H & R Block Midterm Review

The head of household filing status requires that a taxpayer maintain a household for? A.) A qualifying child, qualifying relative, or a parent claimed as a dependent on the taxpayer's return B.) At least one other person C.) A beloved family pet D.) Maintaining a household for another person is not a requirement of the head of household filing status.

A.) A qualifying child, qualifying relative, or a parent claimed as a dependent on the taxpayer's return

After suffering a debilitating injury, Ahmad (47) retired on disability after teaching high-school math for several years. He had not yet reached the minimum retirement age for the district where he taught. If Ahmad's employer paid the premiums on his disability insurance policy using pre-tax dollars, how does he report the disability benefits reported to him on Form 1099-R? A.) As taxable wage income reported on Form 1040, line 1. B.) As nontaxable wage income reported on Form 1040, line 1. C.) As taxable pension income reported on Form 1040, line 4. D.) As nontaxable pension income reported on Form 1040, line 4.

A.) As taxable wage income reported on Form 1040, line 1.

Taxpayers who have any financial interest in, or signature authority over, a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country may have to report this information by filing? A.) FinCEN Form 114 B.) Form 1116 C.) Form 6251 D.) Form 8275

A.) FinCEN Form 114

Which form is used by employers to report wages earned by their employees? A.) Form W-2 B.) Form W-4 C.) Form 1098-T D.) Form 1099-R

A.) Form W-2

James (35), a single taxpayer, lives with his sister, Denise (24), and Neveah, his three-year-old niece. Denise works part-time and earned $3,600 for 2018. Denise will not claim Neveah as a dependent; she will file her return just for the purpose of claiming a refund for tax withheld. James earned $48,000 during the year, and he pays more than half the cost of maintaining the home. What is James's correct and most favorable filing status? A.) Head of household B.) Single C.) Married filing seperately D.) Married filing jointly

A.) Head of household

Which of the following is specifically excluded from gross income? A.) Interest on municipal bonds. B.) Alimony and separate maintenance payments. C.) Pensions. D.) Compensation for services, including fees, commissions, and certain fringe benefits

A.) Interest on municipal bonds.

Which of the following is not counted as support? A.) Life insurance premiums B.) Lodging C.) Clothing D.) Entertainment

A.) Life insurance premiums

The tax on income that comes entirely from wages under $100,000 is determined according to the? A.) Tax tables B.) Tax computation worksheet C.) Qualified dividends and capital gains worksheet D.) schedule D tax worksheet

A.) Tax tables

What happens if an individual is the qualifying child of more than one taxpayer? A.) The IRS tiebreaker rules apply B.) Neither taxpayer is allowed to claim the child as a dependent C.) Each taxpayer is eligible to claim one half (50%) of the Child Tax Credit D.) It is acceptable for both taxpayers to claim the child as a dependent on their return.

A.) The IRS tiebreaker rules apply

Under what circumstances might a taxpayer, who does not meet the federal filing requirement, want to file a federal return anyway? A.) They are entitled to one or more refundable credits B.) They are entitled to one or more nonrefundable credits C.) To claim the itemized deductions D.) If there was any state tax withheld.

A.) They are entitled to one or more refundable credits

How much is the Child Tax Credit worth? A.) Up to $2000 per qualifying child B.) $2500 per qualifying child C.) $3000 per qualifying child D.) $5000 per qualifying child

A.) Up to $2000 per qualifying child

Chris (67) and Leon (68) are married, and they will file a joint return. Their only income during the year consisted of $32,000 in social security benefits and a $10,000 pension distribution. How much of their social security benefits are taxable? A.) Zero B.) Up to 50% C.) Up to 85% D.) Up to 100%

A.) Zero

For 2018, how much is the standard deduction for a single taxpayer who is not blind and is under age 65? A.) $0 B.) $12000 C.) $18000 D.) $24000

B.) $12000

For 2018, what is the gross income filing requirement for a single taxpayer age 65 or older? A.) $12000 B.) $13600 C.) $24000 D.) $26600

