IRS Enrolled Agent (Part 1) practice exam

Which of the following expenses qualifies for the Child and Dependent Care Credit?

Which of the following situations may require a taxpayer to file a federal income tax return even if their income is below the standard filing threshold?

What is a capital gain distribution from a mutual fund?

What percentage of net earnings from self-employment is generally subject to self-employment tax?

On January 1, 2025, Sarah received a gift of stock from her uncle Lorenzo. At the time of the gift, the stock had an adjusted basis of $\$16{,}000$ and a fair market value (FMV) of $\$8{,}000$. Sarah sold the stock on December 1, 2025, for $\$10{,}000$. What is the amount of gain or loss recognized by Sarah on the sale?

In 2025, Marilyn, a U.S. citizen working in France, earned wages there and paid French income tax on them. She qualifies for the foreign earned income exclusion and excludes all of those wages using Form 2555. Can she also claim the foreign tax credit for the French tax on those wages?

Which of the following items is generally included in a decedent’s gross estate?

Gerald and Marcia were legally separated under a decree of separate maintenance on December 30, 2025. They have no children, Gerald has no other dependents, and they lived apart the entire year. What is Gerald’s correct filing status for 2025?

Which of the following is subject to a cap stated as a specific dollar amount when claimed as an itemized deduction on a 2025 return?

Tom and Sarah are divorced. Their daughter, Lily, lived with Tom all year. However, Sarah claimed Lily as a dependent under a legal agreement. Tom has low earned income and wants to claim the Earned Income Credit. Can Tom claim the Earned Income Credit?

Who must file Form 8615, "Tax for Certain Children Who Have Unearned Income"?

Which of the following types of income is subject to the Net Investment Income Tax (NIIT)?

In 2025, Rina, a single parent who files as head of household with AGI of $\$60{,}000$, has two children who lived with her all year and are her dependents: one is 16 years old, and the other is 19 and a full-time college student. Rina and both children are U.S. citizens with valid Social Security numbers. Which credit(s), if any, can Rina claim?

Which of the following is considered a taxable event by the IRS when it comes to cryptocurrency?

Which of the following is true about the standard deduction for the 2025 tax year?

Estate of Robert Hastings Tax Return Tax Year: 2025

Income: Interest Income: $\$300$Dividend Income: $\$500$Rental Income: $\$5{,}900$Capital Gains: $\$1{,}100$

Deductions: Executor Fees: $\$1{,}300$Professional Fees (Legal/Accounting): $\$600$Administrative Expenses: $\$500$Income Distribution Deduction (to beneficiaries): $\$1{,}900$Estate Exemption Amount: $\$600$What is the Estate of Robert Hastings's taxable income?

Which of the following contributions qualifies for the Saver’s Credit?

A taxpayer pays $\$8{,}000$ in unreimbursed medical expenses in 2025 and has an AGI of $\$60{,}000$. What is the amount of the deductible expense?

Are premiums for long-term care insurance deductible?

Which of the following individuals may have an FBAR filing requirement even if they do not own the foreign account?

Elena, age 45, took a $20,000 distribution from her traditional IRA in 2025, and no exception to the 10% additional tax on early distributions applies. She must also repay excess advance payments of the premium tax credit for 2025. Where does Elena report the 10% additional tax on the early distribution?

John and Mary, who are not married, own a piece of investment real estate as joint tenants with right of survivorship. John furnished all the consideration (i.e., paid the entire purchase price). At the time of John's death, the property is valued at $\$500{,}000$. For federal estate tax purposes, what amount will be included in John's gross estate?

When is Form 5471 typically due?

In 2025, Geneva borrows $\$3{,}000$ from a friend. The friend later tells her she doesn't need to repay it. What are the tax consequences for Geneva?

Diane filed her 2025 Form 1040 on February 20, 2026, before its April 15, 2026 due date, and paid the balance due with the return. In June 2026 she learns she overlooked a credit and plans to file an amended return claiming a refund. From what date does her three-year period to claim the refund run?

In 2025, Diane, who is unmarried, contributes $95,000 to a 529 plan for her adult daughter and elects on Form 709 to treat the contribution as made ratably over 2025 through 2029. Later in 2025 she also gives her daughter $19,000 in cash. She makes no other gifts. What should the preparer advise about the 2025 cash gift?

In 2025, Alex is a single dependent child. Alex must file a tax return if their unearned income is more than:

Frank is married and is not legally separated. He will file a separate return for 2025 and wants to be considered unmarried so that he can file as head of household. Which of the following facts would prevent Frank from being considered unmarried for 2025?

John, age 45, inherited a traditional IRA from his father, who passed away in 2025 at age 68. John is not disabled or chronically ill. By when must John fully distribute the inherited IRA?

On November 10, 2025, Robert sold all his shares of XYZ Corp at a $9,000 loss; he bought no XYZ shares in the 30 days before the sale. He wants to own identical XYZ shares again as soon as possible, but only in a way that keeps the loss deductible on his 2025 return. What should his preparer recommend?

