H & R Block Income Tax Final Exam Review (Latest 2024/ 2025 Update) Questions and Verified Answers| 100% Correct| Grade A

H & R Block Income Tax Exam Review

(Latest 2024/ 2025 Update) Questions and

Verified Answers| 100% Correct| Grade A

Q: For MACRS purposes, you need to divide real property into two categories. What are they?

Answer:

Land, which is not depreciated, and structures, which are depreciated.

Q: For tax purposes, when is a person's marital status determined?

Answer:

On the last day of the tax year, or the date of death.

Q: How are deductible property expenses determined if part is strictly rental and part is strictly

personal?

Answer:

Expenses must be divided between the rental and personal portion. This can be done by any

reasonable method. The most common methods are by square footage or the number of rooms in

the house. If the taxpayer itemizes deductions, the personal portions of real estate taxes,

mortgage interest, and qualified casualty losses may be deducted on Schedule A.

Q: How can a married individual meet the joint return test to remain a qualifying child?

Answer:

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 of any taxes withheld.

Q: How can the gross income test for a qualifying relative be satisfied?

Answer:

The qualifying relative's gross income must be less than $4,300. When determining the gross

income, tax-exempt income, such as certain social security benefits, is not included.

Q: How do members of the clergy and statutory employees pay income taxes and selfemployment taxes?

Answer:

Generally, clergy are considered employees of the church and receive a Form W-2; however,

they are considered self-employed in regard to social security and medicare. Because of this,

they must complete Schedule SE and pay self-employment taxes.

A statutory employee is an employee for social security and medicare tax purposes and selfemployed for income tax purposes. They must report their wages on Schedule C. Their social

security and medicare taxes are generally withheld from their paychecks, so they do not need to

complete Schedule SE.

Q: How do you determine the taxable portion of a social security distribution?

Answer:

The amount of a taxpayer's social security or tier 1 railroad retirement benefits subject to federal

tax varies from zero to 85%, depending upon filing status and income. The level of taxability is

based on MAGI increased by one-half of the net benefits received by the taxpayer (and spouse, if

MFJ).

The taxable portion is calculated using the Social Security Taxable Benefits Worksheet.

Q: How do you determine whether someone is an employee or an independent contractor?

Answer:

There are three main factors to look at to determine whether someone is an employee or

independent contractor.

Does the employer have a right to direct and control the behavior of the employee?

Does the employer have the right to control the business portion of the work?

How do the employer and employee view their relationship, as evidenced by employment

agreements and similar documents?

Q: How is cost of goods sold determined?

Answer:

Cost of goods sold is beginning inventory plus purchases and other direct costs of goods minus

the ending inventory. It is calculated on Schedule C, Part III, page 2.

Q: How is income from an estate, trust, or other pass-through entity reported to a taxpayer?

Answer:

On one or more Schedules K-1.

Q: How is interest income reported to the taxpayer?

Answer:

Interest income is reported to the taxpayer on Form 1099-INT or a substitute statement.

Q: How is the gross income filing requirement determined for most nondependent taxpayers?

Answer:

The taxpayer's standard deduction, including the additional amounts for age. However, for

married filing separately, or married filing jointly when the spouses did not live together at the

end of the year, the amount is $5.

Q: How is the lifetime learning credit calculated?