1|Page
Intuit Academy Tax Level 1 Exam | Latest Verified
Questions and Detailed Answers
OVERVIEW DESCRIPTION:
This comprehensive set of 200 multiple-choice questions is designed for the Intuit
Academy Tax Level 1 Exam, covering foundational US federal income tax principles for the
2021–2022 tax years. Topics include determining filing status and dependency exemptions,
calculating gross income from wages (W-2), self-employment (Schedule C), interest,
dividends, and capital gains, as well as applying deductions (standard vs. itemized,
business expenses, auto expenses, gift limit) and credits (Child Tax Credit, Credit for Other
Dependents). Each question includes a practical scenario, four answer choices, a correct
answer, and a short expert rationale to reinforce key rules and common exceptions.
QUESTION 1
A taxpayer is unmarried, has no children, and lives alone. Their friend stayed with them
for 3 months but paid no rent. What is their most likely filing status?
A) Head of Household
B) Single
C) Married Filing Separately
D) Qualifying Widow(er)
CORRECT ANSWER: B
EXPERT RATIONALE: Head of Household requires paying more than half the cost of
keeping up a home for a qualifying person, which is not met here. Single is correct
because no dependent or spouse exists.
,2|Page
QUESTION 2
A taxpayer’s 22-year-old daughter is a full-time student for 5 months of the year, earned
$8,000, and lived at home all year. Can the taxpayer claim her as a dependent?
A) Yes, as a qualifying child
B) Yes, as a qualifying relative
C) No, because she earned too much
D) No, because she is over 19
CORRECT ANSWER: A
EXPERT RATIONALE: A qualifying child must be under 24 at year-end if a full-time
student, and the student status applies even with part-year attendance. The gross
income test does not apply to a qualifying child.
QUESTION 3
Which of the following is taxable income?
A) Child support received
B) Gift from a friend of $5,000
C) Wages from a W-2 job
D) Life insurance proceeds paid due to death
CORRECT ANSWER: C
EXPERT RATIONALE: Wages are always taxable compensation. Child support, gifts, and
life insurance death proceeds are generally excluded from gross income.
,3|Page
QUESTION 4
A taxpayer drove their personal car for business deliveries. They drove 5,000 business
miles. Using the standard mileage rate (58.5 cents per mile for 2022), what is the
deduction?
A) $1,462.50
B) $2,500
C) $2,925
D) $5,000
CORRECT ANSWER: C
EXPERT RATIONALE: 5,000 miles × $0.585 = $2,925. The standard mileage rate
includes fuel, insurance, and depreciation components.
QUESTION 5
A taxpayer received a Form 1099-INT with $1,200 in interest. They also paid a $200 early
withdrawal penalty on a CD. How much taxable interest is reported on Form 1040?
A) $1,000
B) $1,200
C) $1,400
D) $0
CORRECT ANSWER: A
EXPERT RATIONALE: Early withdrawal penalties are deducted from gross interest
income on the tax return. Taxable interest is $1,200 − $200 = $1,000.
, 4|Page
QUESTION 6
A taxpayer has $15,000 in medical expenses and AGI of $80,000. What amount can be
itemized for medical expenses (assuming 7.5% floor)?
A) $15,000
B) $9,000
C) $6,000
D) $0
CORRECT ANSWER: B
EXPERT RATIONALE: Medical expenses are deductible only to the extent they exceed
7.5% of AGI. 7.5% × $80,000 = $6,000 floor; $15,000 − $6,000 = $9,000.
QUESTION 7
A single taxpayer with no dependents has $13,000 in wages and $500 in unearned
income. Are they required to file a federal tax return?
A) Yes, because unearned income exceeds $400
B) Yes, because total income exceeds $12,950 (2022 standard deduction for single)
C) No, because total income is under the filing threshold
D) No, because they are a dependent
CORRECT ANSWER: B
EXPERT RATIONALE: For a single taxpayer under 65 in 2022, filing is required if gross
income exceeds $12,950. $13,500 total income exceeds that threshold.
