Tax Preparation Study Guide 2026
Everything you need to pass the Tax Preparation exam in one place: the exam format, every topic to study, real practice questions with explanations, flashcards, and full-length practice tests. Free, no sign-up needed.
📚 Tax Preparation Topics to Study (21)
✍️ Sample Tax Preparation Questions & Answers
1. A self-employed person's net loss from Schedule C may:
Schedule C losses from an active trade or business can offset other income on Form 1040 subject to at-risk and basis limitations.
2. A taxpayer's divorce was finalized on December 31. What is their filing status for that tax year?
Filing status is determined by marital status on the last day of the tax year; a divorce finalized on December 31 means the taxpayer files as Single.
3. What is the maximum Saver's Credit percentage for a single taxpayer with the lowest AGI?
The Retirement Savings Contributions Credit (Saver's Credit) is up to 50% of contributions for the lowest income tier, based on AGI.
4. Schedule C net profit of $40,000 is subject to self-employment tax on what amount?
Self-employment tax is calculated on 92.35% of net earnings: $40,000 × 0.9235 = $36,940.
5. A taxpayer can avoid the underpayment penalty by paying at least what percentage of the prior year's tax?
The safe harbor rule allows avoiding the underpayment penalty by paying 100% of the prior year's tax (or 110% if prior year AGI exceeded $150,000).
6. Under the IRS safe harbor rule, a taxpayer can avoid an underpayment penalty by paying at least what percentage of the current year's tax liability?
Taxpayers can avoid the underpayment penalty by paying at least 90% of the current year's tax liability, or 100% of the prior year's tax, whichever is smaller.