INTUIT ACADEMY TAX LEVEL 1 FINAL EXAM
QUESTIONS AND CORRECT ANSWERS (VERIFIED
ASWERS) PLUS RATIONALES Q &A 2026 |INSTANT
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1. Which of the following is considered taxable income by
the IRS?
A) Gifts received from family members
B) Wages and salaries
C) Life insurance proceeds paid at death
D) Child support payments
Rationale: Taxable income includes compensation for
work but excludes certain gifts, life insurance proceeds,
and child support.
Answer: B) Wages and salaries
2. Which of the following can be claimed as an adjustment
to income?
A) Standard deduction
B) Student loan interest deduction
C) Child tax credit
D) State income tax paid
Rationale: Adjustments to income reduce gross income to
determine AGI. Student loan interest is an adjustment;
credits are applied after AGI.
Answer: B) Student loan interest deduction
,3. Who must file a federal income tax return?
A) All U.S. citizens regardless of income
B) Individuals with income above the filing threshold
C) Only self-employed individuals
D) Retirees with no taxable income
Rationale: Filing is required if gross income exceeds IRS
thresholds based on age and filing status.
Answer: B) Individuals with income above the filing
threshold
4. Which form is used by employees to report their wages
and tax withheld?
A) Form 1099
B) Form W-2
C) Form 1040
D) Form W-4
Rationale: W-2 reports wages, salaries, and withheld
taxes; W-4 is for withholding; 1099 is for independent
contractors.
Answer: B) Form W-2
5. Which of the following is a refundable tax credit?
A) Child tax credit
B) Earned income tax credit
C) Lifetime learning credit
D) Mortgage interest credit
Rationale: Refundable credits can reduce tax below zero
, and result in a refund. EITC is refundable.
Answer: B) Earned income tax credit
6. Which income is generally not taxable?
A) Interest from a savings account
B) Social Security benefits (partially taxable depending on
income)
C) Municipal bond interest
D) Dividends from stocks
Rationale: Municipal bond interest is federally tax-exempt.
Answer: C) Municipal bond interest
7. Which filing status typically results in the lowest tax rate?
A) Single
B) Married filing jointly
C) Married filing separately
D) Head of household
Rationale: Married filing jointly spreads income across
wider brackets, usually resulting in lower rates.
Answer: B) Married filing jointly
8. Which of the following is considered a standard
deduction for 2025 (example year)?
A) $6,000 for single filers
B) $13,850 for single filers
C) $25,000 for married filing jointly
D) $20,000 for head of household
Rationale: The IRS updates standard deductions annually.
, Single filers get $13,850 in 2025.
Answer: B) $13,850 for single filers
9. What is the purpose of Form W-4?
A) Report wages to the IRS
B) Determine how much tax to withhold from paycheck
C) Claim refundable tax credits
D) File annual income tax return
Rationale: W-4 instructs employers on withholding
amounts from employee paychecks.
Answer: B) Determine how much tax to withhold from
paycheck
10. Which expense may qualify as a deductible medical
expense?
A) Cosmetic surgery
B) Health insurance premiums
C) Gym membership
D) Over-the-counter vitamins
Rationale: Deductible medical expenses include insurance
premiums and necessary medical costs. Cosmetic and
general wellness expenses are not deductible.
Answer: B) Health insurance premiums
11. Which of the following is a requirement to claim a
dependent?
A) The dependent must be under 18
B) The dependent must live with you for at least six
months
QUESTIONS AND CORRECT ANSWERS (VERIFIED
ASWERS) PLUS RATIONALES Q &A 2026 |INSTANT
DOWNLOAD PDF
1. Which of the following is considered taxable income by
the IRS?
A) Gifts received from family members
B) Wages and salaries
C) Life insurance proceeds paid at death
D) Child support payments
Rationale: Taxable income includes compensation for
work but excludes certain gifts, life insurance proceeds,
and child support.
Answer: B) Wages and salaries
2. Which of the following can be claimed as an adjustment
to income?
A) Standard deduction
B) Student loan interest deduction
C) Child tax credit
D) State income tax paid
Rationale: Adjustments to income reduce gross income to
determine AGI. Student loan interest is an adjustment;
credits are applied after AGI.
Answer: B) Student loan interest deduction
,3. Who must file a federal income tax return?
A) All U.S. citizens regardless of income
B) Individuals with income above the filing threshold
C) Only self-employed individuals
D) Retirees with no taxable income
Rationale: Filing is required if gross income exceeds IRS
thresholds based on age and filing status.
Answer: B) Individuals with income above the filing
threshold
4. Which form is used by employees to report their wages
and tax withheld?
A) Form 1099
B) Form W-2
C) Form 1040
D) Form W-4
Rationale: W-2 reports wages, salaries, and withheld
taxes; W-4 is for withholding; 1099 is for independent
contractors.
Answer: B) Form W-2
5. Which of the following is a refundable tax credit?
A) Child tax credit
B) Earned income tax credit
C) Lifetime learning credit
D) Mortgage interest credit
Rationale: Refundable credits can reduce tax below zero
, and result in a refund. EITC is refundable.
Answer: B) Earned income tax credit
6. Which income is generally not taxable?
A) Interest from a savings account
B) Social Security benefits (partially taxable depending on
income)
C) Municipal bond interest
D) Dividends from stocks
Rationale: Municipal bond interest is federally tax-exempt.
Answer: C) Municipal bond interest
7. Which filing status typically results in the lowest tax rate?
A) Single
B) Married filing jointly
C) Married filing separately
D) Head of household
Rationale: Married filing jointly spreads income across
wider brackets, usually resulting in lower rates.
Answer: B) Married filing jointly
8. Which of the following is considered a standard
deduction for 2025 (example year)?
A) $6,000 for single filers
B) $13,850 for single filers
C) $25,000 for married filing jointly
D) $20,000 for head of household
Rationale: The IRS updates standard deductions annually.
, Single filers get $13,850 in 2025.
Answer: B) $13,850 for single filers
9. What is the purpose of Form W-4?
A) Report wages to the IRS
B) Determine how much tax to withhold from paycheck
C) Claim refundable tax credits
D) File annual income tax return
Rationale: W-4 instructs employers on withholding
amounts from employee paychecks.
Answer: B) Determine how much tax to withhold from
paycheck
10. Which expense may qualify as a deductible medical
expense?
A) Cosmetic surgery
B) Health insurance premiums
C) Gym membership
D) Over-the-counter vitamins
Rationale: Deductible medical expenses include insurance
premiums and necessary medical costs. Cosmetic and
general wellness expenses are not deductible.
Answer: B) Health insurance premiums
11. Which of the following is a requirement to claim a
dependent?
A) The dependent must be under 18
B) The dependent must live with you for at least six
months
