Intuit Academy Tax Level 2 TEST EXAM (LATEST 2026)
MOST RECENT EXAM 2026|2027 ACTUAL COMPLETE
REAL EXAM QUESTIONS AND CORRECTLY WELL
DEFINED ANSWERS (VERIFIED ANSWERS) ALREADY
GRADED A+ | GUARANTEED SUCCESS!! NEWEST
EXAM | JUST RELEASED!!
What is the primary purpose of due diligence requirements for tax
preparers?
A. To increase preparation fees
B. To ensure accurate and ethical tax return preparation
C. To guarantee every taxpayer receives a refund
D. To eliminate all IRS audits
Answer: B. To ensure accurate and ethical tax return preparation
Rationale: IRS due diligence requirements help ensure tax professionals
prepare accurate returns, verify eligibility for tax benefits, ask
appropriate questions, and maintain documentation. These rules promote
compliance and reduce improper claims.
A taxpayer receives Form W-2 and Form 1099-NEC during the same
tax year. What does this indicate?
A. The taxpayer worked only as an employee
B. The taxpayer received only investment income
C. The taxpayer had both employee wages and self-employment
income
D. The taxpayer filed jointly
,Answer: C. The taxpayer had both employee wages and self-
employment income
Rationale: Form W-2 reports employee wages, while Form 1099-NEC
generally reports nonemployee compensation from self-employment or
independent contractor work. Both forms may appear when a taxpayer
has multiple income sources.
Which schedule is generally used to report business income for a sole
proprietor?
A. Schedule A
B. Schedule C
C. Schedule D
D. Schedule E
Answer: B. Schedule C
Rationale: Schedule C is used to report income and deductible business
expenses for a sole proprietor or single-member LLC that is disregarded
for federal tax purposes.
What is the purpose of Schedule SE?
A. Calculate depreciation
B. Report rental income
C. Calculate self-employment tax
D. Claim education credits
Answer: C. Calculate self-employment tax
,Rationale: Schedule SE calculates Social Security and Medicare taxes
owed by self-employed individuals based on their net earnings from self-
employment.
Which business expense is generally deductible?
A. Personal vacation costs
B. Ordinary and necessary business expenses
C. Personal groceries
D. Family entertainment unrelated to business
Answer: B. Ordinary and necessary business expenses
Rationale: A deductible business expense must generally be both
ordinary (common in the business) and necessary (helpful and
appropriate for operating the business).
What accounting method recognizes income when it is actually
received?
A. Accrual method
B. Cash method
C. Hybrid depreciation method
D. Inventory method
Answer: B. Cash method
Rationale: Under the cash method of accounting, income is recognized
when payment is received and expenses are deducted when paid.
Which taxpayer is generally required to pay self-employment tax?
, A. Employee receiving only wages
B. Sole proprietor with sufficient net earnings
C. Retired taxpayer receiving Social Security only
D. Child receiving allowance
Answer: B. Sole proprietor with sufficient net earnings
Rationale: Self-employed individuals generally pay self-employment tax
on qualifying net earnings to fund Social Security and Medicare.
Which form reports interest income?
A. Form W-2
B. Form 1099-INT
C. Form 1098-T
D. Form 5498
Answer: B. Form 1099-INT
Rationale: Form 1099-INT reports taxable interest income earned from
banks, credit unions, and other financial institutions.
What is depreciation?
A. A tax penalty
B. The gradual recovery of a business asset's cost over time
C. A payroll deduction
D. A charitable contribution
Answer: B. The gradual recovery of a business asset's cost over time
Rationale: Depreciation allows taxpayers to recover the cost of qualifying
business property over its useful life according to IRS rules.
MOST RECENT EXAM 2026|2027 ACTUAL COMPLETE
REAL EXAM QUESTIONS AND CORRECTLY WELL
DEFINED ANSWERS (VERIFIED ANSWERS) ALREADY
GRADED A+ | GUARANTEED SUCCESS!! NEWEST
EXAM | JUST RELEASED!!
What is the primary purpose of due diligence requirements for tax
preparers?
A. To increase preparation fees
B. To ensure accurate and ethical tax return preparation
C. To guarantee every taxpayer receives a refund
D. To eliminate all IRS audits
Answer: B. To ensure accurate and ethical tax return preparation
Rationale: IRS due diligence requirements help ensure tax professionals
prepare accurate returns, verify eligibility for tax benefits, ask
appropriate questions, and maintain documentation. These rules promote
compliance and reduce improper claims.
A taxpayer receives Form W-2 and Form 1099-NEC during the same
tax year. What does this indicate?
A. The taxpayer worked only as an employee
B. The taxpayer received only investment income
C. The taxpayer had both employee wages and self-employment
income
D. The taxpayer filed jointly
,Answer: C. The taxpayer had both employee wages and self-
employment income
Rationale: Form W-2 reports employee wages, while Form 1099-NEC
generally reports nonemployee compensation from self-employment or
independent contractor work. Both forms may appear when a taxpayer
has multiple income sources.
Which schedule is generally used to report business income for a sole
proprietor?
A. Schedule A
B. Schedule C
C. Schedule D
D. Schedule E
Answer: B. Schedule C
Rationale: Schedule C is used to report income and deductible business
expenses for a sole proprietor or single-member LLC that is disregarded
for federal tax purposes.
What is the purpose of Schedule SE?
A. Calculate depreciation
B. Report rental income
C. Calculate self-employment tax
D. Claim education credits
Answer: C. Calculate self-employment tax
,Rationale: Schedule SE calculates Social Security and Medicare taxes
owed by self-employed individuals based on their net earnings from self-
employment.
Which business expense is generally deductible?
A. Personal vacation costs
B. Ordinary and necessary business expenses
C. Personal groceries
D. Family entertainment unrelated to business
Answer: B. Ordinary and necessary business expenses
Rationale: A deductible business expense must generally be both
ordinary (common in the business) and necessary (helpful and
appropriate for operating the business).
What accounting method recognizes income when it is actually
received?
A. Accrual method
B. Cash method
C. Hybrid depreciation method
D. Inventory method
Answer: B. Cash method
Rationale: Under the cash method of accounting, income is recognized
when payment is received and expenses are deducted when paid.
Which taxpayer is generally required to pay self-employment tax?
, A. Employee receiving only wages
B. Sole proprietor with sufficient net earnings
C. Retired taxpayer receiving Social Security only
D. Child receiving allowance
Answer: B. Sole proprietor with sufficient net earnings
Rationale: Self-employed individuals generally pay self-employment tax
on qualifying net earnings to fund Social Security and Medicare.
Which form reports interest income?
A. Form W-2
B. Form 1099-INT
C. Form 1098-T
D. Form 5498
Answer: B. Form 1099-INT
Rationale: Form 1099-INT reports taxable interest income earned from
banks, credit unions, and other financial institutions.
What is depreciation?
A. A tax penalty
B. The gradual recovery of a business asset's cost over time
C. A payroll deduction
D. A charitable contribution
Answer: B. The gradual recovery of a business asset's cost over time
Rationale: Depreciation allows taxpayers to recover the cost of qualifying
business property over its useful life according to IRS rules.
