Tens of thousands of currently practicing enrolled agents were licensed by the Internal Revenue Service in order to earn their status. Their biggest hurdle in earning their stripes?
The enrolled agent exam.
The best way to pass isn’t easy, and it might not be the most fun thing in the world. However, as the old adage goes, “practice makes perfect.”
That’s why I created 60 enrolled agent exam practice questions to help you on your EA journey.
Key Takeaways
- Three-Part Structure: The EA exam is divided into three sections: Individuals, Businesses, and Representation, Practices, and Procedures.
- 100 Questions Per Section: Each part includes 100 multiple-choice questions, with a 3.5-hour time limit to complete them.
- Scaled Scoring System: Questions are weighted based on difficulty, and you’ll need a scaled score of 105 to pass.
- Immediate Results: Since the EA exam is computer-based, candidates receive their scores as soon as they finish the test.
- Prometric Test Centers: All exams are administered at Prometric test centers, ensuring a standardized testing environment.
EA Exam Format
3 Sections | 100 Multiple-Choice Questions Each | 3.5 Hours Per Exam
The enrolled agent exam, or the Special Enrollment Examination (SEE), includes three parts: Individuals, Businesses, and Representation, Practices, and Procedures. All of the exams are hosted within Prometric test centers.
Each part includes a mix of 100 multiple-choice questions to answer over the course of 3.5 hours. The EA exams use a scaled score, so more difficult questions are worth more points, and a correct answer isn’t always the same amount of points earned. To earn a passing score, you must earn 105 out of a possible 40 to 130-point range.
Because EA exams are based on multiple-choice questions and computer-based testing (CBT), you’ll receive your exam results immediately after you finish.
Below is a summary of the topics for each exam:
| Topics | Part One: Individuals | Part Two: Businesses | Part Three: Representation, Practices, and Procedures |
|---|---|---|---|
| Topic 1 | Preliminary Work with Taxpayer Data | Business Entities and Considerations | Practices and Procedures |
| Topic 2 | Income and Assets | Business Tax Preparation | Representation before the IRS |
| Topic 3 | Deductions and Credits | Specialized Returns and Taxpayers | Specific Areas of Representation |
| Topic 4 | Taxation | X | Filing Process |
| Topic 5 | Advising the Individual Taxpayer | X | X |
| Topic 6 | Specialized Returns for Individuals | X | X |
Part One: Individuals
1. Preliminary Work with Taxpayer Data
1. A taxpayer, age 35, provided their tax preparer with Form W-2, two Forms 1099-NEC, and a handwritten summary of expenses for a side business. What is the first step the preparer should take to ensure accurate reporting?
A. Report the total of all forms provided as income
B. Review the expense summary for allowable deductions
C. Confirm all documents match official IRS records
D. Input the data as provided into tax software
Answer: C
2. A married taxpayer filing jointly brings a copy of their Social Security card, while their spouse brings a Medicare card showing their Social Security Number. The preparer notices a typo in the SSN on the Medicare card. What is the preparer’s best course of action?
A. Use the number on the Medicare card for the return
B. Submit the return with a note about the discrepancy
C. Verify the correct SSN with the Social Security Administration
D. Omit the spouse’s SSN from the return
Answer: C
3. A taxpayer claims their child, age 17, as a dependent but does not have documentation for the child’s taxpayer identification number. What action should the preparer take?
A. File the return and include the child as a dependent
B. Apply for an ITIN and file the return with the application
C. Remove the child from the return until an ITIN is obtained
D. File for an automatic extension
Answer: B
2. Income and Assets
1. A taxpayer receives $12,000 in unemployment compensation during the tax year. How should this income be reported on the tax return?
A. It is fully taxable
B. It is excluded from taxable income
C. Only the first $10,200 is taxable
D. It is taxed only if total income exceeds $150,000
Answer: A
2. A taxpayer sells a rental property for $250,000, which they purchased 10 years ago for $180,000. They made $20,000 in improvements and paid $15,000 in selling expenses. What is the taxpayer’s capital gain?
A. $35,000
B. $50,000
C. $70,000
D. $85,000
Answer: A
3. A taxpayer received $500 in interest from a savings account and $1,200 in interest from municipal bonds. How much of this interest income is taxable?
A. $0
B. $500
C. $1,200
D. $1,700
Answer: B
4. A taxpayer received $25,000 from a traditional IRA distribution at age 55. No exceptions apply. What additional tax will the taxpayer owe on this distribution?
