TheoryEnrolled Agent
Practice Test
Prepare for all three parts of the EA exam. Study individual tax, business entities, IRS representation, and federal tax procedures.
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Enrolled Agent exam — full Q&A walkthrough
Every question read aloud with the answer explained. Play it on your commute, then test yourself.
30 free Enrolled Agent questions
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Enrolled Agent (SEE Part 1)
A taxpayer's spouse died in Year 1. In Years 2 and 3, the taxpayer maintains a home as the principal residence for a dependent child and does not remarry. What is the most favorable filing status available in Year 3?
Correct — D. Qualifying Surviving Spouse (formerly 'Qualifying Widow(er)') status allows the taxpayer to use the Married Filing Jointly rates for the two tax years following the year of the spouse's death, provided the taxpayer maintains a household for a dependent child and does not remarry, so Year 3 is the second year and still qualifies. -
Enrolled Agent (SEE Part 1)
Two unmarried parents live apart. Their son lives with Mother all year. Father provides 60% of the son's total support and signs Form 8332 releasing the exemption to Mother. Who may claim the son as a qualifying child for the Earned Income Credit?
Correct — C. Form 8332 transfers the dependency exemption (and child tax credit) to the noncustodial parent, but it does NOT transfer the Earned Income Credit; the EIC is based on the residency test (qualifying child must live with the taxpayer more than half the year), so only the custodial parent — Mother — may claim the EIC. -
Enrolled Agent (SEE Part 1)
Which filing status is available ONLY to a taxpayer who is legally married on the last day of the tax year or whose spouse died during the tax year?
Correct — C. Married Filing Jointly requires the taxpayers to be married as of December 31 of the tax year (or for one spouse to have died during the year without remarriage), making it the status exclusively tied to legal marital status at year-end. -
Enrolled Agent (SEE Part 1)
A taxpayer's elderly mother lived in a nursing home all year. The taxpayer paid 80% of her mother's total support. The mother had Social Security income of $9,000, which was entirely excluded from gross income. Which statement is correct regarding the mother's dependency status?
Correct — C. For the qualifying relative gross income test, only amounts included in gross income are counted; tax-exempt Social Security benefits are excluded from gross income and therefore do not count, so the mother's gross income for dependency purposes is zero. -
Enrolled Agent (SEE Part 1)
A taxpayer is legally separated under a decree of separate maintenance issued by a court as of December 31. How is this taxpayer's filing status determined?
Correct — A. IRS rules treat a taxpayer who is legally separated under a decree of divorce or separate maintenance as unmarried at year-end, allowing them to file as Single or, if they qualify, Head of Household — not as a married person. -
Enrolled Agent (SEE Part 1)
A taxpayer's nephew lived with the taxpayer all year. The nephew is 28 years old, permanently and totally disabled, has no income, and the taxpayer provides all of his support. Can the nephew be claimed as a qualifying child?
Correct — B. A nephew is an eligible relationship for the qualifying child test, and when an individual is permanently and totally disabled, there is no upper age limit under the qualifying child rules, so a disabled 28-year-old nephew who lives with the taxpayer and meets the other tests qualifies. -
Enrolled Agent (SEE Part 1)
A head of household claimant must pay more than half the cost of keeping up a home for a qualifying person. Which of the following costs counts toward 'keeping up a home' for this test?
Correct — C. Costs of keeping up a home include rent or mortgage interest, property taxes, utilities, repairs, and food consumed in the home; clothing, education, medical care outside the home, and life insurance are specifically excluded from this calculation. -
Enrolled Agent (SEE Part 1)
A single taxpayer has no gross income for the year and is not claimed as a dependent by anyone else. Which statement about their filing requirement is most accurate?
Correct — C. A taxpayer's obligation to file is triggered when gross income meets or exceeds the filing threshold (roughly the standard deduction amount for their filing status and age); a taxpayer with no gross income generally has no filing requirement, though they may choose to file to claim refundable credits. -
Enrolled Agent (SEE Part 1)
Spouses file Married Filing Separately. One spouse itemizes deductions. What must the other spouse do?
