INTUIT ACADEMY TAX LEVEL 1 EXAM QUESTIONS WITH VERIFIED
ANSWERS 2026
Question 1:
A taxpayer is a high school teacher. During the year, they spent $300 on classroom supplies, $150 on
books for their classroom, and $50 on a new briefcase for their personal use. What is the maximum
amount they can deduct as an educator expense?
A) $250
B) $300
C) $500
D) $150
ANSWER: A
Rationale: The educator expense deduction allows eligible educators to deduct up to $250 of qualified
expenses paid during the tax year. While the total qualified expenses are $450 ($300 supplies + $150
books), the maximum deduction is capped at $250 per taxpayer.
Question 2:
Which of the following is considered a below-the-line deduction?
A) Educator expenses
B) Alimony paid
C) Standard deduction
D) Student loan interest deduction
ANSWER: C
Rationale: "Below-the-line" deductions are deductions from Adjusted Gross Income (AGI) to arrive at
taxable income. The standard deduction is a classic example of a below-the-line deduction. Educator
expenses, alimony, and student loan interest are typically "above-the-line" deductions that reduce AGI.
Question 3:
,A married couple filing jointly has taxable income of $75,000. They have a net capital gain from the sale
of stock. At what tax rate will this net capital gain be taxed?
A) 0%
B) 15%
C) 20%
D) 37%
ANSWER: A
Rationale: For 2026, the 0% long-term capital gains tax rate applies to married filing jointly taxpayers
with taxable income less than $80,800. Since their income is $75,000, their net capital gain is taxed at
0%.
Question 4:
A taxpayer's 17-year-old daughter lives with them and they provide more than half of her support. She
works a part-time job and earns $5,000. To claim her as a dependent, which test must she meet?
A) Qualifying child test only
B) Qualifying relative test only
C) Either the qualifying child test or the qualifying relative test
D) Neither, she earns too much money
ANSWER: C
Rationale: A child must meet either the qualifying child test (which has age, relationship, residency, and
support tests) or the qualifying relative test (which has relationship or member of household, gross
income, and support tests) to be claimed as a dependent. The qualifying relative test would apply here if
she fails the qualifying child test due to age.
Question 5:
A taxpayer receives $1,000 in dividends from a corporation. The corporation's earnings were taxed at
the corporate level. At what rate will the taxpayer's ordinary dividends be taxed?
A) The qualified dividend rate
B) The same rate as ordinary income
C) 0%
,D) A flat 15%
ANSWER: B
Rationale: Ordinary dividends are taxed at the same rate as the taxpayer's ordinary income tax rate.
They do not qualify for the lower capital gains rates that apply to qualified dividends.
Question 6:
A taxpayer uses funds from their Health Savings Account (HSA) to pay for their dependent's prescription
medication. Is this distribution taxable?
A) Yes, because it was for a dependent
B) No, because it was a qualified medical expense
C) Yes, because it was from an HSA
D) Only if the amount exceeds 7.5% of AGI
ANSWER: B
Rationale: Distributions from an HSA are non-taxable when they are spent for qualified medical
expenses of the account holder, their spouse, or their dependents. Prescription medication is a qualified
medical expense.
Question 7:
What is the maximum amount a taxpayer can contribute to their traditional IRA for the 2026 tax year if
they are under age 50?
A) $6,500
B) $7,000
C) $7,500
D) $8,000
ANSWER: B
Rationale: For 2026, the IRA contribution limit is $7,000 for individuals under age 50. Those age 50 and
older can contribute an additional $1,000 as a catch-up contribution.
, Question 8:
A taxpayer is a single filer with a filing status of "Head of Household." What is the standard deduction for
the 2026 tax year?
A) $13,850
B) $20,800
C) $27,700
D) $15,500
ANSWER: B
Rationale: For the 2026 tax year, the standard deduction for a Head of Household filer is $20,800. Single
filers get $13,850, and Married Filing Jointly get $27,700.
Question 9:
A taxpayer has a child who is 24 years old and a full-time student. The child does not provide more than
half of their own support and lives at home. Can the taxpayer claim this child as a dependent?
A) Yes, as a qualifying child
B) Yes, as a qualifying relative
C) No, the child is too old
D) No, the child is a full-time student
ANSWER: B
Rationale: To be a qualifying child, a child must be under age 19 or under age 24 and a full-time student.
This child is 24, so they fail the qualifying child test. However, they may still be claimed as a qualifying
relative if they meet the gross income and support tests.
Question 10:
Which of the following is a requirement for a child to be a "qualifying child" for the Earned Income Tax
Credit (EITC)?
