This course explains tax law regarding:
▪ H&R Block Code of Conduct
▪ IRS requirements
▪ Noncompliance penalties
SCORE:
93%
PASSED
Question 1,
All of the following are EITC due diligence requirements EXCEPT:
Completion of eligibility checklist.
X Verification of employment.
Knowledge.
Record retention.
Question 2,
A Tax Professional should ask more questions whenever the client's information seems:
X Incorrect, inconsistent, or incomplete.
Ordinary and necessary.
Reasonably accurate.
None of the above.
Question 3,
What is a Tax Professional's correct response to a client after learning that the client has omitted items on their previously filed income tax return? Advise the client promptly of the fact of such omission and:
Refuse to prepare the return until their prior-year return is audited.
Make an adjustment elsewhere on the return.
X Advise them of the consequences as provided under the Internal Revenue Code and Preparer Regulations.
Refer the client to a supervisor.
Question 4,
Who may be affected by monetary penalties imposed by the IRS?
The Tax Professional.
The client.
H&R Block.
X All three of these.
Question 5,
Beatrice is eligible to claim EITC based on Jordyn, her granddaughter, and qualifying child. Jordyn's mother, Beth, is also eligible and plans to claim Jordyn as a qualifying child for EITC. Which of the following statements is accurate?
X Beth holds a higher right and may claim EITC based on Jordyn because Beth is Jordyn's parent.
As long as Beatrice files before Beth, you may prepare her return claiming EITC based on Jordyn.
Beatrice may claim EITC based on Jordyn if her AGI was higher than Beth's and if she files first.
Beatrice and Beth may agree to each claim one-half of the EITC based on Jordyn, their qualifying child.
Question 6,
All of the following are requirements for a Tax Professional to meet the EITC due diligence knowledge requirement EXCEPT:
X Verification and proof of relationships claimed.
Not knowing or having reason to know that any information used in determining the taxpayer's eligibility for, or the amount of, the EITC is incorrect.
Contemporaneously documenting in the files the additional inquiries made and their client's responses to these inquiries.
Not ignoring the implications of information furnished to or known by the preparer.
Question 7,
Yvette, who wants to claim EITC, informs her Tax Professional that she is still married but is separated from her spouse and that her nine-year-old daughter lives with her. To determine filing status, which question should the Tax Professional ask?
How long has your daughter lived in your household?
Is your spouse employed?
Did anyone else live in your household?
Do you want to file a joint return with your spouse?
Question 8,
Tax preparation software is designed to meet EITC due diligence tests. But, the software alone cannot satisfy which test?
Retain a record of how and when EITC information was obtained and the identity of the person who provided it.
X Comply with the knowledge requirement.
Complete an eligibility checklist.
Compute the amount of the credit.
Question 9,
Harmon is 30 years old. He is a new client who comes to you because he received a Form W-2. He earned $8,500. He has not ever filed a tax return because his wages have always been paid in cash. Which of the following most accurately states your responsibilities as a Tax Professional?
Advise the IRS about Harmon's failure to report income.
Advise Harmon that he should report his cash wages and file his prior-year returns.
Advise Harmon that if the IRS has not investigated him before, they will probably not do so now.
X Advise Harmon he must report his cash wages and file prior-year returns and explain the consequences for failure to do so.
Question 10,
In which of the following situations should a Tax Professional be especially wary?
Many Forms W-2 for one tax year.
X A handwritten Form W-2.
All income and expenses are reported on Schedule C.
Many children live in the taxpayer's household.
Question 11,
Bob, who is not a dependent, states he wishes to claim EITC this year for his 29-year- old dependent child. Both reside in the U.S. Bob tells you that the child lives with him, is not married, is disabled, and has never had a job. What do you need to do to determine if the child can qualify Bob for EITC?
Enter Bob's child on his return and identify him as a disabled qualifying child.
X Advise Bob of the tax definition of disabled and apply sound judgment and common sense to see if the definition is met.
Ask for proof of the child's income.
Explain to Bob that a 29-year-old child is too old to be a qualifying child for EITC.
Question 12,
A Tax Professional asks probing questions to protect:
Only the client.
Only H&R Block and the Tax Professional.
Only the Tax Professional.
X The client, the Tax Professional, and H&R Block.
Question 13,
To claim the filing status of head of household, a taxpayer must:
Have a dependent who pays less than half of their own support.
Be single according to the laws of the state of residence.
X Pay over half the cost of maintaining the household for themselves and a qualifying person.
Live in the U.S. more than half the year.
Question 14,
When a client comes to H&R Block hoping to defraud the government by electronically filing a false return:
The client is protected by IRS privacy rules, which forbid the Tax Professional to tell anyone else about the return.
X Contact your supervisor.
Call the IRS as soon as possible.
Confront your client and, in no uncertain terms, accuse them of fraud.
Question 15,
Jerry is a carpenter who provides services to many different contractors.
He probably does not have any records of income or expenses.
His income must be verified with additional documentation before his Tax Professional can complete his return.
X He probably received Forms 1099-MISC from the contractors for whom he provided services.
He cannot claim EITC for income earned as a sole proprietor unless he provides Forms 1099-MISC to attach to his return.