A. 0%
B. 10%
C. 20%
D. 25%
Answer: B
3. Deductions and Credits
1. A taxpayer paid $3,000 in qualified student loan interest during the year. What is the maximum deduction they may claim?
A. $1,500
B. $2,000
C. $2,500
D. $3,000
Answer: C
2. A taxpayer with an AGI of $95,000 contributes $6,000 to a traditional IRA. How much of the contribution is deductible?
A. $0
B. $3,000
C. $5,000
D. $6,000
Answer: D
3. A taxpayer paid $15,000 in childcare expenses for their 4-year-old. What is the maximum credit they can receive under the Child and Dependent Care Credit, rounded to the nearest thousand dollars?
A. $1,000
B. $3,000
C. $4,000
D. $6,000
Answer: A
4. A taxpayer donates appreciated stock worth $10,000 to a qualified charity. The stock was held for more than one year and had an original purchase price of $6,000. What is the maximum charitable deduction the taxpayer can claim?
A. $6,000
B. $8,000
C. $10,000
D. $12,000
Answer: C
4. Taxation
1. A taxpayer earned $5,000 from self-employment. What is the self-employment tax rate they must use to calculate their tax?
A. 10%
B. 12.4%
C. 15.3%
D. 18.4%
Answer: C
2. A single taxpayer with taxable income of $45,000 is in which federal tax bracket for 2023?
A. 10%
B. 12%
C. 22%
D. 24%
Answer: C
3. A taxpayer receives $10,000 from a Roth IRA they opened 8 years ago. They are 62 years old. How much of the distribution is taxable?
A. $0
B. $5,000
C. $10,000
D. It depends on their AGI
Answer: A
5. Advising the Individual Taxpayer
1. A taxpayer wants to minimize their taxable income by contributing to a retirement account. Which account type offers an immediate tax deduction?
A. Roth IRA
B. Traditional IRA
C. Health Savings Account (HSA)
D. Brokerage Account
Answer: B
2. A taxpayer receives an IRS notice requesting verification of their reported income. What is the first step they should take?
A. Ignore the notice and file an amended return
B. Gather relevant documentation and respond by the deadline
C. Request a Taxpayer Advocate to handle the issue
D. File a new return without the questionable income
Answer: B
3. A taxpayer asks if they should file jointly or separately with their spouse. What factor should be considered?
A. Eligibility for the Earned Income Tax Credit
B. The ages of their dependents
C. Whether one spouse is a nonresident alien
D. Both A and C
Answer: D
6. Specialized Returns for Individuals
1. A taxpayer with a sole proprietorship reports business income and expenses on which form?
A. Form 1040 Schedule A
B. Form 1040 Schedule C
C. Form 1065
D. Form 1120
Answer: B
2. A taxpayer with rental income files which additional form with their return?
A. Form 1040 Schedule E
B. Form 1040 Schedule B
C. Form 1040 Schedule C
D. Form 1040 Schedule SE
Answer: A
3. A taxpayer wants to report $150,000 in gambling winnings and $90,000 in gambling losses. What is the correct reporting procedure?
A. Report only the net winnings of $60,000
B. Report $150,000 in income and deduct $90,000 on Schedule A
C. Exclude both winnings and losses since they offset each other
D. Report $90,000 as income and $60,000 as a deduction
Answer: B
Part Two: Businesses
1. Business Entities and Considerations
1. A sole proprietorship is taxed:
A. As a separate legal entity
B. On the owner’s personal tax return
C. At corporate tax rates
D. Only on distributions
Answer: B
2. What is a key requirement for a business to qualify as an S Corporation?
A. Have at least 100 shareholders
B. Issue preferred stock
C. Be a domestic corporation
D. Use accrual basis accounting
Answer: C
3. A partnership agreement does not specify how profits are shared. How are profits allocated by default?
A. Equally among partners
B. Based on partner contributions
C. According to IRS discretion
D. Based on time spent managing the partnership
Answer: A
4. Which of the following is a benefit of forming a Limited Liability Company (LLC)?
A. Simplified tax filing compared to sole proprietorships
B. No self-employment tax obligations for members
C. Limited personal liability for members
D. Mandatory double taxation
Answer: C
5. A C Corporation’s retained earnings are:
A. Taxed at the individual shareholder level
B. Taxed as part of corporate income
C. Not subject to taxation
D. Deductible by the corporation
Answer: B
6. Which of the following business structures is required to file Form 8832 to elect its tax classification?
A. Sole proprietorship
B. S Corporation
C. LLC
D. Partnership
Answer: C
2. Business Tax Preparation
1. A business using the accrual method of accounting must recognize income:
A. When cash is received
B. When the service is performed or product is delivered
C. When expenses are incurred
D. Only when income exceeds $50,000
Answer: B
2. A corporation paid $12,000 for an insurance policy covering the next 3 years. How should this expense be reported in the first year?