Correct — D. When spouses file separately and one spouse itemizes deductions, the other spouse's standard deduction is reduced to zero and they must also itemize — a specific rule that makes MFS costly when deductions are unequal. -
Enrolled Agent (SEE Part 1)
A taxpayer provides 55% of her adult brother's support. The brother lives in his own apartment, earns $500 in gross income for the year, and is 30 years old. Which dependency test applies, and does the brother qualify?
Correct — C. A brother is a qualifying relative (not a qualifying child at age 30 and not living with the taxpayer); a sibling does not need to live in the taxpayer's home to satisfy the relationship test for qualifying relative, and $500 gross income is below the threshold, so the brother qualifies. -
Enrolled Agent (SEE Part 1)
A taxpayer lived with an unrelated individual who was their dependent all year. Which filing status, if any, may the taxpayer claim based solely on maintaining this household?
Correct — A. Head of Household requires the qualifying person to be either a qualifying child or a qualifying relative who is a parent or specified relative listed in the tax law; an unrelated individual who qualifies as a dependent only through the member-of-household prong does NOT qualify the taxpayer for Head of Household. -
Enrolled Agent (SEE Part 1)
Which of the following taxpayers is NOT required to file a federal income tax return based solely on the general gross-income filing thresholds (ignoring special situations)?
Correct — B. A taxpayer whose gross income equals (but does not exceed) the applicable standard deduction threshold is not required to file; the filing requirement is triggered only when gross income exceeds the threshold, and self-employment income above $400 triggers a separate SE filing requirement that the sole proprietor in option A faces. -
Enrolled Agent (SEE Part 1)
A taxpayer divorced in February and paid all costs to maintain a home where a qualifying child lived for the entire year. The taxpayer does not remarry. The ex-spouse signs Form 8332 releasing the child's dependency exemption to the taxpayer. What is the taxpayer's correct filing status?
Correct — D. A taxpayer who is considered unmarried (legally divorced) by December 31, maintained a home as the principal residence of a qualifying child for more than half the year, and paid more than half the household costs qualifies for Head of Household regardless of who claims the dependency exemption, because the HOH qualifying-child test uses residency, not the dependency claim. -
Enrolled Agent (SEE Part 1)
A taxpayer receives a $10,000 settlement from a lawsuit. Of this amount, $6,000 compensates for physical injuries sustained in a car accident, $2,000 is for emotional distress directly attributable to those physical injuries, and $2,000 is for punitive damages. How much of the settlement is taxable?
Correct — A. Under IRC §104(a)(2), compensatory damages for physical injuries and emotional distress directly attributable to physical injuries are excluded from gross income, but punitive damages are always includable regardless of the origin of the claim. -
Enrolled Agent (SEE Part 1)
A calendar-year taxpayer contributes to a traditional IRA and also participates in his employer's 401(k). His modified AGI is between the IRA deduction phase-out range for active participants. He makes a $3,000 nondeductible IRA contribution and later takes a $5,000 distribution. His total traditional IRA balance before the distribution was $20,000, of which $3,000 was basis. What portion of the $5,000 distribution is taxable?
Correct — B. Under the pro-rata (cream-in-the-coffee) rule of IRC §72, the taxable portion equals the distribution multiplied by (1 − basis/total balance); here $5,000 × (1 − $3,000/$20,000) = $5,000 × 0.85 = $4,250 is taxable, and $750 is a nontaxable return of basis. -
Enrolled Agent (SEE Part 1)
An employee receives group-term life insurance coverage of $150,000 from her employer, who pays the entire premium. What is the correct tax treatment of this benefit?
Correct — B. IRC §79 excludes employer-paid group-term life insurance up to $50,000 of coverage; the cost of any coverage above that threshold (calculated using IRS Table I rates) must be included in the employee's gross income as wages. -
Enrolled Agent (SEE Part 1)
A taxpayer cashes in Series EE U.S. Savings Bonds and uses ALL of the proceeds to pay qualified higher-education expenses for her dependent child. Her modified AGI is well below the exclusion phase-out range. What is the correct treatment of the interest earned on the bonds?
