INTUIT ACADEMY TAX LEVEL 1 EXAM
QUESTION BANK 2026 QUESTIONS &
VERIFIED ANSWERS + RATIONALES
GRADED A+ GUARANTEED PASS
This comprehensive question practice exam bank provides
verified answers and high-yield, bolded rationales tailored
precisely to the latest Intuit Academy Tax Level 1 syllabus.
It covers critical core domains including filing statuses,
gross income exclusions, HSA guidelines, above-the-line
adjustments, and essential IRS forms to guarantee a passing
score. Perfect for self-study or quick revision, this premium
resource is optimized to help you master foundational U.S.
federal individual tax concepts and effortlessly secure your
digital badge.
Which of the following filing statuses yields the largest standard deduction for the 2025/2026
tax year, assuming no individuals are blind or over age 65?
A) Single
B) Married Filing Jointly
C) Head of Household
D) Married Filing Separately
Answer: B
Rationale: Married Filing Jointly consistently provides the highest standard deduction of all
filing statuses to accommodate two individuals filing a single joint return.
,To qualify as a Head of Household, a taxpayer must pay more than what percentage of the costs
of keeping up a home for the year?
A) 30%
B) 50%
C) 75%
D) 100%
Answer: B
Rationale: The IRS requires a Head of Household taxpayer to pay more than 50% (over half) of
the total costs of maintaining a qualifying household for a dependent.
Which document is used by employers to report annual wages and withholding to both the
employee and the IRS?
A) Form W-4
B) Form 1099-NEC
C) Form W-2
D) Form 1040
Answer: C
Rationale: Form W-2 is the Wage and Tax Statement generated by employers at the end of the
calendar year to report earned wages and taxes withheld.
Under the qualifying child rules, what is the general age limit for a child to be claimed as a
dependent, assuming they are not a full-time student or permanently disabled?
A) Under age 17
B) Under age 19
C) Under age 24
D) Under age 26
Answer: B
Rationale: A qualifying child must be under age 19 at the end of the tax year, or under age 24
if they are a full-time student for at least five months of the year.
Which form is an independent contractor most likely to receive to report nonemployee
compensation?
A) Form 1099-MISC
B) Form 1099-NEC
C) Form W-2
D) Form 1099-K
Answer: B
Rationale: Form 1099-NEC is specifically designated for reporting Nonemployee Compensation
of $600 or more paid to independent contractors.
,What type of tax is a progressive tax?
A) A tax that charges a flat percentage across all income tiers.
B) A tax where the tax rate increases as the taxable amount increases.
C) A tax that imposes a heavier burden on lower-income earners.
D) A fixed fee applied to specific goods or services.
Answer: B
Rationale: The U.S. federal income tax system is progressive, meaning higher income brackets
face higher marginal tax rates.
Which of the following is considered an "Above-the-Line" deduction used to calculate Adjusted
Gross Income (AGI)?
A) Medical and dental expenses
B) State and local sales taxes
C) Charitable contributions for itemizers
D) Student loan interest deduction
Answer: D
Rationale: Above-the-line deductions (adjustments to income) are subtracted from gross
income to arrive at AGI. Student loan interest is found on Schedule 1 of Form 1040 for this
purpose.
What is the penalty threshold if a taxpayer fails to file their tax return on time without a valid
extension?
A) 0.5% per month of the unpaid tax
B) 5% per month of the unpaid tax
C) 10% flat rate fee
D) 25% flat rate fee
Answer: B
Rationale: The Failure to File penalty is typically 5% of the unpaid taxes for each month or
part of a month that a tax return is late, capping out at 25%.
A taxpayer is 67 years old and single. How does their age impact their standard deduction?
A) They receive an additional standard deduction amount.
B) Their standard deduction is cut in half.
C) They must itemize their deductions.
D) Age has no impact on standard deduction amounts.
Answer: A
Rationale: Taxpayers who are 65 or older, or blind, are entitled to a higher standard deduction
by adding an additional statutory amount to the base deduction.
, Which schedule is used to report profit or loss from a sole proprietorship business?
A) Schedule A
B) Schedule B
C) Schedule C
D) Schedule SE
Answer: C
Rationale: Schedule C (Form 1040) is used by sole proprietors and single-member LLCs to
report business income and deductible operational expenses.
What is the purpose of Form W-4 filled out by an employee?
A) To file an annual tax return.
B) To calculate self-employment tax obligations.
C) To direct the employer on how much federal income tax to withhold.
D) To claim an automatic 6-month filing extension.
Answer: C
Rationale: Employees complete Form W-4 so that employers can accurately calculate federal
income tax withholding based on their expected filing status and adjustments.
If a taxpayer chooses to itemize deductions, which schedule must they complete and attach to
Form 1040?
A) Schedule A
B) Schedule B
C) Schedule C
D) Schedule E
Answer: A
Rationale: Schedule A is explicitly utilized to list and compute itemized deductions such as
medical costs, mortgage interest, state/local taxes, and charity.
Which of the following items is explicitly excluded from gross income?
A) Gambling winnings
B) Jury duty pay
C) Life insurance proceeds received due to the death of the insured
D) Unemployment compensation
Answer: C
Rationale: Generally, life insurance proceeds paid to a beneficiary because of the death of the
insured person are entirely tax-free and excluded from gross income.
What tax rate applies to the net earnings of self-employed individuals to cover Social Security
and Medicare?
