INTUIT ACADEMY TAX LEVEL 1 ACTUAL
EXAM PAPER 2026 QUESTIONS WITH
ANSWERS GRADED A+
• Below the line deductions include.
Answer: Standard deduction
• Introduction to Tax Preparation.
Answer: Key players: IRS, taxpayer, preparer; filing requirements; e-filing
vs paper.
• Taxpayer Filing Requirements.
Answer: Filing thresholds based on age, filing status, gross income.
• Eligible educators can deduct up to _______ of qualified expenses paid
during the tax year..
Answer: $250
• Form 1040 Overview.
Answer: Purpose of Form 1040; main sections for income, adjustments, tax
computation, payments.
• Form 1040 Line 1: Wages, Salaries, Tips.
Answer: Box 1 of W-2; reporting tips; attached Form W-2.
• Form 1040 Lines 2a & 2b: Interest Income.
Answer: 2a: Tax-exempt interest (municipal bond interest); 2b: Taxable
interest (1099-INT box 1).
• Which of the following is an ineligible medical expense for HSA, Archer
MSA, and MA MSA?.
Answer: Breast enhancement
• The net capital gain is taxed at _______ if the married filing jointly taxpayer
income is less than $80,800..
Answer: 0%
,• To claim a child as a dependent, they must meet the qualifying child test or
________________..
Answer: qualifying relative test
• Ordinary dividends are taxed at the same rate as __________ income tax
rate..
Answer: ordinary
• Distributions from HSA, Archer MSA, or MS MSA are non-taxable when
_________________________________________..
Answer: qualified medical expenses of your dependent
• Which residency status is used when an individual is neither a U.S. citizen
nor a resident alien for tax purposes?.
Answer: Non-resident alien
• _____________ and ____________ are what taxpayers must know to
calculate their tax amount..
Answer: Taxable income and filing status
• Form 1040 Lines 3a & 3b: Dividends.
Answer: 3a: Qualified dividends at capital gains rates; 3b: Ordinary
dividends at ordinary rates.
• Filing Status Definitions.
Answer: Single; Married Filing Jointly (MFJ); Married Filing Separately
(MFS); Head of Household (HOH); Qualifying Widow(er).
• For mortgages entered into after December 15, 2017, the amount of interest
the taxpayer can deduct is no more than ______________ of the debt used
to buy, build, or substantially improve their principal home and a second
home..
Answer: 750,000
• __________ reduce the amount of tax due..
Answer: Tax credits
• Qualifying Dependent Tests.
, Answer: Relationship test; residency test; age test; support test; joint return
test.
• Which form is for beneficiaries who get income from trusts and estates?.
Answer: Form 1041
• ___________________ consists of both earned and unearned income that is
used to calculate the tax. It is generally less than adjusted gross income due
to the deductions..
Answer: Taxable income
• Gross Income Inclusions.
Answer: Wages; salaries; tips; interest; dividends; business income; rental
income; unemployment compensation; alimony (pre-2019).
• Gross Income Exclusions.
Answer: Gifts and bequests; life insurance proceeds; municipal bond
interest; qualified scholarships; employer-provided health benefits.
• Adjustments to Income.
Answer: Educator expenses; IRA contributions; student loan interest;
self-employed health insurance; HSA contributions.
• To satisfy the Substantial Presence Test, how many minimum days (in the
current year) must you be physically present in the United States?.
Answer: 31
• Adjusted Gross Income (AGI).
Answer: Gross income minus above-the-line deductions; used to determine
eligibility for many tax benefits.
• Complete the equation. ___________ = Selling Price - Purchase Price.
Answer: Capital Loss or Capital Gain
• _________________ helps sole proprietorships calculate the profit or loss
from a business while also providing the IRS with your total business
income and deductions..
Answer: Schedule C
, • Standard Deduction Amounts (2024).
Answer: Single $13,850; MFJ $27,700; MFS $13,850; HOH $20,800; QW
$27,700.
• Itemized Deductions Overview.
Answer: Mortgage interest; state and local taxes (SALT) cap $10,000;
charitable contributions; medical expenses (7.5% of AGI floor).
• As it applies to compensation income, the general rule for sourcing wages
and personal services income is controlled by
________________________________..
Answer: where the service is performed.
• Which is considered non-taxable income?.
Answer: military personnel allowances
• ______________ is used to offset income and payroll taxes for low-income
workers and to provide an incentive to work..
Answer: Earned Income Tax Credit Earned
• Other Adjustments & Deductions.
Answer: Alimony paid (pre-2019); moving expenses for military; deductible
portion of self-employment tax.
• Which is a non-deductible business expense?.
Answer: family vacation
• Exemptions and Dependents.
Answer: Personal exemptions eliminated; child tax credits replace
dependency exemptions.
• What amount of upper cap is applicable on business gifts?.
Answer: $25
• If yearly dividend amounts exceed __________, a Schedule B must be
completed and attached to Form 1040..
