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Everything You Need To Know To Easily Pass The IRS Enrolled Agent Exam – Part 1 Individuals

The IRS enrolled agent exam consists of three parts, and the first part focuses on individuals. It covers topics such as filing requirements, gross income, adjustments to income, tax credits, tax payments, and taxpayer data. Specifically, the exam tests knowledge of tax forms, filing status, exemptions, dependents, wages, salaries, interest, dividends, and capital gains. It also covers deductions for adjusted gross income, itemized deductions, tax computations, and tax payments.

Additionally, the IRS enrolled agent exam tests the ability to interpret taxpayer data such as Social Security numbers, taxpayer identification numbers, and dates of birth. Overall, the first part of the exam assesses an individual’s knowledge of taxation related to individuals and their finances.

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IRS Enrolled Agent Exam Topics Overview

The IRS enrolled agent exam is divided into three parts. Each part lasts 3.5 hours (not including the pre-examination tutorial and post-examination survey). There is an on-screen timer that indicates how much time remains. In addition to the 85 multiple-choice EA exam questions that are scored in each part, there are 15 experimental questions that are not scored. 

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SEE1: Part 1 ‚ÄĒ Individuals

  1. Preliminary Work with Taxpayer Data ‚Äď 14 questions
  2. Income and Assets ‚Äď 17 questions
  3. Deductions and Credits ‚Äď 17 questions
  4. Taxation ‚Äď 15 questions
  5. Advising the Individual Taxpayer ‚Äď 11 questions
  6. Specialized Returns for Individuals ‚Äď 12 questions

IRS Enrolled Agent Exam Topics Detail

  1. Filing Requirements: This topic covers the various filing requirements for taxpayers, including the types of tax returns, filing deadlines, and extensions.

  2. Gross Income: This IRS enrolled agent exam topic focuses on the different types of income that individuals can receive, such as wages, salaries, tips, interest, dividends, and rental income. It also covers the treatment of capital gains and losses.

  3. Adjustments to Income: This topic covers deductions that taxpayers can claim to reduce their taxable income, such as contributions to retirement plans, alimony payments, and self-employment taxes.

  4. Tax Credits: This IRS enrolled agent exam topic covers the various tax credits that are available to taxpayers, including the earned income credit, child tax credit, and education credits.

  5. Tax Payments: This topic covers the different ways taxpayers can pay their taxes, such as through withholding, estimated tax payments, and extension payments.

  6. Taxpayer Data: This IRS enrolled agent exam topic covers the information that taxpayers need to provide on their tax returns, including Social Security numbers, taxpayer identification numbers, and dates of birth.

  7. Filing Status: This topic covers the different filing statuses that taxpayers can choose from, such as single, married filing jointly, and head of household.

  8. Exemptions: This IRS enrolled agent exam topic covers the personal and dependent exemptions that taxpayers can claim on their tax returns.

  9. Dependents: This topic covers the rules for claiming dependents, including the age and residency requirements.

  10. Wages and Salaries: This IRS enrolled agent exam topic covers the different types of income that taxpayers can receive from their employment, including wages, salaries, and tips.

  11. Interest and Dividends: This topic covers the treatment of interest and dividends for tax purposes.

  12. Capital Gains and Losses: This IRS enrolled agent exam topic covers the rules for calculating and reporting capital gains and losses on tax returns.

  13. Deductions for Adjusted Gross Income: This topic covers the deductions that taxpayers can claim to reduce their adjusted gross income, such as contributions to IRA accounts.

  14. Itemized Deductions: This IRS enrolled agent exam topic covers the different types of expenses that taxpayers can claim as itemized deductions, such as medical expenses, charitable contributions, and state and local taxes.

  15. Tax Computation: This topic covers the rules for calculating the tax liability for individual taxpayers.

  16. Tax Payments: This IRS enrolled agent exam topic covers the various ways taxpayers can make their tax payments, including through withholding, estimated tax payments, and extension payments.

