IRS Cheat Sheet 2026

The 30 highest-yield IRS facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. Which of the following best describes the 'best practices' standard under Circular 230 §10.33? → Aspirational guidelines encouraging high-quality, ethical tax practice
2. Which of the following is NOT a recognized category of individuals who may practice before the IRS under Circular 230? → Financial advisors holding the CFP designation
3. Which Circular 230 section governs the duty to exercise due diligence in preparing tax returns and documents? → §10.22
4. A tax professional wants to register for IRS e-Services for the first time. Which identity verification standard does the IRS currently require? → ID.me identity verification with biometric or document verification
5. A C corporation pays a dividend to its individual shareholders. How is this dividend taxed at the individual level? → It is taxed as a qualified dividend at preferential capital gains rates
6. A C corporation donates appreciated stock (basis $5,000, FMV $15,000) to a qualified charity. What is the maximum deduction? → $15,000 but limited to 10% of taxable income
7. Which of the following forms of advertising or solicitation by a tax practitioner would be a violation of the rules in Circular 230? → "As a former IRS agent, I have the inside knowledge to get you the best possible outcome."
8. Which IRS e-Services feature allows a tax professional to obtain a client's income verification for mortgage or lending purposes? → Income Verification Express Service (IVES)
9. What information is NOT available through the IRS Get Transcript tool for a tax professional accessing a client's transcript with proper authorization? → Current year tax return line items before processing is complete
10. A taxpayer contributes $3,000 to a Health Savings Account (HSA). This contribution is treated as: → An above-the-line deduction reducing AGI
11. A partnership purchases land for $200,000. The land is distributed to a partner when its FMV is $250,000. What is the partner's basis in the land? → The partnership's adjusted basis in the land at time of distribution
12. A taxpayer sells stock held for 14 months at a $10,000 gain. What is the character and typical tax rate for this gain for a middle-income taxpayer? → Long-term capital gain taxed at preferential 0%, 15%, or 20% rates
13. What is the maximum charitable contribution deduction for cash donations to a public charity as a percentage of the donor's adjusted gross income (AGI)? → 60%
14. Under the IRS e-file program, a paid preparer who files 11 or more individual federal income tax returns during a calendar year is required to: → File those returns electronically unless an exemption applies
15. A taxpayer receives a scholarship that covers tuition and required fees at a qualified educational institution. How is the scholarship treated? → Excluded from gross income to the extent used for tuition and required fees
16. What does passing the Annual Federal Tax Refresher (AFTR) course exam allow a tax preparer to do? → Gain limited representation rights for clients whose returns they prepared
17. For the home office deduction simplified method, what is the deduction per square foot? → $5
18. A taxpayer is single with no dependents. They have $5,000 in gambling winnings and no other income. Must they file? → No, because $5,000 is below the single filing threshold of $14,600
19. According to the FTC Safeguards Rule, which of the following is a mandatory requirement for professional tax return preparers regarding client data? → Creating and implementing a written information security plan.
20. A practitioner who receives a subpoena for client records during a grand jury investigation should first: → Consult with the client and consider asserting applicable privileges
21. A taxpayer is legally separated under a decree of separate maintenance. How are they treated for federal tax filing purposes? → As unmarried, allowing Single or Head of Household status
22. What is the tax treatment of municipal bond interest received by a US taxpayer? → Exempt from federal income tax but may be subject to state tax
23. Which of the following business expenses is generally only 50% deductible for tax purposes? → Meals with clients and for employees during travel
24. Which of the following is NOT a ground for sanctioning a practitioner under Circular 230 §10.51? → Charging fees that a client believes are too high
25. Which business entity provides limited liability to all owners AND avoids double taxation without making an S corporation election? → Limited liability company (LLC) taxed as a partnership
26. A taxpayer received a Form 1099-NEC showing $800 in nonemployee compensation. Do they have a filing obligation? → Yes, because net self-employment earnings exceed the $400 threshold
27. A taxpayer who is self-employed pays $8,400 in self-employment tax. What deduction may they claim on their federal return? → One-half of SE tax ($4,200) as an above-the-line deduction
28. Under the installment sale method, when does a taxpayer recognize gain from the sale of appreciated property? → As payments are received, proportional to the gross profit percentage
29. What is the primary purpose of the IRS's Volunteer Income Tax Assistance (VITA) site coordinator training? → To prepare volunteers to manage VITA sites and ensure quality returns
30. An organization applies for 501(c)(3) status but the IRS issues a proposed adverse determination. What is the organization's first option for appeal? → Request a conference with the IRS Office of Appeals