Answer: $1500
EXAM PAPER 2026 QUESTIONS WITH
ANSWERS GRADED A+
• Below the line deductions include.
Answer: Standard deduction
• Introduction to Tax Preparation.
Answer: Key players: IRS, taxpayer, preparer; filing requirements; e-filing
vs paper.
• Taxpayer Filing Requirements.
Answer: Filing thresholds based on age, filing status, gross income.
• Eligible educators can deduct up to _______ of qualified expenses paid
during the tax year..
Answer: $250
• Form 1040 Overview.
Answer: Purpose of Form 1040; main sections for income, adjustments, tax
computation, payments.
• Form 1040 Line 1: Wages, Salaries, Tips.
Answer: Box 1 of W-2; reporting tips; attached Form W-2.
• Form 1040 Lines 2a & 2b: Interest Income.
Answer: 2a: Tax-exempt interest (municipal bond interest); 2b: Taxable
interest (1099-INT box 1).
• Which of the following is an ineligible medical expense for HSA, Archer
MSA, and MA MSA?.
Answer: Breast enhancement
• The net capital gain is taxed at _______ if the married filing jointly taxpayer
income is less than $80,800..
Answer: 0%
,• To claim a child as a dependent, they must meet the qualifying child test or
________________..
Answer: qualifying relative test
• Ordinary dividends are taxed at the same rate as __________ income tax
rate..
Answer: ordinary
• Distributions from HSA, Archer MSA, or MS MSA are non-taxable when
_________________________________________..
Answer: qualified medical expenses of your dependent
• Which residency status is used when an individual is neither a U.S. citizen
nor a resident alien for tax purposes?.
Answer: Non-resident alien
• _____________ and ____________ are what taxpayers must know to
calculate their tax amount..
Answer: Taxable income and filing status
• Form 1040 Lines 3a & 3b: Dividends.
Answer: 3a: Qualified dividends at capital gains rates; 3b: Ordinary
dividends at ordinary rates.
• Filing Status Definitions.
Answer: Single; Married Filing Jointly (MFJ); Married Filing Separately
(MFS); Head of Household (HOH); Qualifying Widow(er).
• For mortgages entered into after December 15, 2017, the amount of interest
the taxpayer can deduct is no more than ______________ of the debt used
to buy, build, or substantially improve their principal home and a second
home..
Answer: 750,000
• __________ reduce the amount of tax due..
Answer: Tax credits
• Qualifying Dependent Tests.
, Answer: Relationship test; residency test; age test; support test; joint return
test.
• Which form is for beneficiaries who get income from trusts and estates?.
Answer: Form 1041
• ___________________ consists of both earned and unearned income that is
used to calculate the tax. It is generally less than adjusted gross income due
to the deductions..
Answer: Taxable income
• Gross Income Inclusions.
Answer: Wages; salaries; tips; interest; dividends; business income; rental
income; unemployment compensation; alimony (pre-2019).
• Gross Income Exclusions.
Answer: Gifts and bequests; life insurance proceeds; municipal bond
interest; qualified scholarships; employer-provided health benefits.
• Adjustments to Income.
Answer: Educator expenses; IRA contributions; student loan interest;
self-employed health insurance; HSA contributions.
• To satisfy the Substantial Presence Test, how many minimum days (in the
current year) must you be physically present in the United States?.
Answer: 31
• Adjusted Gross Income (AGI).
Answer: Gross income minus above-the-line deductions; used to determine
eligibility for many tax benefits.
• Complete the equation. ___________ = Selling Price - Purchase Price.
Answer: Capital Loss or Capital Gain
• _________________ helps sole proprietorships calculate the profit or loss
from a business while also providing the IRS with your total business
income and deductions..
Answer: Schedule C
, • Standard Deduction Amounts (2024).
Answer: Single $13,850; MFJ $27,700; MFS $13,850; HOH $20,800; QW
$27,700.
• Itemized Deductions Overview.
Answer: Mortgage interest; state and local taxes (SALT) cap $10,000;
charitable contributions; medical expenses (7.5% of AGI floor).
• As it applies to compensation income, the general rule for sourcing wages
and personal services income is controlled by
________________________________..
Answer: where the service is performed.
• Which is considered non-taxable income?.
Answer: military personnel allowances
• ______________ is used to offset income and payroll taxes for low-income
workers and to provide an incentive to work..
Answer: Earned Income Tax Credit Earned
• Other Adjustments & Deductions.
Answer: Alimony paid (pre-2019); moving expenses for military; deductible
portion of self-employment tax.
• Which is a non-deductible business expense?.
Answer: family vacation
• Exemptions and Dependents.
Answer: Personal exemptions eliminated; child tax credits replace
dependency exemptions.
• What amount of upper cap is applicable on business gifts?.
Answer: $25
• If yearly dividend amounts exceed __________, a Schedule B must be
completed and attached to Form 1040..
Answer: $1500