IRS Enrolled Agent Exam: Part 1 ‚ÄĒ Individuals

Domain 1: Preliminary Work and Taxpayer Data | 14 Questions 

1.1. Preliminary work to prepare tax returns 

  • Use of prior years’ returns for comparison, accuracy, and carryovers for current year’s return¬†¬†
  • Taxpayer personal information (e.g., date of birth, marital status, dependents, identity¬† protection PIN, state issued photo ID)¬†
  • Residency status and/or citizenship (e.g., , visas, green cards, resident alien or non-resident¬† alien, ITIN)¬†
  • Filing requirements and due date¬†
  • Taxpayer filing status¬†¬†
  • Sources of worldwide taxable and non-taxable income (e.g., interest, wages, business, sales of¬† property, dividends, rental income, flow-through entities, alimony received)¬†
  • Sources of applicable exclusions and adjustments to gross income (e.g., foreign earned income¬† exclusion, retirement plans, HSAs, alimony paid, health insurance, self-employment tax)¬†
  • Sources of applicable deductions (e.g., itemized, standard)¬†
  • Qualifications for dependency¬†
  • Sources of applicable credits (e.g., education, foreign tax, child and dependent care, credit for¬† other dependents, child tax credit)¬†
  • Sources of tax payments and refundable credits¬†
  • Previous IRS correspondence with taxpayer¬†
  • Additional required returns to be filed, and taxes paid (e.g., employment, gifts, international¬† information returns, and other information returns)¬†
  • Special filing requirements (e.g. foreign income, presidentially declared disaster areas, injured¬† spouse)¬†
  • Foreign account and asset reporting (e.g., FBAR, Form 8938)¬†
  • Minor children’s unearned income (‚ÄúKiddie‚ÄĚ tax)¬†
  • ACA requirements (e.g., , total household income, premium tax credit, household size)

Domain 2: Income and Assets | 17 Questions 

2.1. Income 

  • Taxability of wages, salaries and other earnings¬†¬†
  • Interest Income (e.g., taxable and non-taxable)
  • Dividends and other distributions from mutual funds, corporations, and other entities¬† -Personal property rental¬†
  • Gambling income and allowable deductions (e.g., Form W-2G, documentation) -Tax treatment of cancellation of debt (e.g., Form 1099C, foreclosures, insolvency)¬†
  • Tax treatment of a U.S. citizen/resident with foreign income (e.g., tax treaties, Form 1116, Form¬† 2555, Form 3520, Form 5471)¬†
  • Other income (e.g., scholarships, barter income, hobby income, alimony, non-taxable combat¬† pay, unearned income, taxable recoveries, NOL, illegal income)¬†
  • Constructive receipt of income¬†
  • Constructive dividends (e.g., payments of personal expenses from a business entity) -Passive income and loss¬†¬†
  • Pass-through income (e.g., Schedule K-1, income, deductions, basis, qualified business income¬† (QBI) items)¬†
  • Royalties and related expenses¬†
  • State/local income tax refund and other itemized deduction recoveries¬†
  • 1099 MISC, 1099 NEC, 1099 K reporting, irregularities, and corrections¬†

2.2. Retirement income 

  • Basis in a traditional IRA (Form 8606)¬†
  • Comparison of and distributions from traditional and Roth IRAs¬†
  • Distributions from qualified and non-qualified plans (e.g., pre-tax, after-tax, rollovers, Form¬† 1099R, qualified charitable distribution)¬†
  • Excess contributions and tax treatment (e.g., penalties)¬†
  • Penalties and exceptions on premature distributions from qualified retirement plans and IRAs -Prohibited transactions and tax consequences¬†
  • IRA conversions and recharacterization (Form 8606)¬†
  • Required minimum distributions¬†¬†
  • Loans from qualified plans¬†
  • Taxability of Social Security and Railroad Retirement benefits¬†
  • Inherited retirement accounts¬†
  • Foreign pensions and retirement income

2.3. Property, real and personal 

  • Sale or disposition of property including depreciation recapture rules and 1099A¬†
  • Capital gains and losses (e.g., netting effect, short-term, long-term, mark-to-market, virtual¬† currency)¬†
  • Basis of assets (e.g., purchased, gifted or inherited)¬†
  • Basis of stock after stock splits and/or stock dividends (e.g., research, schedules, brokerage re¬† cords)¬†
  • Publicly traded partnerships (PTP) (e.g., sales, dispositions, losses)¬†
  • Sale of a personal residence (e.g., IRC sec 121 exclusions)¬†
  • Installment sales (e.g., related parties, original cost, date of acquisition, possible recalculations¬† and recharacterization)¬†
  • Options (e.g., stock, commodity, ISO, ESPP)¬†
  • Like-kind exchange¬†
  • Non-business bad debts¬†
  • Investor versus trader¬†

2.4. Adjustments to Income  

  • Self-employment tax¬†
  • Retirement contribution limits and deductibility (e.g., earned compensation requirements) -Health savings accounts¬†
  • Other adjustments to income (e.g., student loan interest, alimony, moving expenses for active¬† military, write-in adjustments)¬†
  • Self-Employed Health Insurance¬†