B.) $13600

Schedule B is required when interest income exceeds which of the following thresholds? A.) $1000 B.) $1500 C.) Schedule B is always required D.) Schedule B is never required

B.) $1500

n 2018, Erin (38) contributed $2,000 to a traditional IRA. She is single, and her modified adjusted gross income (MAGI) is $31,000, all from wages. Erin has never taken a distribution from any retirement account. She is potentially eligible for a retirement savings contributions credit (Saver's Credit) of up to ____________. A.) $0 B.) $200 C.) $400 D.) $500

B.) $200

Which of the following shows these numbers rounded correctly: $31.43, $143.57, $369.22, $1,547.88? A.) $32. $142. $368. $1,547 B.) $31. $144. $369. $1,548 C.) $31. $142. $369. $1,547. D.) $32. $144. $368. $1,547

B.) $31. $144. $369. $1,548

Which of the following statements about distributions from qualified retirement plans is TRUE? A.) A blank amount in box 2a of Form 1099-R usually means that none of the distribution is taxable. B.) A distribution code 4 in box 7 of Form 1099-R generally means the taxpayer is not subject to the additional tax on early distributions. C.) A distribution code 1 in box 7 of Form 1099-R indicates a direct rollover to a qualified retirement plan or IRA. D.) The Tax Code imposes an additional 10% early withdrawal penalty on all distributions made before the taxpayer has reached age 59 1/2.

B.) A distribution code 4 in box 7 of Form 1099-R generally means the taxpayer is not subject to the additional tax on early distributions.

Choose the response that best completes the following sentence. Under the special rules for children of divorced or separated parents, the noncustodial parent may be entitled to: A.) Claim a higher standard deduction B.) Claim the Child Tax Credit C.) Claim the Earned Income Credit D.) File as head of household

B.) Claim the Child Tax Credit

Which of the following is nontaxable on a federal income tax return? A.) Interest income from a savings account B.) Interest income from municipal bonds C.) Interest income from corporate bonds D.) Interest income from personal loans.

B.) Interest income from municipal bonds

In 2018, John, a single parent, sent his dependent daughter, Marlene, to Big Kids' Play Yard while he worked during the day. Marlene turned 13 on August 1, 2018. John paid Big Kids' Play Yard $2,310 ($35 per week day) from June 1 through August 31, 2018. He did not incur any other child care expenses during the year. How should John report this amount on Form 2441, Child and Dependent Care Expenses? A.) John should report $2,310 on line 1 and $2,310 on line 2. B.) John should report $2,310 on line 1 and $1,505 on line 2 C.) John should report $1,505 on line 1 and $1,505 on line 2. D.) John will not be able to claim the child care expenses because his daughter turned 13 during the year

B.) John should report $2,310 on line 1 and $1,505 on line 2

Which of the following three factors determine the filing requirement for nondependents? A.) Marital status, age, and residency. B.) Marital status, age, and gross income C.) Marital status, age, and taxable income D.) Marital status, age, and total deductions.

B.) Marital status, age, and gross income

What are the five tests for a qualifying child? A.) Relationship, citizenship, age, support, and joint return B.) Relationship, residency, age, support, and joint return C.) Marital status, residency, age, support, and joint return. D.) Relationship, residency, age, support, and type of income.

B.) Relationship, residency, age, support, and joint return

All of the following are qualified health care coverage except: A.) Employer-sponsored coverage B.) Stand alone disability coverage C.) Marketplace coverage D.) Government programs coverage

B.) Stand alone disability coverage

Which of the following is NOT a requirement for a taxpayer claiming the Child and Dependent Care Credit?. A.) The person providing the care must not be someone the taxpayer can claim as a dependent. B.) The care must have been provided for a qualifying child under age 13. C.) The taxpayer and the person receiving the care must have lived in the same home D.) The taxpayer must have some earned income

B.) The care must have been provided for a qualifying child under age 13.