A) 7.65%
QUESTION BANK 2026 QUESTIONS &
VERIFIED ANSWERS + RATIONALES
GRADED A+ GUARANTEED PASS
This comprehensive question practice exam bank provides
verified answers and high-yield, bolded rationales tailored
precisely to the latest Intuit Academy Tax Level 1 syllabus.
It covers critical core domains including filing statuses,
gross income exclusions, HSA guidelines, above-the-line
adjustments, and essential IRS forms to guarantee a passing
score. Perfect for self-study or quick revision, this premium
resource is optimized to help you master foundational U.S.
federal individual tax concepts and effortlessly secure your
digital badge.
Which of the following filing statuses yields the largest standard deduction for the 2025/2026
tax year, assuming no individuals are blind or over age 65?
A) Single
B) Married Filing Jointly
C) Head of Household
D) Married Filing Separately
Answer: B
Rationale: Married Filing Jointly consistently provides the highest standard deduction of all
filing statuses to accommodate two individuals filing a single joint return.
,To qualify as a Head of Household, a taxpayer must pay more than what percentage of the costs
of keeping up a home for the year?
A) 30%
B) 50%
C) 75%
D) 100%
Answer: B
Rationale: The IRS requires a Head of Household taxpayer to pay more than 50% (over half) of
the total costs of maintaining a qualifying household for a dependent.
Which document is used by employers to report annual wages and withholding to both the
employee and the IRS?
A) Form W-4
B) Form 1099-NEC
C) Form W-2
D) Form 1040
Answer: C
Rationale: Form W-2 is the Wage and Tax Statement generated by employers at the end of the
calendar year to report earned wages and taxes withheld.
Under the qualifying child rules, what is the general age limit for a child to be claimed as a
dependent, assuming they are not a full-time student or permanently disabled?
A) Under age 17
B) Under age 19
C) Under age 24
D) Under age 26
Answer: B
Rationale: A qualifying child must be under age 19 at the end of the tax year, or under age 24
if they are a full-time student for at least five months of the year.
Which form is an independent contractor most likely to receive to report nonemployee
compensation?
A) Form 1099-MISC
B) Form 1099-NEC
C) Form W-2
D) Form 1099-K
Answer: B
Rationale: Form 1099-NEC is specifically designated for reporting Nonemployee Compensation
of $600 or more paid to independent contractors.
,What type of tax is a progressive tax?
A) A tax that charges a flat percentage across all income tiers.
B) A tax where the tax rate increases as the taxable amount increases.
C) A tax that imposes a heavier burden on lower-income earners.
D) A fixed fee applied to specific goods or services.
Answer: B
Rationale: The U.S. federal income tax system is progressive, meaning higher income brackets
face higher marginal tax rates.
Which of the following is considered an "Above-the-Line" deduction used to calculate Adjusted
Gross Income (AGI)?
A) Medical and dental expenses
B) State and local sales taxes
C) Charitable contributions for itemizers
D) Student loan interest deduction
Answer: D
Rationale: Above-the-line deductions (adjustments to income) are subtracted from gross
income to arrive at AGI. Student loan interest is found on Schedule 1 of Form 1040 for this
purpose.
What is the penalty threshold if a taxpayer fails to file their tax return on time without a valid
extension?
A) 0.5% per month of the unpaid tax
B) 5% per month of the unpaid tax
C) 10% flat rate fee
D) 25% flat rate fee
Answer: B
Rationale: The Failure to File penalty is typically 5% of the unpaid taxes for each month or
part of a month that a tax return is late, capping out at 25%.
A taxpayer is 67 years old and single. How does their age impact their standard deduction?
A) They receive an additional standard deduction amount.
B) Their standard deduction is cut in half.
C) They must itemize their deductions.
D) Age has no impact on standard deduction amounts.
Answer: A
Rationale: Taxpayers who are 65 or older, or blind, are entitled to a higher standard deduction
by adding an additional statutory amount to the base deduction.
, Which schedule is used to report profit or loss from a sole proprietorship business?
A) Schedule A
B) Schedule B
C) Schedule C
D) Schedule SE
Answer: C
Rationale: Schedule C (Form 1040) is used by sole proprietors and single-member LLCs to
report business income and deductible operational expenses.
What is the purpose of Form W-4 filled out by an employee?
A) To file an annual tax return.
B) To calculate self-employment tax obligations.
C) To direct the employer on how much federal income tax to withhold.
D) To claim an automatic 6-month filing extension.
Answer: C
Rationale: Employees complete Form W-4 so that employers can accurately calculate federal
income tax withholding based on their expected filing status and adjustments.
If a taxpayer chooses to itemize deductions, which schedule must they complete and attach to
Form 1040?
A) Schedule A
B) Schedule B
C) Schedule C
D) Schedule E
Answer: A
Rationale: Schedule A is explicitly utilized to list and compute itemized deductions such as
medical costs, mortgage interest, state/local taxes, and charity.
Which of the following items is explicitly excluded from gross income?
A) Gambling winnings
B) Jury duty pay
C) Life insurance proceeds received due to the death of the insured
D) Unemployment compensation
Answer: C
Rationale: Generally, life insurance proceeds paid to a beneficiary because of the death of the
insured person are entirely tax-free and excluded from gross income.
What tax rate applies to the net earnings of self-employed individuals to cover Social Security
and Medicare?
A) 7.65%