Domain 3: Deductions and Credits | 17 Questions 

3.1. Itemized deductions and QBI 

  • Medical, dental, vision, long-term care expenses¬†
  • Various taxes (e.g., state and local, personal property, real estate)¬†
  • Interest expense (e.g., mortgage interest, investment interest, tracing rules, points,¬† indebtedness limitations)¬†
  • Charitable contributions (e.g., cash, non-cash, limitations, documentation required) -Nonbusiness casualty and theft losses¬†
  • Other itemized deductions¬†
  • Itemized deductions for Form 1040-NR¬†
  • Qualified Business Income (QBI) deduction¬†

3.2. Credits 

  • Child and dependent care credit¬†
  • Child tax credit and credit for other dependents¬†
  • Education credits¬†
  • Foreign tax credit¬†
  • Earned income tax credit (e.g., paid preparer’s earned income credit checklist, eligibility and¬† disallowance)¬†
  • Adoption credits (e.g., carryovers, limitations, special needs)¬†
  • ACA premium tax credit¬†
  • Other credits (refundable and non-refundable) (e.g., health coverage tax credit, energy credits,¬† Retirement savings contribution credit)¬†

Domain 4: Taxation | 15 Items 

4.1. Taxation 

  • Alternative minimum tax and credit for prior year¬†
  • Household employees¬†
  • Underpayment penalties and interest¬†
  • Self-employment tax¬†
  • Excess Social Security withholding¬†
  • Tax provisions for members of the clergy¬†
  • Tax provisions for members of the military¬†
  • Income in respect of decedent¬†¬†
  • Net investment income tax¬†
  • Additional Medicare tax¬†
  • Uncollected Social Security and Medicare tax¬†
  • Other taxes (e.g., first time homebuyer credit repayment)

Domain 5: Advising the individual taxpayer | 11 Questions 

5.1. Advising the Individual Taxpayer 

  • Reporting obligations for individuals (e.g., 1099, bartering, cash)¬†
  • Property sales (e.g., homes, stock, businesses, antiques, collectibles)¬†
  • Education planning (e.g., lifetime learning credit, IRC section 529 plans)¬†
  • Estate planning (e.g., gift versus inheritance, trusts, family partnerships, charitable giving, long term care, life insurance)¬†
  • Retirement planning (e.g., annuities, IRAs, employer plans, early retirement rules, required¬† minimum distribution, beneficiary ownership, charitable distributions from an IRA)¬†
  • Marriage and divorce (e.g., divorce settlement, common-law, community property, alimony)¬†
  • Items that will affect future/past returns (e.g., carryovers, net operating loss, Schedule D, Form¬† 8801, negative QBI carryover)¬†
  • Injured spouse¬†
  • Innocent spouse¬†
  • Estimated tax and penalty avoidance (e.g., mid-year estimated tax planning)¬†
  • Adjustments, deductions, and credits for tax planning (e.g., timing of income and expenses) -Character of transaction (e.g., use of capital gain rates versus ordinary income rates)¬†
  • Advantages and disadvantages of MFJ/MFS/HOH filing statuses in various scenarios (e.g., joint¬† and several liability)¬†
  • Conditions for filing a claim for refund (e.g., amended returns)¬†
  • Penalty of perjury¬†

Domain 6: Specialized Returns for Individuals | 11 Questions 

6.1. Estate Tax 

  • Gross estate, taxable estate (calculations and payments), unified credit¬†¬†
  • Jointly held property¬†
  • Marital deduction and other marital issues (e.g., portability election)¬†
  • Life insurance, IRAs, and retirement plans¬†
  • Estate filing requirements and due dates (e.g., Form 706: Form 1041)¬†

6.2. Gift Tax 

  • Gift-splitting
  • Annual exclusion¬†
  • Unified credit¬†
  • Effect on estate tax (e.g., Generation skipping transfer tax)¬†
  • Filing requirements (e.g., Form 709)¬†

6.3.International Information Reporting 

  • Filing and reporting requirements and due dates (e.g., FBAR, Form 8938, Form 8865, Form¬† 5471, Form 3520)¬†
  • Covered accounts (e.g., FBAR, Form 8938)¬†
  • Potential penalties (e.g., failure to file, underreporting, substantially incomplete, statute of¬† limitations, reduction of tax attributes)¬†
  • Distinctions between FBAR and Form 8938 requirements

Overall, the first part of the IRS enrolled agent exam requires a thorough understanding of tax laws and regulations related to individuals and their financial affairs.

IRS enrolled agent exam