A. Deduct the full $12,000
B. Deduct $4,000 and carry forward the balance
C. Capitalize the expense and deduct $1,000 each month
D. Deduct the premium when the policy expires
Answer: B
3. A small business incurs $8,000 in meals at restaurants and $2,000 in entertainment expenses. How much of this is deductible?
A. $10,000
B. $4,000
C. $8,000
D. $5,000
Answer: B
4. A business donates $25,000 in inventory to a qualified charity. What is the maximum deduction it can claim?
A. Cost of goods sold for the donated inventory
B. Fair market value of the inventory
C. Lesser of cost or fair market value plus 50% of the unrealized appreciation
D. None, as inventory is not deductible
Answer: C
5. Which of the following expenses is not deductible as a business expense?
A. Legal fees for drafting a client contract
B. Lobbying expenses to influence legislation
C. Interest paid on business loans
D. Depreciation on equipment used in the business
Answer: B
6. A corporation that operates on a fiscal year ending June 30 must file its Form 1120 by:
A. April 15
B. October 15
C. March 15
D. September 15
Answer: D
3. Specialized Returns and Taxpayers
1. A farmer uses the cash method of accounting. When must they report income from the sale of crops?
A. When the crops are harvested
B. When payment is received
C. When the crops are sold
D. When the buyer’s check clears
Answer: B
2. Which form must a business file to report income, deductions, and credits for an estate?
A. Form 1120-S
B. Form 1065
C. Form 1041
D. Form 990
Answer: C
3. A tax-exempt organization with unrelated business income must file which form?
A. Form 1120
B. Form 990-T
C. Form 1023
D. Form 1040
Answer: B
4. A foreign corporation earning income from U.S. sources must file:
A. Form 1120-SF
B. Form 1120-F
C. Form 1065
D. Form 1040-NR
Answer: B
5. A taxpayer operating a business as a statutory employee receives a W-2. What box on the W-2 indicates this classification?
A. Box 1
B. Box 10
C. Box 13
D. Box 17
Answer: C
6. An estate with $1,000 of taxable income in 2023 must file a return if:
A. The income is solely from dividends
B. The estate has gross income of $600 or more
C. The executor is filing on behalf of a decedent
D. All of the above
Answer: B
Part Three: Representation, Practices, and Procedures
1. Practices and Procedures
1. Which Circular governs practice before the IRS?
A. Circular 230
B. Circular 1023
C. Circular 990
D. Circular 1040
Answer: A
2. An enrolled agent must renew their license every:
A. Year
B. 2 years
C. 3 years
D. 5 years
Answer: C
3. If a practitioner becomes aware of an error on a client’s filed tax return, what is their obligation under Circular 230?
A. Correct the error immediately without informing the client
B. Notify the IRS directly
C. Advise the client of the error and potential consequences
D. Ignore the error if it is immaterial
Answer: C
4. What action can the Office of Professional Responsibility (OPR) take against a tax professional who fails to comply with Circular 230 regulations?
A. Suspend or disbar the individual from practice before the IRS
B. File criminal charges
C. Adjust the taxpayer’s refund
D. Force the practitioner to pay the client’s penalties
Answer: A
5. Which of the following is NOT considered disreputable conduct under Circular 230?
A. Conviction of a tax-related crime
B. Misleading advertising about qualifications
C. Offering services at a discounted rate
D. Willfully failing to file a personal tax return
Answer: C
2. Representation Before the IRS
1. Which of the following individuals is authorized to represent taxpayers before the IRS?
A. Enrolled agent
B. Certified public accountant (CPA)
C. Tax attorney
D. All of the above
Answer: D
2. A taxpayer signs Form 2848 to grant power of attorney. Which of the following rights does this provide the representative?
