H&R Block Income Tax Course exam
questions with correct answers
Circular 230 - CORRECT ANSWER-✔✔✅Regulations governing the practice of attorneys, certified
public accountants, enrolled agents, enrolled actuaries, and appraisers before the IRS.
Disclosure - CORRECT ANSWER-✔✔✅The release of tax information by an IRS employee.
Due Diligence - CORRECT ANSWER-✔✔✅Requirements that tax professionals must follow when
preparing income tax returns.
Noncompliance - CORRECT ANSWER-✔✔✅Failure or refusal to comply with the tax code.
Privilege - CORRECT ANSWER-✔✔✅Protection from being required to disclose confidential
communications between two parties, such as attorney and client.
Estimated Tax - CORRECT ANSWER-✔✔✅The amount of tax a taxpayer expects to owe for the year
after subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - CORRECT ANSWER-✔✔✅A statement by an individual of (1) the amount of
income tax he estimates he will incur during the current taxable year on income that is not subject to
withholding, (2) the excess amount over that withheld on income which is subject to withholding, and
(3) his estimated self-employment tax.
Exemption from Withholding - CORRECT ANSWER-✔✔✅Status claimed on Form W-4 directing the
employer not to withhold federal income taxes from the employee.
Underpayment Penalty - CORRECT ANSWER-✔✔✅If a taxpayer did not pay enough tax on a timely
basis during the year, he may be required to pay an underpayment penalty.
,Withholding Allowances - CORRECT ANSWER-✔✔✅An increase by which income tax withholding on
certain income is reduced.
Two Ways to Pay as You Go - CORRECT ANSWER-✔✔✅Withholding and Estimated Tax Payments
Form W-4 - CORRECT ANSWER-✔✔✅Employee's Withholding Allowance Certificate
Form 8815 - CORRECT ANSWER-✔✔✅Exclusion of Interest From Series EE and I U.S. Savings Bonds
Issued After 1989
Form 2210 - CORRECT ANSWER-✔✔✅Underpayment of Estimated Tax by Individuals, Estates, and
Trusts
Form 4868 - CORRECT ANSWER-✔✔✅Application for Automatic Extension of Time To File U.S.
Individual Income Tax Return
Form 8888 - CORRECT ANSWER-✔✔✅Allocation of Refund
Form 9465 - CORRECT ANSWER-✔✔✅Installment Agreement Request
Amended Return - CORRECT ANSWER-✔✔✅A tax return filed on Form 1040X after the original return
has been filed.
Closed Year - CORRECT ANSWER-✔✔✅A tax year for which the statute of limitations has expired.
Open Year - CORRECT ANSWER-✔✔✅A taxable year for which the statute of limitations has not yet
expired.
Failure-to-File Penalty - CORRECT ANSWER-✔✔✅Generally 5% for each month or part of a month the
return is late, but not more than 25% of the tax not paid.
,Failure to File - CORRECT ANSWER-✔✔✅Taxpayer fails to file the return by the due date, and there is
a balance due.
Failure to Pay - CORRECT ANSWER-✔✔✅Taxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty - CORRECT ANSWER-✔✔✅0.5% of the unpaid taxes for each month or part of a
month after the due date, but not more than 25%.
Negligence or Intentional Disregard - CORRECT ANSWER-✔✔✅Taxpayer shows negligence or
disregard of the rules or regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty - CORRECT ANSWER-✔✔✅20% of the underpayment.
Substantial Understatment - CORRECT ANSWER-✔✔✅Taxpayer understates their tax by the larger of
$5,000 or 10% of the correct tax.
Substantial-Understatement Penalty - CORRECT ANSWER-✔✔✅20% of the underpayment.
Form 1040X - CORRECT ANSWER-✔✔✅Amended U.S. Individual Income Tax Return
When can an amended return be filed? - CORRECT ANSWER-✔✔✅Within three years of the date the
original return was filed, or within two years of the date the tax was paid, whichever is later.
