To explain tax law regarding: ▪ Confidentiality ▪ Due diligence ▪ Conflicts of interest ▪ Best practices
Final: Passed
Completion Status: Successful
Score: 93
Question 1
Virginia comes to your tax office to have her income tax return prepared. She is eligible to claim EITC based on Kellie, her granddaughter and qualifying child. Kellie's father, Herman, also is eligible and plans to claim Kellie as a qualifying child for EITC. Which of the following statements is accurate?
XX Herman holds a higher right and may claim EITC based on Kellie because Herman is Kellie's parent.
As long as Virginia files before Herman, you may prepare her return claiming EITC based on Kellie.
Virginia may claim EITC based on Kellie if her AGI was higher than Herman's and if she files first.
Herman and Virginia may agree to each claim one-half of the EITC based on Kellie, their qualifying child.
Question 2
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.
XX Comply with the knowledge requirement.
Complete an eligibility checklist.
Compute the amount of the credit.
Question 3
Harmon comes to you for help filing a return this year because he received a Form W-2 from a second job. He tells you he has not filed tax returns for the past two years because his wages from his first job are 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 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.
XX Advise Harmon he must report his cash wages and file prior-year returns, and explain the consequences for failure to do so.
Question 4
When a taxpayer comes to H&R Block hoping to defraud the government by electronically filing a false return:
The taxpayer is protected by IRS privacy rules, which forbid the Tax Professional to tell anyone else about the return.
XX Contact your supervisor.
Call the IRS as soon as possible.
Confront the taxpayer and, in no uncertain terms, accuse them of fraud.
Question 7
Sabrina, who wants to claim EITC, informs her Tax Professional that she is still married but is separated from her spouse, and that her seven-year-old son lives with her. Logically, what is the first EITC-related question to ask her?
How long has your son lived in your household?
When did your spouse last live in your household?
(This is a WRONG answer) X Did anyone else live in your household?
Do you want to file a joint return with your spouse?