A) Must be under age 17 at the end of the year
B) Must have a valid Social Security Number
C) Must live with the taxpayer for more than 9 months
ANSWERS 2026
Question 1:
A taxpayer is a high school teacher. During the year, they spent $300 on classroom supplies, $150 on
books for their classroom, and $50 on a new briefcase for their personal use. What is the maximum
amount they can deduct as an educator expense?
A) $250
B) $300
C) $500
D) $150
ANSWER: A
Rationale: The educator expense deduction allows eligible educators to deduct up to $250 of qualified
expenses paid during the tax year. While the total qualified expenses are $450 ($300 supplies + $150
books), the maximum deduction is capped at $250 per taxpayer.
Question 2:
Which of the following is considered a below-the-line deduction?
A) Educator expenses
B) Alimony paid
C) Standard deduction
D) Student loan interest deduction
ANSWER: C
Rationale: "Below-the-line" deductions are deductions from Adjusted Gross Income (AGI) to arrive at
taxable income. The standard deduction is a classic example of a below-the-line deduction. Educator
expenses, alimony, and student loan interest are typically "above-the-line" deductions that reduce AGI.
Question 3:
,A married couple filing jointly has taxable income of $75,000. They have a net capital gain from the sale
of stock. At what tax rate will this net capital gain be taxed?
A) 0%
B) 15%
C) 20%
D) 37%
ANSWER: A
Rationale: For 2026, the 0% long-term capital gains tax rate applies to married filing jointly taxpayers
with taxable income less than $80,800. Since their income is $75,000, their net capital gain is taxed at
0%.
Question 4:
A taxpayer's 17-year-old daughter lives with them and they provide more than half of her support. She
works a part-time job and earns $5,000. To claim her as a dependent, which test must she meet?
A) Qualifying child test only
B) Qualifying relative test only
C) Either the qualifying child test or the qualifying relative test
D) Neither, she earns too much money
ANSWER: C
Rationale: A child must meet either the qualifying child test (which has age, relationship, residency, and
support tests) or the qualifying relative test (which has relationship or member of household, gross
income, and support tests) to be claimed as a dependent. The qualifying relative test would apply here if
she fails the qualifying child test due to age.
Question 5:
A taxpayer receives $1,000 in dividends from a corporation. The corporation's earnings were taxed at
the corporate level. At what rate will the taxpayer's ordinary dividends be taxed?
A) The qualified dividend rate
B) The same rate as ordinary income
C) 0%
,D) A flat 15%
ANSWER: B
Rationale: Ordinary dividends are taxed at the same rate as the taxpayer's ordinary income tax rate.
They do not qualify for the lower capital gains rates that apply to qualified dividends.
Question 6:
A taxpayer uses funds from their Health Savings Account (HSA) to pay for their dependent's prescription
medication. Is this distribution taxable?
A) Yes, because it was for a dependent
B) No, because it was a qualified medical expense
C) Yes, because it was from an HSA
D) Only if the amount exceeds 7.5% of AGI
ANSWER: B
Rationale: Distributions from an HSA are non-taxable when they are spent for qualified medical
expenses of the account holder, their spouse, or their dependents. Prescription medication is a qualified
medical expense.
Question 7:
What is the maximum amount a taxpayer can contribute to their traditional IRA for the 2026 tax year if
they are under age 50?
A) $6,500
B) $7,000
C) $7,500
D) $8,000
ANSWER: B
Rationale: For 2026, the IRA contribution limit is $7,000 for individuals under age 50. Those age 50 and
older can contribute an additional $1,000 as a catch-up contribution.
, Question 8:
A taxpayer is a single filer with a filing status of "Head of Household." What is the standard deduction for
the 2026 tax year?
A) $13,850
B) $20,800
C) $27,700
D) $15,500
ANSWER: B
Rationale: For the 2026 tax year, the standard deduction for a Head of Household filer is $20,800. Single
filers get $13,850, and Married Filing Jointly get $27,700.
Question 9:
A taxpayer has a child who is 24 years old and a full-time student. The child does not provide more than
half of their own support and lives at home. Can the taxpayer claim this child as a dependent?
A) Yes, as a qualifying child
B) Yes, as a qualifying relative
C) No, the child is too old
D) No, the child is a full-time student
ANSWER: B
Rationale: To be a qualifying child, a child must be under age 19 or under age 24 and a full-time student.
This child is 24, so they fail the qualifying child test. However, they may still be claimed as a qualifying
relative if they meet the gross income and support tests.
Question 10:
Which of the following is a requirement for a child to be a "qualifying child" for the Earned Income Tax
Credit (EITC)?
A) Must be under age 17 at the end of the year
B) Must have a valid Social Security Number
C) Must live with the taxpayer for more than 9 months