Can the 1040X be e-filed? - CORRECT ANSWER-✔✔✅No.
Household Employee - CORRECT ANSWER-✔✔✅An individual who performs nonbusiness services in a
taxpayer's home.
Active Income and Losses - CORRECT ANSWER-✔✔✅Those for which a taxpayer performs services.
, Partnership - CORRECT ANSWER-✔✔✅A form of business in which two or more persons join their
money and skills in conducting the business as co-owners.
Passive Income and Losses - CORRECT ANSWER-✔✔✅Those from business activities in which the
taxpayer does not materially participate, and all rental activities.
Portfolio Income and Losses - CORRECT ANSWER-✔✔✅Those from such sources as dividends,
interest, capital gains and losses, and royalties.
Rental Income - CORRECT ANSWER-✔✔✅Income received by the taxpayer for allowing another
person's use of the taxpayer's property.
Royalty - CORRECT ANSWER-✔✔✅(1) A payment received for the right to exploit a taxpayer's
ownership of natural resources or a taxpayer's literary, musical, or artistic creation. (2) An interest in
the oil and gas in place that entitles the holder to a specified fraction, in kind or in value, of the total
production from the property, free of any expenses of development and operation.
S Corporation - CORRECT ANSWER-✔✔✅A qualified small business corporation that has elected
special tax treatment under subchapter S of the Internal Revenue Code. S corporations pass income,
losses, and deductions through to shareholders to report on their individual returns.
Trust - CORRECT ANSWER-✔✔✅A tax entity that distributes all or part of its income to beneficiaries
as instructed by the trust agreement.
Requirements for a Real Estate Professional - CORRECT ANSWER-✔✔✅1. More than half of the
personal services performed by the taxpayer in all trades or businesses during the tax year were
performed in real property trades or businesses in which the taxpayer materially participated.
2. The taxpayer performed more than 750 hours of services during the year in real property trades or
businesses in which the taxpayer materially participated.
questions with correct answers
Circular 230 - CORRECT ANSWER-✔✔✅Regulations governing the practice of attorneys, certified
public accountants, enrolled agents, enrolled actuaries, and appraisers before the IRS.
Disclosure - CORRECT ANSWER-✔✔✅The release of tax information by an IRS employee.
Due Diligence - CORRECT ANSWER-✔✔✅Requirements that tax professionals must follow when
preparing income tax returns.
Noncompliance - CORRECT ANSWER-✔✔✅Failure or refusal to comply with the tax code.
Privilege - CORRECT ANSWER-✔✔✅Protection from being required to disclose confidential
communications between two parties, such as attorney and client.
Estimated Tax - CORRECT ANSWER-✔✔✅The amount of tax a taxpayer expects to owe for the year
after subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - CORRECT ANSWER-✔✔✅A statement by an individual of (1) the amount of
income tax he estimates he will incur during the current taxable year on income that is not subject to
withholding, (2) the excess amount over that withheld on income which is subject to withholding, and
(3) his estimated self-employment tax.
Exemption from Withholding - CORRECT ANSWER-✔✔✅Status claimed on Form W-4 directing the
employer not to withhold federal income taxes from the employee.
Underpayment Penalty - CORRECT ANSWER-✔✔✅If a taxpayer did not pay enough tax on a timely
basis during the year, he may be required to pay an underpayment penalty.
,Withholding Allowances - CORRECT ANSWER-✔✔✅An increase by which income tax withholding on
certain income is reduced.
Two Ways to Pay as You Go - CORRECT ANSWER-✔✔✅Withholding and Estimated Tax Payments
Form W-4 - CORRECT ANSWER-✔✔✅Employee's Withholding Allowance Certificate
Form 8815 - CORRECT ANSWER-✔✔✅Exclusion of Interest From Series EE and I U.S. Savings Bonds
Issued After 1989
Form 2210 - CORRECT ANSWER-✔✔✅Underpayment of Estimated Tax by Individuals, Estates, and
Trusts
Form 4868 - CORRECT ANSWER-✔✔✅Application for Automatic Extension of Time To File U.S.