Which of the following foreign accounts is generally reportable on FinCEN Form 114 (FBAR)?

What is the defining characteristic of a "willful" FBAR violation?

Which of the following statements is generally correct regarding the taxation of interest and dividends?

Which of the following taxes can a taxpayer who itemizes generally include in the state and local tax (SALT) deduction for 2025?

For 2025, which of the following taxpayers is eligible to claim the Child and Dependent Care Credit?

A single taxpayer with no qualifying child wants to claim the earned income credit (EIC) for 2025. What age requirement must the taxpayer meet?

If a taxpayer files for an automatic extension, what is the extended due date to file Form 1040?

Maria, a single taxpayer, shows total tax of $6,800 on her 2025 Form 1040. She had $5,500 of federal income tax withheld, made no estimated tax payments, and claims a $500 refundable credit. Her 2024 total tax was $7,000. Which statement about the underpayment of estimated tax penalty is correct?

For the 2025 tax year, what is the standard deduction amount for a single filer under age 65?

Does being in a registered domestic partnership or civil union qualify a couple to file as married for federal tax purposes?

What happens if the aggregate value of a taxpayer’s foreign financial accounts exceeds $\$10{,}000$ for only one day during the year?

Logan, who files as single, has 2025 Medicare wages of $150,000 from his employer, which withheld no Additional Medicare Tax, and $100,000 of net earnings from self-employment on Schedule SE. How much Additional Medicare Tax must Logan report on Form 8959?

Maria is a self-employed consultant who reports on a calendar-year basis and pays estimated tax in quarterly installments. The 2025 installment that covers income she earns from September 1 through December 31, 2025 is due on which date?

Which of the following gifts qualifies for the annual gift tax exclusion?

Which of the following transfers is exempt from the federal gift tax?

Mary, age 52, wants to withdraw $\$15{,}000$ from her traditional IRA for a down payment on a new home. Mary has never taken a distribution before and has made both deductible and non-deductible contributions over the years. Assuming no exceptions apply, which of the following is most accurate regarding the taxation and penalties on her withdrawal?

Which of the following is not one of the tests used to determine whether a child is a taxpayer's "qualifying child"?

Georgina, a single taxpayer, itemizes deductions and has an adjusted gross income (AGI) of $\$100{,}000$.

She made the following charitable contributions in 2025: - Cash donation to a public charity: $\$30{,}000$- Donation of appreciated long-term capital gain property to a private non-operating foundation: Fair Market Value (FMV) $\$45{,}000$; Basis $\$10{,}000$.

What is the maximum charitable contribution that Georgina can deduct for the year?

Tanya’s divorce became final on November 15, 2025, and she did not remarry. Her 10-year-old son, whom she claims as a dependent, lived with her all year, and she paid more than half the cost of keeping up their home. Which filing status gives Tanya the lowest tax for 2025?

Kendall will owe tax on a 2025 Form 1040 but cannot finish the return by its original due date and cannot pay the full balance by then. What can Kendall do to avoid the failure-to-file penalty?

What is the primary difference between a decedent's gross estate and their taxable estate?

Diane is married and files a separate 2025 return. Her modified adjusted gross income is $215,000, which includes $100,000 of net investment income. What is her net investment income tax?

Reverend Alvarez, an ordained minister, has an IRS-approved Form 4361 exemption from self-employment tax. In 2025 he received a $48,000 salary from his church, a properly designated $12,000 housing allowance that he spent on housing, and $6,000 of net profit from a weekend tutoring business unrelated to his ministry. Which of these amounts are subject to self-employment tax?

Elena, who files as single, has alternative minimum taxable income (AMTI) of $700,000 for 2025. What AMT exemption may she subtract on Form 6251 before applying the AMT rates?

Fred and Maria, a married couple filing jointly, have a combined income of $\$46{,}000$. How much of their Social Security benefits might be taxable?

Which of the following is generally true if a taxpayer files a return after the due date but is owed a refund?

For federal income tax purposes, how is cryptocurrency treated by the IRS?

Which of the following is generally not a qualified organization for deductible charitable contributions according to IRS rules?

For tax year 2025, is interest on a mortgage for a second home generally deductible?

Carlos is a 30-year-old single taxpayer who earned $\$18{,}000$ working in the U.S. on a work visa. He is considered a nonresident alien for the entire tax year and has no qualifying children. Is Carlos eligible to claim the EIC?

DeShawn (age 40) is raising his girlfriend’s 7-year-old daughter, whom he has supported and lived with all year. He earned $\$25{,}000$ and is not related to the child by blood or law. Can DeShawn claim the child for EIC?

Interest earned on the redemption of Series EE and I savings bonds issued after 1989 are tax-free if the proceeds are used for

Which is true about both injured spouse relief and innocent spouse relief?

To deduct state and local taxes (SALT) for 2025, a taxpayer must generally:

For 2025, what happens if a taxpayer qualifies for less Premium Tax Credit than the advance payments made on the taxpayer's behalf?