Education credits are complex, and the rules are different for each credit. Which of the following accurately describes some of the differences between the American Opportunity Tax Credit (AOTC) and the lifetime learning credit? A.) The lifetime learning credit is not a refundable credit, while up to $2,500 of the AOTC may be refundable. B.) The credit for AOTC may be as much as $2,500 per eligible student, while the maximum amount of the lifetime learning credit is $2,000 per tax return. C.) Up to 40% of the AOTC may be refundable. The amount of the lifetime learning credit is 20% of qualified educational expenses, and there is no cap on the amount of expenses. D.) The credit for AOTC may be as much as 100% of the first $4,000 of expenses per eligible student, while the amount of the lifetime learning credit is only 20% of the first $10,000 of qualified expenses.

B.) The credit for AOTC may be as much as $2,500 per eligible student, while the maximum amount of the lifetime learning credit is $2,000 per tax return.

Some adjustments to income do not have a specific line on the tax return and are instead included on Schedule 1 (Form 1040), line 36, as a "write-in" adjustment. All of the following are considered "write-in" adjustments EXCEPT: A.) Jury duty payment turned over to an employer. B.) The penalty for early withdrawal C.) Expenses related to rental income from personal property D.) Attorney fees paid to settle an unlawful discrimination claim

B.) The penalty for early withdrawal

All of the following are generally considered qualified expenses for the student loan interest deduction EXCEPT: A.) Graduate school tuition. B.) Transportation expenses incurred for a nondependent grandchild attending college in another state. C.) Room and board at a dormitory owned and operated by the educational institution. D.) Books and supplies.

B.) Transportation expenses incurred for a nondependent grandchild attending college in another state.

Assuming all other requirements are met, how long may an eligible surviving spouse file as a qualifying widow(er)? A.) One year B.) Two Years C.) Three years D.) Five Years

B.) Two Years

Tax-exempt interest is? A.) Taxable and reportable B.) Not required to be reported C.) Nontaxable, but reportable D.) Nontaxable and not reportable

C) Nontaxable, but reportable

For 2018 tax returns, what is the standard deduction for taxpayers using the head of household filing status? A.) $0 B.) $12000 C.) $18000 D.) $24000

C.) $18000

Nathan Bayer is a single taxpayer. His 2018 taxable income was $57,474. What is Nathan's 2018 federal income tax? A.) $5,749 B.) $6898 C.) $8584 D.) $12,644

C.) $8584

Margaret works for a privately held corporation. She contributes to her employer's retirement savings plan through regular payroll deductions. Her contributions are tax-deferred, and so are her earnings in the plan. Her employer matches part of her contributions. Margaret most likely participates in which of the following types of employer-sponsored retirement plans? A.) Pension plan. B.) Annuity. C.) 401(k) plan. D.) 403(b) plan

C.) 401(k) plan.

The standard deduction on an income tax return is determined by: A.) Citizenship B.) Residency C.) Filing Status D.) Gross Income

C.) Filing Status

Noncustodial parents who want to claim a dependency exemption, and obtained a divorce decree or separation agreement that went into effect after 2008, must file which of the following forms to claim the exemption? A.) Form 8379. B.) Form 2120. C.) Form 8332. D.) A copy of the court-ordered agreement

C.) Form 8332.

Which form is filed to protect one spouse's share of a refund when the other spouse has past-due debts that could be offset by the refund? A.) Form 8332. B.) Form 2120. C.) Form 8379. D.) Form 8857

C.) Form 8379.

Which form is filed to protect one spouse when the other spouse has understated income or overstated a deduction or credit? A.) Form 4852. B.) Form 8332. C.) Form 8857. D.) Form 8379.

C.) Form 8857.