Intuit Academy Tax Level 1 Exam | Latest Verified
Questions and Detailed Answers
OVERVIEW DESCRIPTION:
This comprehensive set of 200 multiple-choice questions is designed for the Intuit
Academy Tax Level 1 Exam, covering foundational US federal income tax principles for the
2021–2022 tax years. Topics include determining filing status and dependency exemptions,
calculating gross income from wages (W-2), self-employment (Schedule C), interest,
dividends, and capital gains, as well as applying deductions (standard vs. itemized,
business expenses, auto expenses, gift limit) and credits (Child Tax Credit, Credit for Other
Dependents). Each question includes a practical scenario, four answer choices, a correct
answer, and a short expert rationale to reinforce key rules and common exceptions.
QUESTION 1
A taxpayer is unmarried, has no children, and lives alone. Their friend stayed with them
for 3 months but paid no rent. What is their most likely filing status?
A) Head of Household
B) Single
C) Married Filing Separately
D) Qualifying Widow(er)
CORRECT ANSWER: B
EXPERT RATIONALE: Head of Household requires paying more than half the cost of
keeping up a home for a qualifying person, which is not met here. Single is correct
because no dependent or spouse exists.
,2|Page
QUESTION 2
A taxpayer’s 22-year-old daughter is a full-time student for 5 months of the year, earned
$8,000, and lived at home all year. Can the taxpayer claim her as a dependent?
A) Yes, as a qualifying child
B) Yes, as a qualifying relative
C) No, because she earned too much
D) No, because she is over 19
CORRECT ANSWER: A
EXPERT RATIONALE: A qualifying child must be under 24 at year-end if a full-time
student, and the student status applies even with part-year attendance. The gross
income test does not apply to a qualifying child.
QUESTION 3
Which of the following is taxable income?
A) Child support received
B) Gift from a friend of $5,000
C) Wages from a W-2 job
D) Life insurance proceeds paid due to death
CORRECT ANSWER: C
EXPERT RATIONALE: Wages are always taxable compensation. Child support, gifts, and
life insurance death proceeds are generally excluded from gross income.
,3|Page
QUESTION 4
A taxpayer drove their personal car for business deliveries. They drove 5,000 business
miles. Using the standard mileage rate (58.5 cents per mile for 2022), what is the
deduction?
A) $1,462.50
B) $2,500
C) $2,925
D) $5,000
CORRECT ANSWER: C
EXPERT RATIONALE: 5,000 miles × $0.585 = $2,925. The standard mileage rate
includes fuel, insurance, and depreciation components.
QUESTION 5
A taxpayer received a Form 1099-INT with $1,200 in interest. They also paid a $200 early
withdrawal penalty on a CD. How much taxable interest is reported on Form 1040?
A) $1,000
B) $1,200
C) $1,400
D) $0
CORRECT ANSWER: A
EXPERT RATIONALE: Early withdrawal penalties are deducted from gross interest
income on the tax return. Taxable interest is $1,200 − $200 = $1,000.
, 4|Page
QUESTION 6
A taxpayer has $15,000 in medical expenses and AGI of $80,000. What amount can be
itemized for medical expenses (assuming 7.5% floor)?
A) $15,000
B) $9,000
C) $6,000
D) $0
CORRECT ANSWER: B
EXPERT RATIONALE: Medical expenses are deductible only to the extent they exceed
7.5% of AGI. 7.5% × $80,000 = $6,000 floor; $15,000 − $6,000 = $9,000.
QUESTION 7
A single taxpayer with no dependents has $13,000 in wages and $500 in unearned
income. Are they required to file a federal tax return?
A) Yes, because unearned income exceeds $400
B) Yes, because total income exceeds $12,950 (2022 standard deduction for single)
C) No, because total income is under the filing threshold
D) No, because they are a dependent
CORRECT ANSWER: B
EXPERT RATIONALE: For a single taxpayer under 65 in 2022, filing is required if gross
income exceeds $12,950. $13,500 total income exceeds that threshold.