Correct — C. Under IRC §135, interest on Series EE or I bonds issued after 1989 may be excluded from income when the taxpayer uses the proceeds to pay qualified higher-education expenses and the taxpayer's MAGI falls within the eligible range. -
Enrolled Agent (SEE Part 1)
A taxpayer sells a rental property that was placed in service after 1986 for a gain. Of the total gain, $18,000 is attributable to depreciation previously deducted (all straight-line). The remaining gain is long-term capital gain. How is the $18,000 depreciation component taxed for a taxpayer in the highest ordinary income bracket?
Correct — A. Straight-line depreciation on real property (§1250 property) is not recaptured as ordinary income under §1250, but the accumulated depreciation is taxed as 'unrecaptured Section 1250 gain' at a maximum rate of 25% under IRC §1(h). -
Enrolled Agent (SEE Part 1)
A married couple filing jointly receives Social Security benefits during the year. Their provisional income (combined income) is above the second tier threshold. What is the maximum percentage of their Social Security benefits that may be included in gross income?
Correct — A. Under IRC §86, up to 85% of Social Security benefits are includable in gross income for taxpayers whose provisional income exceeds the upper tier combined income threshold; no more than 85% is ever taxable regardless of income level. -
Enrolled Agent (SEE Part 1)
A self-employed taxpayer receives a $15,000 discharge of indebtedness on a business loan at a time when she is insolvent by $8,000 (her liabilities exceed assets by $8,000). What amount, if any, must she include in gross income?
Correct — A. Under IRC §108(a)(1)(B) and §108(a)(3), the insolvency exclusion applies only to the extent the taxpayer was insolvent immediately before the discharge; here $8,000 is excluded and the remaining $7,000 ($15,000 − $8,000) must be included in gross income. -
Enrolled Agent (SEE Part 1)
A taxpayer wins $5,000 at a casino and also loses $7,000 gambling during the same tax year. She itemizes deductions. How does she report these amounts?
Correct — D. Under IRC §165(d), gambling losses are deductible only to the extent of gambling winnings; the taxpayer must include all $5,000 of winnings in income and may claim an itemized deduction for losses up to the $5,000 winnings amount — the excess $2,000 of losses is nondeductible. -
Enrolled Agent (SEE Part 1)
An employee receives a $500 achievement award in the form of a gift card from her employer for completing 10 years of service. The employer does not have a qualified plan under IRC §274. What is the correct tax treatment for the employee?
Correct — A. Cash, gift cards, and equivalent items do not qualify for the employee achievement award exclusion under IRC §74(c) and §274(j) regardless of the amount; such items are always includable in the employee's gross income as compensation. -
Enrolled Agent (SEE Part 1)
A taxpayer inherits 500 shares of stock from her mother. The mother purchased the shares 10 years ago for $4,000. On the date of the mother's death, the fair market value was $11,000. The taxpayer sells the shares three months after the mother's death for $12,000. What is the amount and character of the gain?
Correct — D. Under IRC §1014, the basis of inherited property is stepped up to fair market value at the date of death ($11,000); under IRC §1223(11), inherited property is deemed held long-term regardless of the actual holding period, so the $1,000 gain ($12,000 − $11,000) is a long-term capital gain. -
Enrolled Agent (SEE Part 1)
A taxpayer receives $12,000 in alimony under a divorce instrument executed in 2015 (before the TCJA effective date, no post-2018 modification). She also pays $3,000 of child support. How do the alimony and child support affect her gross income?
Correct — C. For pre-2019 divorce instruments not modified after December 31, 2018, alimony is includable in the recipient's gross income and deductible by the payor under pre-TCJA rules (IRC §71/§215); child support is never income to the recipient or deductible by the payor regardless of the instrument date. -
Enrolled Agent (SEE Part 1)
A taxpayer exercises incentive stock options (ISOs) and holds the shares for two years after the grant date and more than one year after the exercise date before selling them at a gain. What is the tax consequence at exercise and at sale?
Correct — D. Under IRC §422, a qualifying ISO disposition (holding shares more than two years from grant and one year from exercise) results in no regular income tax at exercise — though the spread is an AMT preference item — and the entire gain recognized at sale is treated as long-term capital gain. -
Enrolled Agent (SEE Part 1)
A taxpayer receives $800 in qualified dividends and $600 in ordinary (nonqualified) dividends from domestic corporations during the year. Which statement best describes the federal income tax treatment?
