Intuit Academy Tax Level 1 Exam Latest
Edition 2026/2027 | A Complete Test Bank
Review of 330 Questions and Verified
Answers with Detailed Rationales|
Guaranteed Pass
Questions 1-50: Basic Tax Concepts & Filing Status
1. What is the standard deduction classified as on a tax return?
A) Above-the-line deduction
B) Below-the-line deduction
C) Tax credit
D) Adjustment to income
Answer: B
Rationale: The standard deduction is considered a below-the-line deduction
because it is subtracted after calculating Adjusted Gross Income (AGI) to arrive at
taxable income.
2. What is the maximum amount eligible educators can deduct for qualified
expenses paid during the tax year?
A) $200
B) $250
C) $300
D) $500
Answer: B
Rationale: Eligible educators can deduct up to $250 of qualified expenses paid
during the tax year for classroom supplies and materials.
,3. Which of the following is NOT an eligible medical expense for HSA, Archer
MSA, and MA MSA?
A) Prescription medications
B) Breast enhancement surgery
C) Dental treatments
D) Vision care
Answer: B
Rationale: Breast enhancement (cosmetic surgery) is not considered a qualified
medical expense for HSA, Archer MSA, or MA MSA distributions.
4. What is the tax rate for net capital gain when a married filing jointly
taxpayer has income less than $80,800?
A) 0%
B) 10%
C) 15%
D) 20%
Answer: A
Rationale: Net capital gain is taxed at 0% for married filing jointly taxpayers with
income below $80,800.
5. To claim a child as a dependent, they must meet which two tests?
A) Residency test and income test
B) Qualifying child test or qualifying relative test
C) Age test and support test
D) Citizenship test and relationship test
Answer: B
Rationale: To claim a child as a dependent, they must meet either the qualifying
child test or the qualifying relative test.
,6. How are ordinary dividends taxed compared to other income?
A) At a lower rate than capital gains
B) At the same rate as ordinary income tax
C) They are tax-exempt
D) At a higher rate than wages
Answer: B
Rationale: Ordinary dividends are taxed at the same rate as ordinary income tax
rates, unlike qualified dividends which may receive preferential tax treatment.
7. When are distributions from HSA, Archer MSA, or MS MSA non-taxable?
A) When withdrawn at retirement age
B) When spent for qualified medical expenses of your dependent
C) When used for educational expenses
D) When rolled over to a traditional IRA
Answer: B
Rationale: Distributions from HSA, Archer MSA, or MS MSA are non-taxable
when spent for qualified medical expenses of the taxpayer, spouse, or dependents.
8. What residency status is used when an individual is neither a U.S. citizen
nor a resident alien for tax purposes?
A) Resident alien
B) Non-resident alien
C) Dual-status alien
D) Lawful permanent resident
Answer: B
Rationale: Non-resident alien status is used when an individual is neither a U.S.
citizen nor a resident alien for tax purposes.
9. What two factors must taxpayers know to calculate their tax amount?
, A) Gross income and age
B) Taxable income and filing status
C) Wages and deductions
D) Credits and exemptions
Answer: B
Rationale: Taxable income and filing status are what taxpayers must know to
calculate their tax amount accurately.
10. For mortgages entered into after December 15, 2017, what is the maximum
amount of debt interest taxpayers can deduct for their principal and second
home?
A) $500,000
B) $750,000
C) $1,000,000
D) $250,000
Answer: B
Rationale: For mortgages after December 15, 2017, the interest deduction is
limited to $750,000 of debt used to buy, build, or substantially improve a principal
home and second home.
11. What reduces the amount of tax due on a tax return?
A) Tax deductions
B) Tax credits
C) Adjustments to income
D) Exemptions
Answer: B
Rationale: Tax credits reduce the amount of tax due dollar-for-dollar, making them
more valuable than deductions.
Edition 2026/2027 | A Complete Test Bank
Review of 330 Questions and Verified
Answers with Detailed Rationales|
Guaranteed Pass
Questions 1-50: Basic Tax Concepts & Filing Status
1. What is the standard deduction classified as on a tax return?
A) Above-the-line deduction
B) Below-the-line deduction
C) Tax credit
D) Adjustment to income
Answer: B
Rationale: The standard deduction is considered a below-the-line deduction
because it is subtracted after calculating Adjusted Gross Income (AGI) to arrive at
taxable income.
2. What is the maximum amount eligible educators can deduct for qualified
expenses paid during the tax year?
A) $200
B) $250
C) $300
D) $500
Answer: B
Rationale: Eligible educators can deduct up to $250 of qualified expenses paid
during the tax year for classroom supplies and materials.
,3. Which of the following is NOT an eligible medical expense for HSA, Archer
MSA, and MA MSA?
A) Prescription medications
B) Breast enhancement surgery
C) Dental treatments
D) Vision care
Answer: B
Rationale: Breast enhancement (cosmetic surgery) is not considered a qualified
medical expense for HSA, Archer MSA, or MA MSA distributions.
4. What is the tax rate for net capital gain when a married filing jointly
taxpayer has income less than $80,800?
A) 0%
B) 10%
C) 15%
D) 20%
Answer: A
Rationale: Net capital gain is taxed at 0% for married filing jointly taxpayers with
income below $80,800.
5. To claim a child as a dependent, they must meet which two tests?
A) Residency test and income test
B) Qualifying child test or qualifying relative test
C) Age test and support test
D) Citizenship test and relationship test
Answer: B
Rationale: To claim a child as a dependent, they must meet either the qualifying
child test or the qualifying relative test.
,6. How are ordinary dividends taxed compared to other income?
A) At a lower rate than capital gains
B) At the same rate as ordinary income tax
C) They are tax-exempt
D) At a higher rate than wages
Answer: B
Rationale: Ordinary dividends are taxed at the same rate as ordinary income tax
rates, unlike qualified dividends which may receive preferential tax treatment.
7. When are distributions from HSA, Archer MSA, or MS MSA non-taxable?
A) When withdrawn at retirement age
B) When spent for qualified medical expenses of your dependent
C) When used for educational expenses
D) When rolled over to a traditional IRA
Answer: B
Rationale: Distributions from HSA, Archer MSA, or MS MSA are non-taxable
when spent for qualified medical expenses of the taxpayer, spouse, or dependents.
8. What residency status is used when an individual is neither a U.S. citizen
nor a resident alien for tax purposes?
A) Resident alien
B) Non-resident alien
C) Dual-status alien
D) Lawful permanent resident
Answer: B
Rationale: Non-resident alien status is used when an individual is neither a U.S.
citizen nor a resident alien for tax purposes.
9. What two factors must taxpayers know to calculate their tax amount?
, A) Gross income and age
B) Taxable income and filing status
C) Wages and deductions
D) Credits and exemptions
Answer: B
Rationale: Taxable income and filing status are what taxpayers must know to
calculate their tax amount accurately.
10. For mortgages entered into after December 15, 2017, what is the maximum
amount of debt interest taxpayers can deduct for their principal and second
home?
A) $500,000
B) $750,000
C) $1,000,000
D) $250,000
Answer: B
Rationale: For mortgages after December 15, 2017, the interest deduction is
limited to $750,000 of debt used to buy, build, or substantially improve a principal
home and second home.
11. What reduces the amount of tax due on a tax return?
A) Tax deductions
B) Tax credits
C) Adjustments to income
D) Exemptions
Answer: B
Rationale: Tax credits reduce the amount of tax due dollar-for-dollar, making them
more valuable than deductions.
