HRB-27 Final Exam Review Questions and
Answers 100% Solved
What is a qualified student loan? • Any type of loan used to pay qualified expenses. Credit
card debt may be included, provided the card was used exclusively to pay for qualified expenses.
• Money borrowed from a related person is not a qualified student loan. (11.5)
Where are moving expenses deducted on Form 1040? Line 26, from Form 3903
What are qualified medical expenses with regards to an HSA? Unreimbursed medical
expenses that would normally be deductible on Schedule A (11.16)
What form is used to report HSA contributions and determine any allowable deduction?
Form 8889. Reported on Form 1040 Line 25.
What is a qualified retirement plan? A plan which is eligible for favorable tax treatment
because it meets the requirements of IRC §401(a) and the Employment Retirement Income
Security Act of 1974 (ERISA) (21.2)
What is the 2009 contribution limit to 401(k) plans? • The maximum contribution for
2009 is $16,500 (and 2010).
• Taxpayers age 50 and above are allowed a $5,500 annual "catch-up" contribution. (21.4)
In tax terms, what is it called when a taxpayer puts money into an IRA? Contribution.
What is it called when a taxpayer takes money out of an IRA? Distribution.
,What is it called if a taxpayer takes money out of one IRA and puts it into another (and all
requirements are met)? Roll-over.
What is the last date on which a contribution may be made and qualify as a contribution for a
given year? The due date (not including extensions) of the return for that year.
Why is it important to distinguish between taxpayers who are active participants in an employer-
maintained retirement plan and those who are not? • Those who are not active participants
and whose spouses are not active participants may deduct the full amount they contribute to a
traditional IRA, assuming they stay within the contribution limits.
• Those who are active participants or whose spouses are active participants may still contribute
within the limits but may find their allowable deduction reduced or eliminated. (21.13)
What are the main differences between traditional IRAs and Roth IRAs? • Contributions
to a Roth IRA are never deductible, but qualified distributions are exempt from tax.
• Participation in an employer-maintained retirement plan has no effect on Roth IRA
contributions, and contributions can be made after the taxpayer has reached age 70½.
• As long as they have compensation, contributions to Roth IRAs are not reported on the tax
return. (21.15)
Under what circumstances do you need to determine whether a taxpayer paid over half of the
cost of maintaining his home? If you are determining if the taxpayer may be considered
unmarried, a qualifying widow(er), or head of household. (5.2)
What are some of the costs of maintaining a home? • Rent
, • Mortgage interest
• Real Estate Taxes
• Homeowners Insurance
• Property Taxes
• Repairs
• Utilities
• Food eaten in the home
(5.3)
What requirements must be met for a taxpayer to use the qualifying widow(er) status? •
The death of the taxpayer's spouse must have occurred during one of the two preceding tax years;
• The taxpayer must not have remarried and must have been entitled to file a joint return for the
year of death.
• The taxpayer must have paid over half the cost of maintaining the home which, for the entire
year, was the main home of their dependent son, daughter, stepson, or stepdaughter.
In general, which parent gets to claim the qualifying child in a divorce? The custodial
parent. (5.7)
What is the exception to the custodial parent qualifying child rule? • If a decree of divorce
or separate maintenance or written separation agreement that became effective after October 4,
2004, states that the noncustodial parent is entitled to claim the child's dependency exemption, or
Answers 100% Solved
What is a qualified student loan? • Any type of loan used to pay qualified expenses. Credit
card debt may be included, provided the card was used exclusively to pay for qualified expenses.
• Money borrowed from a related person is not a qualified student loan. (11.5)
Where are moving expenses deducted on Form 1040? Line 26, from Form 3903
What are qualified medical expenses with regards to an HSA? Unreimbursed medical
expenses that would normally be deductible on Schedule A (11.16)
What form is used to report HSA contributions and determine any allowable deduction?
Form 8889. Reported on Form 1040 Line 25.
What is a qualified retirement plan? A plan which is eligible for favorable tax treatment
because it meets the requirements of IRC §401(a) and the Employment Retirement Income
Security Act of 1974 (ERISA) (21.2)
What is the 2009 contribution limit to 401(k) plans? • The maximum contribution for
2009 is $16,500 (and 2010).
• Taxpayers age 50 and above are allowed a $5,500 annual "catch-up" contribution. (21.4)
In tax terms, what is it called when a taxpayer puts money into an IRA? Contribution.
What is it called when a taxpayer takes money out of an IRA? Distribution.
,What is it called if a taxpayer takes money out of one IRA and puts it into another (and all
requirements are met)? Roll-over.
What is the last date on which a contribution may be made and qualify as a contribution for a
given year? The due date (not including extensions) of the return for that year.
Why is it important to distinguish between taxpayers who are active participants in an employer-
maintained retirement plan and those who are not? • Those who are not active participants
and whose spouses are not active participants may deduct the full amount they contribute to a
traditional IRA, assuming they stay within the contribution limits.
• Those who are active participants or whose spouses are active participants may still contribute
within the limits but may find their allowable deduction reduced or eliminated. (21.13)
What are the main differences between traditional IRAs and Roth IRAs? • Contributions
to a Roth IRA are never deductible, but qualified distributions are exempt from tax.
• Participation in an employer-maintained retirement plan has no effect on Roth IRA
contributions, and contributions can be made after the taxpayer has reached age 70½.
• As long as they have compensation, contributions to Roth IRAs are not reported on the tax
return. (21.15)
Under what circumstances do you need to determine whether a taxpayer paid over half of the
cost of maintaining his home? If you are determining if the taxpayer may be considered
unmarried, a qualifying widow(er), or head of household. (5.2)
What are some of the costs of maintaining a home? • Rent
, • Mortgage interest
• Real Estate Taxes
• Homeowners Insurance
• Property Taxes
• Repairs
• Utilities
• Food eaten in the home
(5.3)
What requirements must be met for a taxpayer to use the qualifying widow(er) status? •
The death of the taxpayer's spouse must have occurred during one of the two preceding tax years;
• The taxpayer must not have remarried and must have been entitled to file a joint return for the
year of death.
• The taxpayer must have paid over half the cost of maintaining the home which, for the entire
year, was the main home of their dependent son, daughter, stepson, or stepdaughter.
In general, which parent gets to claim the qualifying child in a divorce? The custodial
parent. (5.7)
What is the exception to the custodial parent qualifying child rule? • If a decree of divorce
or separate maintenance or written separation agreement that became effective after October 4,
2004, states that the noncustodial parent is entitled to claim the child's dependency exemption, or