Correct — B. Under IRC §1(h)(11), qualified dividends meeting the definition (paid by U.S. corporations or qualified foreign corporations and satisfying the holding period) are taxed at the same preferential rates as net long-term capital gains; ordinary (nonqualified) dividends are taxed at the taxpayer's regular marginal rates. -
Enrolled Agent (SEE Part 1)
A taxpayer received a state income tax refund this year for overpayment of last year's taxes. Under what circumstance is the refund NOT required to be included in gross income in the current year?
Correct — D. Under the tax benefit rule (IRC §111 and Reg. §1.111-1), a state income tax refund is excludable from gross income to the extent the prior deduction did not reduce federal tax — most commonly because the taxpayer took the standard deduction (received no tax benefit from the state tax deduction) in the year the tax was paid. -
Enrolled Agent (SEE Part 1)
A taxpayer rolls over a distribution from her 401(k) plan. The plan withholds 20% for federal income tax before sending the check. She deposits the net check into an IRA within 60 days. What is the tax consequence?
Correct — C. Under IRC §402(c), mandatory 20% withholding on eligible rollover distributions is treated as a taxable distribution to the extent the taxpayer does not replace the withheld amount with personal funds within the 60-day rollover window; only the amount actually deposited into the IRA is a nontaxable rollover. -
Enrolled Agent (SEE Part 1)
A taxpayer works abroad for the entire tax year and meets the bona fide residence test. Her employer, a U.S. corporation, pays her an annual salary. She elects the foreign earned income exclusion. Which of the following is correct regarding how this exclusion interacts with her other U.S.-source income?
Correct — C. Under IRC §911, the foreign earned income exclusion covers only qualifying foreign earned income (wages or self-employment income from services performed abroad) up to the statutory annual ceiling; income from U.S. sources and foreign income above the ceiling — as well as unearned income — remain subject to U.S. income tax. -
Enrolled Agent (SEE Part 1)
A taxpayer pays alimony under a divorce agreement finalized in 2015. During the tax year, she also pays student loan interest and contributes to a traditional IRA. Which of these payments is NOT deductible as an above-the-line adjustment?
Correct — C. Above-the-line deductions include alimony under pre-2019 decrees (IRC §215), qualifying student loan interest (IRC §221), and deductible IRA contributions (IRC §219), but voluntary principal payments on a loan are repayment of borrowed principal and are never deductible.
Enrolled Agent sample questions
Tap any question below to reveal the answer and a plain-English explanation.
Enrolled Agent (SEE Part 1) Married taxpayers filing jointly have significant medical expenses. They are deciding whether to itemize. Under the medical expense deduction rules, which statement correctly describes how the floor applies?
A. Only expenses paid to licensed physicians qualify; amounts paid to dentists must be claimed separately under a different rule
B. Unreimbursed medical expenses are deductible only to the extent they exceed the applicable percentage of the taxpayer's AGI ✓
C. All unreimbursed medical expenses exceeding a flat dollar threshold are deductible regardless of AGI
D. Taxpayers who are 65 or older may deduct all unreimbursed medical expenses without any AGI floor
Correct — B. Under IRC §213, unreimbursed medical expenses are deductible only to the extent they exceed the AGI-based percentage floor; there is no flat-dollar threshold, and the floor applies regardless of age.
Real Exam Practice Two taxpayers married on November 30. That same year, the husband enrolled in an accredited college to further his career and subsequently received a Form 1098-T, Tuition Statement. The wife was employed with an income of $45,000 and paid for the husband's education expenses. The taxpayers did not receive any other income for the year. Based on their circumstances, what is the correct method to report the education credit?
A. Taxpayers must file a joint return to claim an education credit ✓
B. Based on the wife's AGI, they do not qualify to claim an education credit
C. Husband is ineligible to claim an education credit because the wife paid his education expenses
D. Wife should report nonqualified education expenses on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)
Correct — A. That's the right answer.
Enrolled Agent (SEE Part 1) A single taxpayer chooses the standard deduction. Which of the following items can she still deduct 'above the line' even though she does not itemize?
A. Charitable cash contributions to a qualified organization
B. Qualifying educator expenses up to the statutory limit ✓
C. Mortgage interest on her primary residence
D. State income taxes paid during the year
Correct — B. Qualifying educator expenses (IRC §62(a)(2)(D)) are an above-the-line adjustment available whether or not the taxpayer itemizes, whereas state taxes, charitable contributions, and mortgage interest are itemized deductions.
