Intuit Academy Tax Level 1 Test Exam
Questions And Correct Detailed
Answers (Verified Answers) |Already
Graded A+.
Description:
This practice exam is designed to help you prepare for the Intuit
Academy Tax Level 1 certification. It covers foundational concepts and
key areas that are frequently tested in the certification exam. By
reviewing these questions, you will gain a deeper understanding of the
topics, which will help you increase your confidence and improve your
performance in the actual exam.
1. Which of the following is considered taxable income?
A. Wages
B. Gifts
C. Inheritance
D. Welfare benefits
Answer: A. Wages
Rationale: Wages earned through employment are subject to income tax,
making them taxable income. Gifts, inheritances, and welfare benefits
are generally not taxable.
2. Which of the following tax forms is used to report business
income?
, A. Form 1040
B. Form 1065
C. Schedule C
D. Form 990
Answer: C. Schedule C
Rationale: Schedule C is used by sole proprietors to report business
income and expenses. Form 1040 is the individual income tax return,
while Form 1065 reports partnership income, and Form 990 is for
nonprofit organizations.
3. Which of the following is the standard deduction for a married
couple filing jointly in 2025?
A. $12,400
B. $25,100
C. $18,800
D. $24,000
Answer: B. $25,100
Rationale: For the tax year 2025, the standard deduction for a married
couple filing jointly is $25,100. This deduction reduces taxable income
and varies by filing status.
4. Which of the following is a requirement for someone to be
considered a dependent?
A. The taxpayer must provide more than half of the
dependent’s support.
B. The dependent must be a U.S. citizen.
C. The dependent must have taxable income.
D. The dependent must be under the age of 25.
,Answer: A. The taxpayer must provide more than half of the
dependent’s support.
Rationale: To claim someone as a dependent, the taxpayer must provide
more than half of their financial support. Citizenship and taxable income
are not requirements for dependents.
5. Which of the following is NOT a tax credit?
A. Child Tax Credit
B. Earned Income Credit
C. Standard Deduction
D. American Opportunity Tax Credit
Answer: C. Standard Deduction
Rationale: The standard deduction is not a tax credit; it is a set amount
that reduces your taxable income. Tax credits, such as the Child Tax
Credit, directly reduce the amount of tax owed.
6. Which of the following is true about tax-deferred accounts like a
401(k)?
A. Contributions are taxed when they are made.
B. Contributions are not taxed until the funds are withdrawn.
C. Withdrawals are taxed at a higher rate than regular income.
D. Contributions are exempt from all taxes.
Answer: B. Contributions are not taxed until the funds are
withdrawn.
Rationale: In tax-deferred accounts like 401(k)s, contributions are made
with pre-tax dollars, and the tax is deferred until the funds are
withdrawn in retirement.
, 7. Which of the following income sources is NOT typically taxed?
A. Life insurance proceeds received by a beneficiary
B. Wages
C. Rental income
D. Investment income
Answer: A. Life insurance proceeds received by a beneficiary
Rationale: Life insurance proceeds are generally not taxable to the
beneficiary. Wages, rental income, and investment income are all
taxable.
8. Which of the following is a tax-exempt organization?
A. Charitable organizations
B. Religious organizations
C. Private foundations
D. All of the above
Answer: D. All of the above
Rationale: Charitable, religious, and private foundations are all
examples of organizations that may be exempt from paying taxes under
section 501(c) of the Internal Revenue Code.
9. What is the purpose of Form W-2?
A. To report business income
B. To report wages and tax withholding
C. To report interest income
D. To claim tax credits
Questions And Correct Detailed
Answers (Verified Answers) |Already
Graded A+.
Description:
This practice exam is designed to help you prepare for the Intuit
Academy Tax Level 1 certification. It covers foundational concepts and
key areas that are frequently tested in the certification exam. By
reviewing these questions, you will gain a deeper understanding of the
topics, which will help you increase your confidence and improve your
performance in the actual exam.
1. Which of the following is considered taxable income?
A. Wages
B. Gifts
C. Inheritance
D. Welfare benefits
Answer: A. Wages
Rationale: Wages earned through employment are subject to income tax,
making them taxable income. Gifts, inheritances, and welfare benefits
are generally not taxable.
2. Which of the following tax forms is used to report business
income?
, A. Form 1040
B. Form 1065
C. Schedule C
D. Form 990
Answer: C. Schedule C
Rationale: Schedule C is used by sole proprietors to report business
income and expenses. Form 1040 is the individual income tax return,
while Form 1065 reports partnership income, and Form 990 is for
nonprofit organizations.
3. Which of the following is the standard deduction for a married
couple filing jointly in 2025?
A. $12,400
B. $25,100
C. $18,800
D. $24,000
Answer: B. $25,100
Rationale: For the tax year 2025, the standard deduction for a married
couple filing jointly is $25,100. This deduction reduces taxable income
and varies by filing status.
4. Which of the following is a requirement for someone to be
considered a dependent?
A. The taxpayer must provide more than half of the
dependent’s support.
B. The dependent must be a U.S. citizen.
C. The dependent must have taxable income.
D. The dependent must be under the age of 25.
,Answer: A. The taxpayer must provide more than half of the
dependent’s support.
Rationale: To claim someone as a dependent, the taxpayer must provide
more than half of their financial support. Citizenship and taxable income
are not requirements for dependents.
5. Which of the following is NOT a tax credit?
A. Child Tax Credit
B. Earned Income Credit
C. Standard Deduction
D. American Opportunity Tax Credit
Answer: C. Standard Deduction
Rationale: The standard deduction is not a tax credit; it is a set amount
that reduces your taxable income. Tax credits, such as the Child Tax
Credit, directly reduce the amount of tax owed.
6. Which of the following is true about tax-deferred accounts like a
401(k)?
A. Contributions are taxed when they are made.
B. Contributions are not taxed until the funds are withdrawn.
C. Withdrawals are taxed at a higher rate than regular income.
D. Contributions are exempt from all taxes.
Answer: B. Contributions are not taxed until the funds are
withdrawn.
Rationale: In tax-deferred accounts like 401(k)s, contributions are made
with pre-tax dollars, and the tax is deferred until the funds are
withdrawn in retirement.
, 7. Which of the following income sources is NOT typically taxed?
A. Life insurance proceeds received by a beneficiary
B. Wages
C. Rental income
D. Investment income
Answer: A. Life insurance proceeds received by a beneficiary
Rationale: Life insurance proceeds are generally not taxable to the
beneficiary. Wages, rental income, and investment income are all
taxable.
8. Which of the following is a tax-exempt organization?
A. Charitable organizations
B. Religious organizations
C. Private foundations
D. All of the above
Answer: D. All of the above
Rationale: Charitable, religious, and private foundations are all
examples of organizations that may be exempt from paying taxes under
section 501(c) of the Internal Revenue Code.
9. What is the purpose of Form W-2?
A. To report business income
B. To report wages and tax withholding
C. To report interest income
D. To claim tax credits
