The short version
This is a review sheet, not a full course. It lists the exam facts, then the rules, pairs and traps for each of the six Part 1 domains. It does not cover everything on the exam, and it contains no real exam questions. Dollar amounts and thresholds belong to a specific tax year. This exam follows tax year 2025 and law as amended through December 31, 2025, so look up every figure in that year’s IRS forms, instructions and publications. We deliberately print rules and structure, not amounts.
Exam facts at a glance
| Item | Fact (IRS bulletin revised October 9, 2026) |
|---|---|
| Questions | 100, four options, single best answer |
| Scored | 85; 15 unscored and unmarked |
| Time | 3.5 hours; two scheduled 10-minute breaks you may decline |
| Passing | 500 on a 200 to 800 scale |
| Tools | On-screen calculator, closed book |
| Retakes | 4 per part per window, 24 hours apart |
| Scored by domain | 14, 17, 17, 15, 11, 11 |
Pace: about two minutes a question, and mark the hard ones for a second pass inside the section you are in. You cannot return to a section after confirming it.
1. Preliminary Work and Taxpayer Data
Dependents. Know the two tracks.
- Qualifying child: relationship, age, residency for more than half the year, the child does not provide over half of their own support, and no joint return (with a narrow exception).
- Qualifying relative: not anyone’s qualifying child, a relationship or household test, a gross income limit that changes yearly, and you provide over half of support.
Tiebreaker for a child claimed by two people. A parent beats a non-parent. If both are parents, the one the child lived with longer wins; if equal time, the higher adjusted gross income wins.
Filing status is decided by facts on December 31. Married is married for the whole year. Head of household needs an unmarried (or considered unmarried) taxpayer who paid over half the cost of keeping up a home that a qualifying person shared for over half the year.
Easily confused:
- Form 8332 releases the claim to the child for the child tax credit. It does not move head of household, earned income credit or the dependent care credit.
- FBAR is filed with FinCEN, separately. Form 8938 is filed with your return.
- Filing requirement (do you have to file?) is different from refund filing (should you file?).
2. Income and Assets
Basis rules.
- Purchased: cost plus costs to acquire.
- Gifted: usually the donor’s basis; if the property had fallen below that value, loss uses fair market value.
- Inherited: fair market value at death (or the alternate date, if elected), and long-term treatment automatically.
- Stock split: total basis is spread over more shares, per-share basis falls.
Decision rules.
- If a scenario says “inherited retirement account or accrued income,” think income in respect of a decedent: taxed to the recipient, no basis step-up, possible deduction for estate tax paid.
- If it says “sold at a loss and bought back within 30 days before or after,” think wash sale: the loss is disallowed and added to the new basis.
- If it says “sold main home,” think ownership and use for two of the last five years.
Pairs.
- Rollover (60 days, one IRA-to-IRA rollover per 12 months) versus direct transfer (no limit).
- Early distribution exceptions differ between IRAs and employer plans. Memorize them as a two-column table.
- State refund is taxable only to the extent it gave a tax benefit the year before.
3. Deductions and Credits
Credit versus deduction. A deduction reduces income; a credit reduces tax.
Credits that look alike:
- American opportunity credit: first four years of post-secondary education, per student, partly refundable.
- Lifetime learning credit: any course that improves job skills, per return, nonrefundable, no year limit.
- Child tax credit: child with the right age and a valid SSN. Credit for other dependents: everyone else.
- Dependent care credit (Form 2441) needs earned income and a qualifying person under 13 or incapable of self-care.
Itemizing. Compare itemized against standard deduction. Medical is limited by an adjusted-gross-income floor, charity by percentage limits, and substantiation rules step up at gift sizes (check amounts for the year).
Earned income credit. Paid preparers must meet due diligence rules; remember Form 8867 and the credits it covers.
Trap: using last year’s phase-out. Verify every threshold against 2025 sources, especially because 2025 had mid-year legislation.
4. Taxation
- Self-employment tax: two parts (Social Security and Medicare), computed on a percentage of net earnings, with half deductible.
- Net investment income tax and additional Medicare tax are both threshold-based and filed on their own forms (8960 and 8959).
- AMT: know which items are added back (such as state and local tax deductions) and which timing items reverse later.
- Underpayment penalty: safe harbors are based on the current year or the prior year, with a higher percentage for higher prior-year income.
- Household employees: Schedule H and a yearly wage threshold.
Decision rule. If the scenario gives prior-year tax and prior-year adjusted gross income, the question is probably about a safe harbor.
5. Advising the Individual Taxpayer
- Injured spouse (Form 8379) protects your share of a refund from your spouse’s past-due debts. Innocent spouse (Form 8857) relieves you of tax on a joint return caused by your spouse.
- Joint filing means joint and several liability. Separate filing can cost credits.
- Amended returns use Form 1040-X. Refund claims have time limits measured from filing or payment.
- Character of a transaction (capital or ordinary, short or long term) often decides the answer.
Trap: choosing the answer that saves the most tax without checking the rule that blocks it.
6. Specialized Returns for Individuals
- Gift tax: Form 709 for gifts above the annual exclusion, for gift splitting, or for gifts of future interests. Present interest gifts qualify for the exclusion.
- Estate tax: Form 706; portability lets a surviving spouse use unused exclusion if the election is made.
- FBAR versus Form 8938: different agency, different thresholds, different filing place. Many people must file both.
- Foreign information forms: 5471 (foreign corporations), 8865 (foreign partnerships), 3520 (foreign trusts and large foreign gifts).
Easily confused pairs in one table
| If you see | Think | Not |
|---|---|---|
| Child, age and residence tests | Qualifying child | Qualifying relative |
| Release signed by custodial parent | Form 8332 | Transfer of every benefit |
| Foreign account, filed with FinCEN | FBAR | Form 8938 |
| Debt offset of refund | Injured spouse | Innocent spouse |
| Four years of college, partly refundable | American opportunity | Lifetime learning |
| Recipient taxed on decedent’s earned income | IRD | Basis step-up |
Last-day checklist
- Sleep and ID matter more than one more rule.
- Reread your one-page list of pairs above and your figures sheet for 2025.
- Remember: 85 of 100 count, so one odd question is not a verdict.
- Confirm PTIN, appointment time, ID name match, and arrival at least 30 minutes early at a test center.
- Plan breaks: you may take or decline the two scheduled 10-minute breaks.
- Do not use post-2025 rules unless the question says so.
More guides for SEE-PART1
- SEE Part 1 Study Plan: 4 and 8 Weeks
- SEE Part 1 Sample Questions With Answers
- Is SEE Part 1 Hard? An Honest Look
- SEE Part 1 Prerequisites and Skills Check
- SEE Part 1 Renewal and Retakes Explained
- Is SEE Part 1 Worth It? An Honest Look
- SEE Part 1 vs Part 2: Which First?
Next step
Use the domains explained page to expand any weak area, and the exam format page for test-day rules. When you want timed practice, our SEE Part 1 practice tests are original sets on tax year 2025.