In 2025, the Hendersons pay their nanny, who is 30 and not a family member, cash wages of $3,200, and they withhold her share of Social Security and Medicare tax from her pay. What total Social Security and Medicare tax do the Hendersons report on Schedule H?

Which statement best describes the difference between a Social Security Number (SSN) and an Individual Taxpayer Identification Number (ITIN)?

Which IRS form is used by U.S. persons to report their ownership interests in certain foreign corporations?

A nonresident alien who files Form 1040-NR earned income effectively connected with a U.S. trade or business. How is that income reported and taxed?

While preparing a client's 2025 return, a preparer reviews four items that affect the alternative minimum tax computation. Which item is a tax preference item, added back without being refigured, rather than an AMT adjustment?

What is the purpose of the “kiddie tax”?

Maria transferred a rental property she had held for investment since 2015 on March 1, 2025, as the first step of a deferred like-kind exchange for replacement investment real estate. Her preparer explains that to keep the exchange's tax deferral she must identify the replacement property in writing. By what date must she identify it?

Which of the following best describes the federal income tax treatment of a cannabis business that operates in a state where marijuana sales are legal?

Which IRS form is used to claim the Foreign Tax Credit for individuals?

What is the maximum percentage of unpaid taxes that the failure-to-file penalty can reach?

A recognized gain is:

Which of the following describes the correct treatment of long-term capital losses?

Maria, who is single, bought a home in 2024 and has lived in it as her main home since; she has not excluded gain from another home sale in the past two years. In August 2025 her employer transferred her to a work location 65 miles farther from the home than her old work location, and she sold the home that month for a $150,000 gain after owning and living in it for 19 months. What should the preparer advise about the gain?

A married couple, both in their mid-career is considering contributing to either a Traditional IRA or a Roth IRA. They anticipate their income and tax bracket to be significantly higher in retirement compared to their current working years. Which of the following factors should be the primary consideration in advising them on this decision?

In 2025, Gladys donated a painting with a fair market value (FMV) of $\$10{,}000$ to a qualified public charity. She bought the painting in 2021 for $\$5{,}000$. Gladys itemizes deductions, her 2025 AGI is $\$80{,}000$, and the charity uses the painting in a way related to its charitable purpose. What amount can she deduct for this donation?

Which type of retirement plan distribution, earnings included, can be permanently excluded from income if certain conditions are met?

Which of the following is considered a deductible expense for an estate or trust because it is "ordinary and necessary" for its trade or business?

Dana and her husband lived apart from 2023 until they reconciled and moved back in together in November 2025. Dana will file married filing separately for 2025. She is an active participant in her employer's 401(k) plan, her 2025 modified AGI is $42,000, and she wants to deduct a $7,000 traditional IRA contribution. What should her preparer advise?

Which of the following is TRUE about deducting interest on a home equity loan or line of credit (HELOC) in 2025?

For 2025, which of the following is NOT required for a taxpayer to claim the self-employed health insurance deduction?

The Alternative Minimum Tax (AMT) is designed to:

James (age 35) and Alicia (age 34) are married, file jointly, and have two qualifying children. Their combined earned income is $\$39{,}000$. They have investment income of $\$12{,}000$. Can they claim the Earned income Credit for the year?

According to the IRS, which of the following workers is a household employee of the taxpayer who hires them?

For 2025, how are same-sex couples who are legally married in a jurisdiction that recognizes their marriage treated for federal tax purposes?

Sheila is 66 years old. She used her Health Savings Account (HSA) to pay for a $\$300$ diagnostic test in 2025. She also used HSA funds for a $\$200$ deposit on an around-the-world cruise. What is the penalty that Sheila will owe based on her HSA spending in 2025?

If a taxpayer's filing status is "Married Filing Separately," what is the general impact on their tax rate compared to "Married Filing Jointly"?

Which of the following is generally true regarding failure-to-pay penalties?

Maria, age 45, received a $20,000 distribution from traditional IRA #1 on March 1, 2025 and rolled it into traditional IRA #2 within 60 days. In October 2025 she wants to move $15,000 from traditional IRA #3 into traditional IRA #4 without owing tax. What should her preparer recommend?

Which of the following is NOT a characteristic of a statutory employee?

Which of the following items is added back when computing Alternative Minimum Taxable (AMT) income?

Which of the following statements is true regarding Form 1040 and payment deadlines?

What is the primary purpose of reviewing a taxpayer's prior-year tax return during the preparation of the current year's return?

Ruth, age 76, was required to take a $10,000 required minimum distribution from her traditional IRA by December 31, 2025, but took nothing. In March 2026 she withdraws the missed $10,000 and files her 2025 return with Form 5329 reporting the excise tax; she does not request a waiver. What excise tax does she owe on the missed distribution?

The actual expense method involves totaling all the costs of owning and operating the vehicle and then multiplying that amount by the business use percentage. The standard mileage rate, on the other hand, is a fixed rate per mile driven for business. Which of the following is the best practice for choosing between the two methods in the first year a vehicle is placed in service?

Which of the following is the key factor the IRS uses to differentiate between a hobby and a business?