H & R Block Income Tax Study Guide (New 2024/ 2025 Update) Questions and Verified Answers| 100% Correct
QUESTION
Exceptions to the Early
... [Show More] Withdrawal Penalty
Answer:
01 - The distribution was made to an employee who separated from service during or after the
year in which they reached age 55.
02 - The distribution is part of a series of substantially equal periodic payments, made at least
annually for the life of the participant or the life expenctancy of the participant.
03 - The distribution was made due to permanent and total disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical expenses exceeds 7.5% of
AGI.
06 - The distribution was made to an alternate payee under a qualified domestic relations order.
07 - The distribution was made in a year an unemployed taxpayer paid health insurance
premiums.
08 - The distribution was made to pay qualified higher education expenses for the taxpayer,
spouse, their child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-buying expenses.
10 - The distribution was made due to an IRS levy of the qualified plan.
11 - The distribution was made to a reservist while serving on active duty for at least 180 days.
12 - Other.
QUESTION
401(k) Plan
Answer:
Deferred compensation plan available through a wide range of employers. Contributions to a
401(k) plan are tax deferred to the employee. Distributions from the plan are taxed as ordinary
income to the recipient when received.
QUESTION
Roth IRA
Answer:
A type of individual arrangement in which contributions are not tax deductible, earnings grow
tax deferred, and qualified withdrawals are tax free.
QUESTION
Traditional IRA
Answer:
An individual retirement arrangement, contributions to which may or may not be deductible
depending on the taxpayer's AGI and whether or not he is covered under an employer-sponsored
retirement plan. Earnings within a traditional IRA grow tax-deferred. Distributions from a
traditional IRA are taxable except to the extent they represent nondeductible contributions.
QUESTION
Qualified Plan
Answer:
A plan which is eligible for favorable tax treatment because it meets the requirements of both the
following: IRC 401(a); the Employment Retirement Income Security Act of 1974.
QUESTION
Nonqualified Plan
Answer:
A plan that does not meet the requirements of IRC 401(a) and ERISA and do not qualify for
favorable tax treatment.
QUESTION
403(b) Plans
Answer:
A tax-advantaged retirement savings plan available for employees of: public education
organizations; some non-profit organizations; cooperative hospital service organizations.
QUESTION
Contribution
Answer:
When a taxpayer puts money into an IRA.
QUESTION
Rollover
Answer:
When a taxpayer moves money from one IRA to another.
QUESTION
Three Sets of Rules for IRAs
Answer:
Taxpayers who are active participants in employer-maintained retirement plans at any time
during the year; taxpayers who are not active participants, including joint filers whose spouses
are not active participants; joint filers who are not active participants, but whose spouses are
active participants.
QUESTION
American Opportunity Credit (AOC)
Answer:
Credit for qualifying education expenses available for tax years 2009 through 2012. The AOC
may be partially refundable.
QUESTION
Credits
Answer:
Reductions of tax liability allowed for various purposes to taxpayers who meet the qualifications.
Some credits are refundable; that is, the IRS will send the taxpayer a refund for any amount in
excess of the tax liability. Some credits are nonrefundable; that is, they can only reduce tax
liability to zero. Some credits may be carried to other tax years.
QUESTION
Lifetime Learning Credit
Answer:
A nonrefundable credit equal to 20% of the first $10,000 of qualified higher education tuition
and fees paid during the year on behalf of the taxpayer, his spouse, or his dependents.
QUESTION
Nonrefundable Credit
Answer:
A credit which cannot exceed the taxpayer's tax liability. [Show Less]