To file as head of household, a taxpayer must meet all of the following requirements EXCEPT: A.) Be unmarried, or "considered unmarried" on the last day of the tax year. B.) Pay more than half the cost of maintaining the household for the year. C.) Have gross income of at least $18,000 D.) Have maintained a household for either a qualifying child or a qualifying relative

C.) Have gross income of at least $18,000

Which of the following is considered earned income? A.) Interest from a bank account. B.) Unemployment compensation C.) Income from farming D.) Gambling Winnings

C.) Income from farming

Which of the following taxpayer(s) may qualify to claim the lifetime learning credit? A.) Morgan (23) is single and is attending Placer University, where she is completing her master's degree in accounting. Her parents will claim her as a dependent. B.)Kevin, a married taxpayer who will file separately. He attended classes at Placer University, where he is working towards a masters degree in business administration. C.) Jim and Sara, a married filing joint couple with modified adjusted gross income of $125,000. They paid tuition to Placer University for their daughter, Meg (22), as she obtains her master's degree in education. D.) Marvin (35) is single and is attending Placer University, as he obtains his master's degree in psychology. His modified adjusted gross income is $70,000.

C.) Jim and Sara, a married filing joint couple with modified adjusted gross income of $125,000. They paid tuition to Placer University for their daughter, Meg (22), as she obtains her master's degree in education.

Which of the following taxpayer(s) may qualify to deduct student loan interest as an adjustment to income? A.) Alanis (23), a single taxpayer. She paid $1,500 in interest on a loan she received from her grandmother when she was a full-time student at her state university. B.) Roger (42), who is married filing separately. He paid $2,600 in student loan interest for his daughter, Meg, when she was completing her bachelor's degree in accounting. C.) Leah (29), a single taxpayer with modified adjusted gross income of $68,000. She received a Form 1098-E, reporting $2,100 of interest on a loan used to pay tuition when she was working on her undergraduate degree at a state university. D.) Jack and Kendra, a married filing joint couple with modified adjusted gross income of $169,000. They received a Form 1098-E, reporting $2,600 of interest on a loan which paid tuition at a local college for their daughter, Jane (28), when she was completing her bachelor's degree.

C.) Leah (29), a single taxpayer with modified adjusted gross income of $68,000. She received a Form 1098-E, reporting $2,100 of interest on a loan used to pay tuition when she was working on her undergraduate degree at a state university.

Roberta (37) is married, but she lived apart from her husband, Leo, for the last three months of 2018. Roberta and Leo are not divorced or legally separated. They agree that they do not want to file a joint return. They share custody of their two children, who spend an equal amount of time with both parents. What is Roberta's most favorable and correct filing status? A.) Single B.) Married filing jointly C.) Married filing separately D.) Head of household

C.) Married filing separately

The purpose of Form 8962 is to calculate the taxpayer's: A.) Premium Tax Credit and reconcile it with any advance payment of the Premium Tax Credit. B.) Insurance premiums for minimum essential coverage from both private insurers and the Marketplace C.) Penalty for failing to obtain qualifying coverage D.) Health coverage exemption

C.) Penalty for failing to obtain qualifying coverage

What are the four tests for a qualifying relative? A.) Relationship or member of the household, gross income, support, and residency. B.) Relationship or member of the household, gross income, citizenship, and not a qualifying child C.) Relationship or member of the household, gross income, support, and not a qualifying child D.) Relationship or member of the household, gross income, support, and be a qualifying child.

C.) Relationship or member of the household, gross income, support, and not a qualifying child

To be eligible to deduct educator expenses, a taxpayer must meet the definition of qualified educator described in the regulations. This includes: A.) Teachers, instructors, and teacher's aides who worked in their role for at least 750 hours during the school year. B.) Counselors and principals who worked at least 750 hours during the school year. C.) Teachers, instructors, and teacher's aides who worked in their role for at least 900 hours during the school year D.) Counselors, principals, and administrative assistants who worked at least 900 hours during the school year

C.) Teachers, instructors, and teacher's aides who worked in their role for at least 900 hours during the school year

Which of the following is NOT a requirement that must be met for a taxpayer to qualify for the head of household filing status? A.) Taxpayer must be unmarried (or qualified as unmarried) for tax purposes. B.) The taxpayer must pay over half the cost of maintaining a home for the year C.) The taxpayer must be legally separated or divorced D.) The taxpayer's home must have been the main home of the taxpayer and their qualifying child or qualifying relative for more than half the year.

