HRB FINAL EXAM Actual 328 Questions And 100

HRB FINAL EXAM (Actual / ) 328 Questions And 100% Verified Correct Answers.

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

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What is the third due diligence requirement for the EITC, CTC/ACTC, and AOTC, and how does a paid preparer meet this requirement for EITC and CTC/ACTC?

Knowledge Requirement: Tax preparer cannot know of or have

any reason to know that any information used to determine taxpayers eligibility for, or the amount of , the credit is incorrect or inconsistent. Tax Preparers must complete the smell test (Retain notes and ask open end questions)

Is unemployment compensation taxable?Yes

Are scholarships and fellowships taxable?If the student is a non degree candidate or is not attending an eligible educational institution then the scholarship or fellowship are fully taxable

What documents will the taxpayer receive from their employer reproting disability pension payments?1099R

Where is income from disability pension payments entered on Form 1040 A? 2 / 4

1040 A line 7 Note: once the taxpayer reaches minimum

retirement age, pension income is reported on Form 1040A lines 12a and 12b..it could go on line 12a or b if retired

Under what circumstances can a d disability pension qualify as earned income for the EITC Before the taxpayer reaches minimum retirement age, income is treated as wage income and is considered earned income for EITC purposes

What types of income must be reported on Form 1040 and cannot be reported on Form 1040a?Gambling winnings, Alimony, Prizes and Awards, jury duty, hobby income (compare 1040 and 1040A if you need help figuring it out

CHAPTER 14: ADJUSTMENTS

What are the four adjustments that can be claimed on Form 1040A Educator Expenses, IRA Deduction, Student Loan Interest Deduction, Tuition and Fees Deduction

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How much may an eligible educator deduct for qualified classroom expenses as an adjustment to income?$250 per educator

Who is an eligible educator?Someone who worked 900 hours during the school year as a teacher, instructor, teachers aide, counselor principal or administrator in an elementary or secondary school (Kindergarten to 12th)

Where is the educator expense reported?1040 pg 1 Line 23, 1040A Line 16

Who may not claim a student loan interest deduction?If they file married filing seperately, some claims them as a dependent, must be legally obligated to pay the loan

What is a qualified student loan?A loan taken out by a tax payer solely to pay qualified

education expenses that were for: the taxpayer, the taxpayers

spouse or a person who was the taxpayers dependent when

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