Intuit Academy Tax Practice Exam 2025 - Free Tax Practice Questions and Study Guide

Question: 1 / 400

For Taxpayer A and B, with an adjusted gross income of $99,650, do they need to include $4,200 of workers compensation benefits in taxable income?

Yes, it must be included

No, it does not need to be included

Workers' compensation benefits are generally not subject to federal income tax. This tax-exempt status applies regardless of the taxpayer's adjusted gross income. In the case of Taxpayer A and B, the $4,200 received in workers' compensation benefits should not be included in their taxable income. The key principle is that these benefits are designed to replace lost wages due to work-related injuries or illnesses, and the purpose of workers' compensation is to provide financial support to injured workers without the tax burden. Therefore, the correct choice indicates that the benefits do not need to be included in taxable income at all, reinforcing the non-taxable nature of such compensation.

Get further explanation with Examzify DeepDiveBeta

Yes, but only partially

No, unless other income is claimed

Next Question

Report this question

Download Intuit Academy Tax Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy