H & R Block Income Tax Final Exam Review
(New 2024/ 2025 Update) Questions and
Verified Answers| 100% Correct| Graded A
QUESTION
If a taxpayer
... [Show More] is subject to both the failure-to-file and failure-to-pay penalty, how is the combined
penalty calculated?
Answer:
The failure-to-file penalty for that month is reduced by the failure-to-pay penalty for that month
for a combined penalty of 5% of the unpaid taxes.
QUESTION
If a taxpayer receives an adjustment letter from the IRS showing a balance due, is an amended
return always required?
Answer:
No. If the taxpayer agrees with the adjustment, they may simply pay the balance due. If they
believe their original return, as filed, was correct, they can respond to the letter and provide any
additional documentation required.
QUESTION
If a taxpayer's employer paid part of their child care expenses, how will this affect their Child
and Dependent Care Credit, and on which form is it reported to the taxpayer?
Answer:
The expenses eligible for the credit must be reduced by the employer-provided assistance that
can be excluded from income. Dependent care expenses are reported in box 10 of Form W-2.
QUESTION
If an employee thinks their Form W-2 is incorrect, what should they do?
Answer:
If the taxpayer's name, social security number, earnings, or withholdings are incorrect, the
taxpayer should notify their employer and request a corrected Form W-2. The employee should
request that the employer update their records and verify that the earnings were properly credited
with the Social Security Administration. However, the taxpayer is still responsible for filing a
timely tax return. If the employee's attempts to obtain a corrected Form W-2 from their employer
are not successful, the taxpayer should notify the IRS. It may be necessary to prepare a substitute
Form W-2.
QUESTION
If the taxpayer has contract labor, or subcontractors, what should you remind the taxpayer that
they should do?
Answer:
File Forms 1099-NEC. This is required if they are paid more than $600 but can still be
completed for amounts lower than $600.
QUESTION
In the case of divorced or separated parents, which parent generally gets to claim the qualifying
child?
Answer:
The custodial parent, according to the IRS definition, which is the person with whom the child
spent more nights during the year.
QUESTION
In what situations does the 20% accuracy penalty apply?
Answer:
The 20% penalty applies if any of the following are involved:
Negligence or intentional disregard of the rules and regulations.
Substantial understatement of income tax.
Substantial misstatement of valuation.
Substantial overstatement of pension liabilities.
Substantial estate or gift tax valuation understatement.
Disallowance of benefits claimed for a transaction that lacks economic substance.
Undisclosed foreign financial assets.
Inconsistent estate basis.
QUESTION
Is interest received on U.S. Treasury obligations taxable on state and/or local returns?
Answer:
No. Interest on U.S. Treasury obligations is exempt from state a [Show Less]