Intuit Academy Tax Level 1 Questions With Complete
Solutions
Edik owns a $500 U.S. Series EE savings bond. He paid $250
for the bond. When the bond matures, he will receive $500. At
the end of the first year, the bond is worth $265.
Which of the following is true about Edik's U.S. Series EE
savings bond?
Report the interest income each year. Report the interest income
only once when the bond matures.
Edik and Fedora are filing their tax jointly and their combined
income is $400,000.
If they earned qualified dividends, what is the tax rate for their
dividend income?
15%
Deon holds both common stock and preferred stock in several
U.S. corporations. Several corporations paid dividends during
the tax year.
How will the dividends will be listed in Form 1099-DIV?
Ordinary dividends
Deon receives Form 1099-DIV. It shows his non-dividend
distributions, the return of his cost on a stock.Does Deon need to
keep this information with his tax records in order to calculate
the adjusted basis of the stock when it is sold?
,Yes
Deon made an early withdrawal of a fund from one of his
savings account. When will he be charged a penalty for his
withdrawal of funds?
He withdraws before the maturity date for a time deposit.
Deon withdrew $3000 from a one-year, deferred-interest
certificate of deposit in the current tax year. He had to pay a
penalty of three months' interest. Based on the information
above, which of the following is true about the penalty amount?
Deon can claim the penalty amount as an adjustment to income.
tax deduction
a deduction that lowers a person's or an organization's tax
liability by reducing their taxable income. Deductions are
expenses the taxpayer incurs during the year that can be applied
against or subtracted from their gross income to determine how
much they owe in taxes.
Some deductions are considered more common than others.
Let's learn more about them now.
A deduction is an expense that can be subtracted from taxable
income in order to reduce the amount owed.
Most taxpayers who take the standard deduction do not file the
Schedule A.
Taxpayers who itemize deductions must use Schedule A Form
1040 to list all of their allowable deductions.
,The standard deductions for tax years 2021 and 2022 are almost
double the amounts allowed prior to the passage of the Tax Cuts
and Jobs Act.
Standard Deduction Amount
The standard deduction amount depends on your filing status,
whether you are 65 or older or blind, and whether another
taxpayer can claim you as a dependent.
Standard Deduction Age and Blindness
Standard Deduction Dependents
The standard deduction for an individual who can be claimed as
a dependent on another person's tax return is generally limited to
the greater of $1,150.00 or earned income plus $400.
Itemized Deductions
Medical and Dental
Taxes
Interest Paid
Gifts to Charity
Miscellaneous
Deduction Facts
The standard deduction is a fixed dollar amount that reduces the
income taxpayers are taxed on. The standard deduction varies
according to filing status.
The dollar amount of itemized deductions differs from taxpayer
, to taxpayer
In some situations, it makes sense to itemize vs. take the
standard deduction on Form 1040(opens in a new tab).
Itemizing your tax deductions makes sense if you:
Have itemized deductions that total more than the standard
deduction you would receive
Paid mortgage interest and real estate taxes on your home
Had large, uninsured casualty (fire, flood, wind) or theft losses
Made large contributions to qualified charities
Have gambling losses
Have other allowable deductions such as impairment-related
work expenses of a disabled person or repayment of amounts
subject to a claim of right over $3,000
The IRS allows taxpayers to choose between taking the standard
deduction or itemizing their deductions.
True
Tax Deduction
A tax deduction lowers taxable income and thus reduces tax
liability.
There are two ways to claim tax deductions: take the standard
deductions or itemize deductions. The taxpayer can't do both.
Itemizing deductions usually takes more time and requires more
Solutions
Edik owns a $500 U.S. Series EE savings bond. He paid $250
for the bond. When the bond matures, he will receive $500. At
the end of the first year, the bond is worth $265.
Which of the following is true about Edik's U.S. Series EE
savings bond?
Report the interest income each year. Report the interest income
only once when the bond matures.
Edik and Fedora are filing their tax jointly and their combined
income is $400,000.
If they earned qualified dividends, what is the tax rate for their
dividend income?
15%
Deon holds both common stock and preferred stock in several
U.S. corporations. Several corporations paid dividends during
the tax year.
How will the dividends will be listed in Form 1099-DIV?
Ordinary dividends
Deon receives Form 1099-DIV. It shows his non-dividend
distributions, the return of his cost on a stock.Does Deon need to
keep this information with his tax records in order to calculate
the adjusted basis of the stock when it is sold?
,Yes
Deon made an early withdrawal of a fund from one of his
savings account. When will he be charged a penalty for his
withdrawal of funds?
He withdraws before the maturity date for a time deposit.
Deon withdrew $3000 from a one-year, deferred-interest
certificate of deposit in the current tax year. He had to pay a
penalty of three months' interest. Based on the information
above, which of the following is true about the penalty amount?
Deon can claim the penalty amount as an adjustment to income.
tax deduction
a deduction that lowers a person's or an organization's tax
liability by reducing their taxable income. Deductions are
expenses the taxpayer incurs during the year that can be applied
against or subtracted from their gross income to determine how
much they owe in taxes.
Some deductions are considered more common than others.
Let's learn more about them now.
A deduction is an expense that can be subtracted from taxable
income in order to reduce the amount owed.
Most taxpayers who take the standard deduction do not file the
Schedule A.
Taxpayers who itemize deductions must use Schedule A Form
1040 to list all of their allowable deductions.
,The standard deductions for tax years 2021 and 2022 are almost
double the amounts allowed prior to the passage of the Tax Cuts
and Jobs Act.
Standard Deduction Amount
The standard deduction amount depends on your filing status,
whether you are 65 or older or blind, and whether another
taxpayer can claim you as a dependent.
Standard Deduction Age and Blindness
Standard Deduction Dependents
The standard deduction for an individual who can be claimed as
a dependent on another person's tax return is generally limited to
the greater of $1,150.00 or earned income plus $400.
Itemized Deductions
Medical and Dental
Taxes
Interest Paid
Gifts to Charity
Miscellaneous
Deduction Facts
The standard deduction is a fixed dollar amount that reduces the
income taxpayers are taxed on. The standard deduction varies
according to filing status.
The dollar amount of itemized deductions differs from taxpayer
, to taxpayer
In some situations, it makes sense to itemize vs. take the
standard deduction on Form 1040(opens in a new tab).
Itemizing your tax deductions makes sense if you:
Have itemized deductions that total more than the standard
deduction you would receive
Paid mortgage interest and real estate taxes on your home
Had large, uninsured casualty (fire, flood, wind) or theft losses
Made large contributions to qualified charities
Have gambling losses
Have other allowable deductions such as impairment-related
work expenses of a disabled person or repayment of amounts
subject to a claim of right over $3,000
The IRS allows taxpayers to choose between taking the standard
deduction or itemizing their deductions.
True
Tax Deduction
A tax deduction lowers taxable income and thus reduces tax
liability.
There are two ways to claim tax deductions: take the standard
deductions or itemize deductions. The taxpayer can't do both.
Itemizing deductions usually takes more time and requires more
