Intuit Academy Tax Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

A tax lien is defined as a legal claim against a property due to unpaid taxes. This means that if an individual or business fails to pay their tax obligations, the government can place a lien on their property. This lien serves as a public notice that the government has a legal right to the property until the tax debt is satisfied. It can prevent the property owner from selling the property or borrowing against it until the lien is released, which occurs only after the outstanding taxes are cleared or negotiated.

The other options do not accurately describe what a tax lien is. A tax credit for homeowners pertains to reductions in tax liability rather than a legal claim on property. Calculating capital gains involves determining the profit made from the sale of an asset, which is unrelated to tax liens. Lastly, penalties for late filing of taxes refer to fines imposed for not submitting tax returns on time, rather than a legal claim concerning property. Understanding tax liens is essential for managing unpaid tax obligations and their implications on property ownership.