HRB FINAL EXAM STUDY GUIDE 100% Correct Answers Verified Latest 2024 Version
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HRB FINAL EXAM STUDY GUIDE | 100% Correct
Answers | Verified | Latest 2024 Version
What is the Difference between earned income and unearned income? - Earned income is received
for services performed. Examples are wages commissions, tips and generally farming and other business
income . Taxable...
HRB FINAL EXAM STUDY GUIDE | 100% Correct
Answers | Verified | Latest 2024 Version
What is the Difference between earned income and unearned income? - ✔✔Earned income is received
for services performed. Examples are wages commissions, tips and generally farming and other business
income . Taxable income other than that received for services performed. Unearned Income includes
money received ro the investment of money or other property, such as interest, dividends, and royalties.
It also includes pensions alimony, unemployment compensation and other income that is not earned
If an employee thinks their Form W2 is incorrect, what should they do? - ✔✔Employee should discuss
with employer who issued the document and request a W2C. If no help from employer, notify IRS. Tax
prepaper can then file a substitute.
What information do you need to know to determine whether a taxpayer is required to file a return? -
✔✔Gross income, filing status, age and if they are a dependent
For tax purposes, when is a person's marital status determined? - ✔✔On the last day of the tax year
Where on the tax form can you find the regular standard deduction amounts? - ✔✔Line 22 on 1040A, In
the left margin at the top of the page 2 of forms 1040 and 1040A. Look at actual form to look for line
How much is added to the standard deduction if the taxpayer (or spouse is age 65 or older, or blind? -
✔✔$1550 if unmarried, $1250 if married
What is the personal exemption amount for 2016? - ✔✔$4,050
What two amounts are combined to make up the gross income filing requirments for most taxpayers? -
✔✔The standard deduction and the personal exemption amounts
Under what circumstances might a taxpayer be required to file a return even though they do not meet
the gross income filing requirements? - ✔✔1. Has net employment of $400 or more net self
employment 2. You had unemployment income you owe medicare Advantage MSA, receive HAS, Archer,
,MSA 3. Reeived an Advanced Premium Tax credit even if they didn't otherwise have a filing requirment
for the year *Tips, HSA, SE $400, PTC
What is the difference between injured spouse allocation and innocent spouse relief? - ✔✔The
difference between injured spouse and innocent spouse is significant in the eyes of the IRS. Both release
you from an income tax liability arising from a "married filing jointly" return but different outcomes.
Innocent spouse filed a joint return byt was unaware that their spouse deliberately under reported tax
liability. Injured spouse seeks to protect his or her share of the refund in case it gets seized or offset due
to the other spouse's debts or unpaid obligations
CHAPTER 3: DEPENDENT EXEMPTIONS AND SUPPORT - ✔✔
What four requirements must be met for an individual to be claimed as a dependent - ✔✔Must pass the
dependent test, joint return test, citizenship, qualifying child or relative
What are the five tests for a qualifying child? - ✔✔1. Relationship 2. Age 3. Residency 4. Support 5. Joint
Return
How can a married individual meet the joint return test to remain a qualifying child? - ✔✔They can meet
this test by not filing a joint return with their spouse or they can file a joint return with their spouse if
they are filing only to claim a refund on any taxes withheld
How can you determine who paid more than half of a person's support? - ✔✔Total support is
determined and reduced by the funds received by and for the person from all sources other than the
taxpaer. The remaining support is considered to be provided by the taxpayer. Other sources might
include government support Worksheet for Determining Support
What happens if an individual is a qualifying child of more than one taxpayer? - ✔✔Generally, the
custodial parent is the one in which the child spent the most nights
What happens when more than one taxpayer claims the same qualifying child? - ✔✔Tie Breaker Rules
apply : 1. The parent, if only one of the persons is the childs parent 2. The parent with whom the child
lived the longest during the tax 3. The parents with the highest AGI if no parent can claim the child as a
qualifying child
,What four tests must be met for an individual to be considered a qualifying relative? - ✔✔1. Not be a
qualifying child, the person cannot be the taxpayers qualifying child or the qualifying child of another
taxpayer 2. Relationship: Child, brother, sister, step sister, step brother, step father , step mother, in-laws
3. Gross Income: gross income must be less than $4050 4. Support: Taxpayer must provide more than
half the support
How can the gross income for a qualifying relative test be satisfied? - ✔✔Gross income must be less than
$4050 (Do not include tax exempt income)
What is the purpose of Form 2120 Multiple Support Declaration? - ✔✔You only need 2120 multiple
support declaration if you are claiming someone other than a qualifying child as a dependent and there
are two or more people including yourself who provide support for the dependent
How much is the child tax credit worth? - ✔✔$1,000
What additional requirements must be met for a taxpayer to be eligible to claim the Child Tax Credit for
the qualifying child? - ✔✔1. Taxpayer 2. Child must be under17 at the end of the year 3. Qualifying child
must be claimed on tax payer returns 4. Qualifying child must be US Citizen US National or resident of US
Is the Child Tax Credit refundable or nonrefundable - ✔✔CTC is nonrefundable the The additional child
tax credit is refundable
How much is the penalty if a paid prepaerer fails to meet the child tax credit due diligence requirements
- ✔✔$510 for each failure, for each credit on each return Total Penalty max for return is $1530
What is the first due diligence requirement for the EITC, CTC,ACTC, AOTC and how does a paid preparer
meet this requirement? - ✔✔Complete and submit the form 8867. 1. Complete the form thoroughly and
conscientously read the form carefully 2. submit the form on every claim for eitc, ctc/actc and aotc
CHAPTER 4: DEPENDENT-RELATED FILING STATUS - ✔✔
, What filing statuses are available to taxpayers who are unmarried - ✔✔1. Single 2. Head of Household 3.
Qualifying widow(er)
How may a married taxpayer qualify as unmarried for tax purposes? - ✔✔Must be legally seperated
under a decree of divorce or separate maintenance or meet these requirements: 1. must file a separate
return 2. must have provided more than half the cost of maintaining a household 3. the home must have
been the principle place of abode
What requirements must be met for a taxpayer to qualify to file as head of household - ✔✔1. unmarried
on the last day of year 2. paid more than 1/2 to maintain home 3. taxpayer has qualifying child or
relative or parent
What are some of the costs of maintaining a home? - ✔✔Rent, mortgage interest, real estate taxes,
homeowner or renter insurance, repairs/maintenance, utilities, food eaten in home
What requirements must be met for a taxpayer to use the qualifying wideo(er) status? - ✔✔1. Taxpayer's
spouse died in either of the two tax years immediately preceding the current tax year 2. Taxpayer paid
over half the cost of maintaining the household wich is home of their dependent son , stepson or step
daughter for the entire year and cannot remarry
In the case of divorced or separated parents, which parent generally gets to claim the qualifying child? -
✔✔Generally, the custodial parent is the one in which the child spent the most nights. If child lived equal
nights, the parent with the higher AGI
What is the exception to this rule? - ✔✔Custodial parent may waive the right to claim dependency
exemption (Form 8332)
What happens when more than one taxpayer claims the same qualifying child? - ✔✔The IRS will apply
the TIE BREAKER RULES
CHAPTER 6: ITEMIZED DEDUCTIONS - ✔✔
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