C.) The taxpayer must be legally separated or divorced

Unearned income is all of the following except: A.) Interest B.) Dividends C.) Wages D.) Alimony

C.) Wages

Choose the response that best describes a credit that is not claimed very often because the income limits are very low, and taxpayers who are eligible generally receive only a small amount. A.) Adoption Credit B.) Child and Dependent Care Credit C.) The Foreign Tax Credit D.) Credit for the Elderly or Disabled

D.) Credit for the Elderly or Disabled

Which taxpayer is required to file a tax return for 2018? A.) Reba, age 65. She is a qualifying widow. Her gross income was $24,500 B.) Simon, age 26. He is single, and his gross income was $11,500, all from wages C.) Raine, age 27. Her filing status is head of household. Her gross income was $17,500, all from wages D.) Felipe, age 23. His gross income was $5,750. His filing status is married filing separately

D.) Felipe, age 23. His gross income was $5,750. His filing status is married filing separately

Which form is required when a custodial parent releases their right to claim their child as a dependent to the noncustodial parent? A.) Form 8453 B.) Form 8283 C.) Form 8867 D.) Form 8332

D.) Form 8332

A taxpayer's spouse died in 2018, and the taxpayer did not remarry. Assuming the taxpayer has a qualifying child, what is the taxpayer's most favorable and correct filing status for 2018? A.) Single B.) Head of household C.) Married filing separate D.) Married filing jointly

D.) Married filing jointly

For tax purposes, when is a person's marital status determined? A.) On the first day of the tax year B.) On the taxpayer's birthday C.) On the day the person files their tax return D.) On the last day of the tax year.

D.) On the last day of the tax year.

Taxpayers who receive Form 1099-DIV, showing that they received qualified dividends, must complete which of the following forms to compute their tax? A.) Schedule J B.) Schedule B C.) Schedule D Tax Worksheet D.) Qualified Dividends and Capital Gains Tax Worksheet.

D.) Qualified Dividends and Capital Gains Tax Worksheet.

A taxpayer eligible to claim the lifetime learning credit may receive up to $2,000 for this credit. All of the following are considered qualified expenses for this credit EXCEPT: A.) Tuition and fees paid to acquire a degree from an accredited university. B.) Tuition and fees paid to a local community college for a class that will improve the taxpayer's job skills. C.) Books that must be purchased from the educational institution as a condition for enrollment. D.) Room and board.

D.) Room and board.

All of the following are types of retirement plans self-employed taxpayers may establish for themselves and their employees EXCEPT A.) A 401(k) plan B.) Simplified employee pensions (SEPs) C.) SIMPLE IRAs D.) Spousal IRAs

D.) Spousal IRAs

Which of the following is not one of the four requirements to claim a dependent? A.) The dependent must be a qualifying child or qualifying relative B.) The dependent must be a U.S. citizen or a resident of the United States, Canada, or Mexico. C.) IF the dependent is married, they cannot be claimed as a dependent if they file a joint return with their spouse (unless they are only filing to claim a refund of withholding). D.) The taxpayer must provide 100% of the dependent's support for the whole year.

D.) The taxpayer must provide 100% of the dependent's support for the whole year.

Which of the following is incorrect regarding the requirements to be considered unmarried for tax purposes? A.) The taxpayer must file a separate return from their spouse. B.) The taxpayer must have provided more than half the cost of maintaining their home for the tax year. C.) The home must have been the main home of the taxpayer and their qualifying dependent for more than half of the tax year. D.) The taxpayer's spouse must have not lived in the home at any time during the tax year

D.) The taxpayer's spouse must have not lived in the home at any time during the tax year

Some types of income do not need to be reported anywhere on a federal tax return. This includes all of the following EXCEPT: A.) Most medical insurance proceeds B.) Worker's compensation paid to an employee who was injured on the job. C.) Welfare benefits D.) Unemployment compensation

D.) Unemployment compensation