1 HRB FINAL EXAM (All Chapters Covered) Questions with Correct Verified Answers/ Latest Update 2024/ Rated A+
What information do you need to know to determine whether a taxpayer is required to file a return? - ANS - Gross income, filing status, age and if they are a dependent
For tax purposes, when is a person's marital status determined? - ANS - On the last day of the tax year
Where on the tax form can you find the regular standard deduction amounts? - ANS - 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? - ANS - $1550 if unmarried, $1250 if married
What is the personal exemption amount for 2016? - ANS - $4,050
What two amounts are combined to make up the gross income filing requirements for most taxpayers? - ANS - 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? - ANS
- Has net employment of $400 or more net self-employment
- You had unemployment income you owe Medicare Advantage MSA, receive HAS,
Archer, MSA 1 / 4
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- Received an Advanced Premium Tax credit even if they didn't otherwise have a filing
requirement for the year *Tips, HSA, SE $400, PTC
What is the difference between injured spouse allocation and innocent spouse relief? - ANS - 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 bit 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
In tax terms, what is it called when a taxpayer puts money into an IRA and what is it called when a taxpayer takes money out of an IRA? - ANS - Contribution and Distribution
What is it called if a taxpayer takes money of one IRA and puts into another IRA (and all requirements are met)? - ANS - rollover
Who is eligible to to establish a traditional IRA? - ANS - Any taxpayer who has not reached age 70 1/2 at the end of the year and who has received compensation during the tax year. This includes self-employed taxpayers
What is the Ira contribution limit for 2016? - ANS - $5500 - $6500 if taxpayer has reached age 50 by the end of the year or 100% of taxpayer compensation
What is the last date on which an IRA contribution may be made and qualify as a contribution for a given year? - ANS - (18.9) An IRA may be established and contributed to until the due date (not including extensions) of the return for the year on or before April 18, 2017
Why is it important to distinguish between taxpayers who are active participants in an employer-maintained retirement plan and those who are not? - ANS - Those who are not active and whose spouses are not active may deduct the full amount they contribute to a traditional IRA assuming they stay within the contribution limits. Those are 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 2 / 4
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What four requirements must be met for an individual to be claimed as a dependent - ANS - Must pass the dependent test, joint return test, citizenship, qualifying child or relative
What are the main differences between traditional IRAs and Roth IRAs? - ANS - contributions to a Roth 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 taxpayer has reached 70 1/2.Contributions to Roth IRA are not reported on the tax return as long as you have income
What are the five tests for a qualifying child? - ANS –
- Relationship
- Age
- Residency
- Support
- Joint Return
How can a married individual meet the joint return test to remain a qualifying child? - ANS - 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? - ANS - Total support is determined and reduced by the funds received by and for the person from all sources other than the taxpayer. 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? - ANS - Generally, the custodial parent is the one in which the child spent the most nights
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4 What happens when more than one taxpayer claims the same qualifying child? - ANS - Tie Breaker Rules apply: 1. The parent, if only one of the persons is the child’s 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? -
ANS –
- Not be a qualifying child, the person cannot be the taxpayers qualifying child or the
- Relationship: Child, brother, sister, step sister, step brother, step father, step mother,
qualifying child of another taxpayer
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? - ANS - Gross income must be less than $4050 (Do not include tax exempt income)
What is the purpose of Form 2120 Multiple Support Declaration? - ANS - 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? - ANS - $1,000
What additional requirements must be met for a taxpayer to be eligible to claim the Child Tax Credit for the qualifying child? - ANS –
- Taxpayer
- Child must be under17 at the end of the year
- Qualifying child must be claimed on tax payer returns
- Qualifying child must be US Citizen US National or resident of US
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