (AOC) that is refundable is _________________ A. 40% of expenses up to $1,000 B. A max of $2,500 C. 50% of the first $4,000 of expenses D. 20% of expenses up to $10,000 Answer: A The max amount of American Opportunity Credit (AOC) that can be claimed on a tax return is __________________ A. $2,500 in total for the return B. $2,500 per eligible student claimed on the return C. $4,000 in total for the return D. $4,000 per eligible student claimed on the return Answer: B What portion of a scholarship is taxable to a degree candidate attending an eligible institution?