Individual Income Tax Return
Form 8888 - CORRECT ANSWER-✔✔✅Allocation of Refund
Form 9465 - CORRECT ANSWER-✔✔✅Installment Agreement Request
Amended Return - CORRECT ANSWER-✔✔✅A tax return filed on Form 1040X after the original return
has been filed.
Closed Year - CORRECT ANSWER-✔✔✅A tax year for which the statute of limitations has expired.
Open Year - CORRECT ANSWER-✔✔✅A taxable year for which the statute of limitations has not yet
expired.
Failure-to-File Penalty - CORRECT ANSWER-✔✔✅Generally 5% for each month or part of a month the
return is late, but not more than 25% of the tax not paid.
,Failure to File - CORRECT ANSWER-✔✔✅Taxpayer fails to file the return by the due date, and there is
a balance due.
Failure to Pay - CORRECT ANSWER-✔✔✅Taxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty - CORRECT ANSWER-✔✔✅0.5% of the unpaid taxes for each month or part of a
month after the due date, but not more than 25%.
Negligence or Intentional Disregard - CORRECT ANSWER-✔✔✅Taxpayer shows negligence or
disregard of the rules or regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty - CORRECT ANSWER-✔✔✅20% of the underpayment.
Substantial Understatment - CORRECT ANSWER-✔✔✅Taxpayer understates their tax by the larger of
$5,000 or 10% of the correct tax.
Substantial-Understatement Penalty - CORRECT ANSWER-✔✔✅20% of the underpayment.
Form 1040X - CORRECT ANSWER-✔✔✅Amended U.S. Individual Income Tax Return
When can an amended return be filed? - CORRECT ANSWER-✔✔✅Within three years of the date the
original return was filed, or within two years of the date the tax was paid, whichever is later.
Can the 1040X be e-filed? - CORRECT ANSWER-✔✔✅No.
Household Employee - CORRECT ANSWER-✔✔✅An individual who performs nonbusiness services in a
taxpayer's home.
Active Income and Losses - CORRECT ANSWER-✔✔✅Those for which a taxpayer performs services.
, Partnership - CORRECT ANSWER-✔✔✅A form of business in which two or more persons join their
money and skills in conducting the business as co-owners.
Passive Income and Losses - CORRECT ANSWER-✔✔✅Those from business activities in which the
taxpayer does not materially participate, and all rental activities.
Portfolio Income and Losses - CORRECT ANSWER-✔✔✅Those from such sources as dividends,
interest, capital gains and losses, and royalties.
Rental Income - CORRECT ANSWER-✔✔✅Income received by the taxpayer for allowing another
person's use of the taxpayer's property.
Royalty - CORRECT ANSWER-✔✔✅(1) A payment received for the right to exploit a taxpayer's
ownership of natural resources or a taxpayer's literary, musical, or artistic creation. (2) An interest in
the oil and gas in place that entitles the holder to a specified fraction, in kind or in value, of the total
production from the property, free of any expenses of development and operation.
S Corporation - CORRECT ANSWER-✔✔✅A qualified small business corporation that has elected
special tax treatment under subchapter S of the Internal Revenue Code. S corporations pass income,
losses, and deductions through to shareholders to report on their individual returns.
Trust - CORRECT ANSWER-✔✔✅A tax entity that distributes all or part of its income to beneficiaries
as instructed by the trust agreement.
Requirements for a Real Estate Professional - CORRECT ANSWER-✔✔✅1. More than half of the
personal services performed by the taxpayer in all trades or businesses during the tax year were
performed in real property trades or businesses in which the taxpayer materially participated.
2. The taxpayer performed more than 750 hours of services during the year in real property trades or
businesses in which the taxpayer materially participated.
