H&R Block Exam Questions and Answers
Graded A+
Earned Income - Correct answer-received for services performed. some examples
include wages, commissions, tips, farming, and other business income.
Unearned Income - Correct answer-taxable income that does not meet the
definition of earned income. Examples of unearned income include interest
income, dividends, rents and royalties, pensions, alimony, and unemployment
income.
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. Some states tax
municipal bond interest from outside the state, and from their own state. Depends
on the state.
,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-The taxpayer's filing status,
age at the end of the tax year, and gross income for the year.
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Jobs Act of 2017 repealed this deduction beginning in 2018.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 protect their portion of a refund from a spouse's past-due federal
income tax, unpaid student loans, unpaid child and spousal support, or state income
tax.
The IRS provides innocent spouse relief to taxpayers who file a joint return and
later learn that their spouse has underestimated income (or overstated a credit or
deduction) on the return.
Is unemployment compensation taxable? - Correct answer-Yes, unemployment
compensation is fully taxable.
Are scholarships and fellowships taxable? - Correct answer-Sometimes. Generally,
scholarships and fellowships are excluded from income by degree-seeking
candidates to the extent that they are used to pay qualified education expenses,
such as tuition and course-related fees. However, if they are used to pay for room
and board or other expenses, they are taxable.
What document will the taxpayer receive from their employer reporting disability
pension payments? - Correct answer-The income is reported on Form 1099-R.
, Under what circumstances can a disability pension qualify as earned income for
the EIC? - Correct answer-Disability pension income received before the taxpayer
attains minimum retirement age for their company is reported as wage income. It is
also considered earned income for purposes of EIC.
What types of income must be reported on Schedule 1 (Form 1040) and then
reported on Form 1040? - Correct answer-Gambling winnings, alimony, jury duty
pay, canceled debts, and hobby income are some examples of income that must be
reported on Schedule 1 (Form 1040) and then reported on Form 1040.
What are the adjustments that can be claimed on Schedule 1 (Form 1040)? -
Correct answer-Some examples of adjustments that can be claimed on Schedule 1
are:
Educator expense deduction.
The health savings account (HSA) deduction.
Moving expenses for members of the military.
Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty on early withdrawal of savings.
Graded A+
Earned Income - Correct answer-received for services performed. some examples
include wages, commissions, tips, farming, and other business income.
Unearned Income - Correct answer-taxable income that does not meet the
definition of earned income. Examples of unearned income include interest
income, dividends, rents and royalties, pensions, alimony, and unemployment
income.
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. Some states tax
municipal bond interest from outside the state, and from their own state. Depends
on the state.
,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-The taxpayer's filing status,
age at the end of the tax year, and gross income for the year.
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 protect their portion of a refund from a spouse's past-due federal
income tax, unpaid student loans, unpaid child and spousal support, or state income
tax.
The IRS provides innocent spouse relief to taxpayers who file a joint return and
later learn that their spouse has underestimated income (or overstated a credit or
deduction) on the return.
Is unemployment compensation taxable? - Correct answer-Yes, unemployment
compensation is fully taxable.
Are scholarships and fellowships taxable? - Correct answer-Sometimes. Generally,
scholarships and fellowships are excluded from income by degree-seeking
candidates to the extent that they are used to pay qualified education expenses,
such as tuition and course-related fees. However, if they are used to pay for room
and board or other expenses, they are taxable.
What document will the taxpayer receive from their employer reporting disability
pension payments? - Correct answer-The income is reported on Form 1099-R.
, Under what circumstances can a disability pension qualify as earned income for
the EIC? - Correct answer-Disability pension income received before the taxpayer
attains minimum retirement age for their company is reported as wage income. It is
also considered earned income for purposes of EIC.
What types of income must be reported on Schedule 1 (Form 1040) and then
reported on Form 1040? - Correct answer-Gambling winnings, alimony, jury duty
pay, canceled debts, and hobby income are some examples of income that must be
reported on Schedule 1 (Form 1040) and then reported on Form 1040.
What are the adjustments that can be claimed on Schedule 1 (Form 1040)? -
Correct answer-Some examples of adjustments that can be claimed on Schedule 1
are:
Educator expense deduction.
The health savings account (HSA) deduction.
Moving expenses for members of the military.
Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty on early withdrawal of savings.