Real Exam Practice The taxpayer has a child under the age of 24 who is a full-time student in their second year of college. The student will be claimed as a dependent on the taxpayer's return. The student's educational expenses included $8,000 for tuition and $4,000 for room and board. The student received a $5,000 scholarship for tuition use only, as well as an additional $2,500 scholarship to pay any of the student's college expenses. The taxpayer paid the remaining $4,500. Which of the following statements is correct, based on the information above?
A. The student can claim the American Opportunity credit on the student's return for tuition expenses of $3,000 when the student reports the additional $2,500 scholarship as income
B. The taxpayer can claim the American Opportunity credit on the taxpayer's return for tuition expenses of $3,000 when the student reports the additional $2,500 scholarship as income ✓
C. The taxpayer can claim the American Opportunity credit on the taxpayer's return for tuition expenses of $3,000, and neither the taxpayer nor the student should report any of the additional $2,500 scholarship as income
D. The taxpayer can claim the American Opportunity credit on the taxpayer's return for tuition expenses of $3,000 when the taxpayer reports the additional $2,500 scholarship as income
Correct — B. That's the right answer.
Enrolled Agent (SEE Part 1) A taxpayer who is self-employed pays premiums for health insurance covering herself, her spouse, and their dependent children. She has a net profit from self-employment. Which statement best describes the tax treatment of these premiums?
A. The premiums are deductible above the line as self-employed health insurance, but only up to the net profit from the business generating the coverage ✓
B. The premiums are not deductible because health insurance is a personal expense for the self-employed
C. The premiums are deductible as an itemized medical expense subject to the AGI floor
D. The premiums are fully deductible above the line with no limitation related to net profit
Correct — A. Under IRC §162(l), self-employed health insurance premiums are deductible above the line but the deduction cannot exceed the net profit from the trade or business for which the coverage is established.
Real Exam Practice Which of the following statements is correct regarding Form 1095-A, Health Insurance Marketplace Statement?
A. Taxpayers do not need Form 1095-A to complete Form 8962, Premium Tax Credit, to reconcile advance payments of the premium tax credit or claim the premium tax credit on their tax return
B. Taxpayers will receive Form 1095-A to complete Form 8962, Premium Tax Credit, if they have been covered by an employer insurance plan for the entire year
C. Taxpayers will use Form 1095-A to complete Form 8962, Premium Tax Credit, to reconcile advance payments of the premium tax credit or claim the premium tax credit on their tax return ✓
D. Taxpayers will attach a Form 1095-A to their tax return to reconcile advance payments of the premium tax credit or claim the premium tax credit on their return
Correct — C. That's the right answer.
Enrolled Agent (SEE Part 1) A taxpayer cannot claim the Earned Income Credit (EIC) if she has investment income above a certain threshold. Which type of income counts toward the investment income limit for EIC purposes?
A. Taxable interest and ordinary dividends ✓
B. W-2 wages from a part-time job
C. Net self-employment income reported on Schedule C
D. Unemployment compensation
Correct — A. For EIC purposes, disqualifying investment income includes net capital gains, qualified dividends, and taxable interest (IRC §32(i)); wages, self-employment income, and unemployment compensation are not investment income for this test.
Real Exam Practice Which of the following statements is correct regarding Form 8995 Qualified Business Income (QBI) Deduction Simplified Computation?
A. Corporations should complete the Form 8995 to claim the QBI Deduction on their corporate returns
B. Taxpayers will receive the Form 8995 from the IRS, if they are determined to be eligible for the QBI Deduction
C. A single individual with QBI, whose taxable income doesn't exceed the threshold amount, should use the Form 8995 to claim the QBI Deduction ✓
D. A partnership is required to attach Form 8995 to their partnership tax return to claim the QBI Deduction
Correct — C. That's the right answer.
About the Enrolled Agent test
Study for the IRS Enrolled Agent Special Enrollment Examination (SEE) Part 1 - Individuals, with original practice questions written for this app from the publicly available SEE Part 1 domains. Every question has a clear explanation.
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