A. The ability to sign the taxpayer’s tax return
B. The ability to represent the taxpayer in audits, appeals, and collections
C. The ability to override the taxpayer’s filing decisions
D. Unlimited authority over the taxpayer’s finances
Answer: B
3. What is the primary purpose of a Collection Due Process (CDP) hearing?
A. To challenge the validity of the underlying tax liability
B. To request innocent spouse relief
C. To address a taxpayer’s disagreement with a lien or levy action
D. To negotiate the taxpayer’s audit findings
Answer: C
4. When representing a client, what is the best practice if a practitioner identifies a factual error in the taxpayer’s records?
A. Report the error directly to the IRS
B. Correct the error without informing the client
C. Discuss the issue with the client and suggest corrective action
D. Ignore the issue if it favors the taxpayer
Answer: C
5. Which form is used to authorize a tax practitioner to receive and discuss confidential taxpayer information?
A. Form 2848
B. Form 8821
C. Form 1099
D. Form 4506-T
Answer: A
3. Specific Areas of Representation
1. A taxpayer believes their spouse should be solely responsible for a tax debt incurred while filing jointly. Which IRS program can address this?
A. Innocent Spouse Relief
B. Offer in Compromise
C. Collection Appeal Program
D. Injured Spouse Allocation
Answer: A
2. Which IRS process allows taxpayers to resolve a dispute without formal litigation?
A. Taxpayer Advocate Service assistance
B. Appeals mediation
C. Collection Due Process hearing
D. Automated Underreporter Program
Answer: B
3. What is the maximum penalty for underpayment of taxes due to fraud?
A. 10%
B. 25%
C. 50%
D. 75%
Answer: D
4. A taxpayer who failed to pay taxes due is subject to which penalty?
A. Failure-to-file penalty
B. Failure-to-pay penalty
C. Accuracy-related penalty
D. Fraudulent failure penalty
Answer: B
5. A taxpayer disputes an IRS determination and decides to file a petition with the U.S. Tax Court. What is the deadline for filing the petition?
A. 30 days from the date of the notice
B. 60 days from the date of the notice
C. 90 days from the date of the notice
D. 120 days from the date of the notice
Answer: C
4. Filing Process
1. A taxpayer who wishes to request a six-month extension for filing their federal income tax return must submit:
A. Form 4868
B. Form 1040-X
C. Form 8821
D. Form 433-D
Answer: A
2. An amended return for an individual taxpayer is filed using which form?
A. Form 1040-SR
B. Form 1040-X
C. Form 1120X
D. Form 990-T
Answer: B
3. A taxpayer requests a copy of a previously filed tax return. Which form should they submit?
A. Form 4506
B. Form 2848
C. Form 8822
D. Form 1099-G
Answer: A
4. A taxpayer owes a balance on their return but cannot pay the full amount immediately. What form should they file to request a payment plan?
A. Form 9465
B. Form 1040-ES
C. Form 433-A
D. Form 2848
Answer: A
5. Which of the following taxpayers is required to file electronically?
A. A taxpayer with income over $100,000
B. A partnership with 10 or more partners
C. A corporation with total assets over $10 million
D. Any taxpayer who prepares their return using tax software
Answer: B
Congrats on getting through the questions! Want more test-taking goodness? Here are some top tips worth following, specifically for all those MCQs.
10 Tips for Answering Multiple-Choice Questions Correctly
- Thoroughly Read Each Question: Ensure you understand the question before considering the answer choices. Misreading can lead to incorrect answers. Pay attention to qualifiers like “always,” “never,” “except,” and “not,” as they significantly impact the question’s meaning.
- Predict the Answer Before Reviewing Options: After reading the question, try to anticipate the correct answer before looking at the choices. This approach helps identify the correct option and reduces the influence of distractors.
- Eliminate Clearly Incorrect Answers: Use the process of elimination to narrow down your choices. Discard options that are obviously wrong, which increases the probability of selecting the correct answer from the remaining choices.
- Be Cautious with Absolutes: Options containing words like “always,” “never,” or “only” are often incorrect, as they leave no room for exceptions. Conversely, choices with qualifiers like “usually,” “generally,” or “often” are more likely to be correct.
- Consider “All of the Above” and “None of the Above” Options: If you are confident that at least two statements are correct, “All of the Above” is likely the correct choice. However, if even one statement is false, “All of the Above” cannot be correct. Similarly, ensure all statements are false before choosing “None of the Above.”
- Analyze Similar Options: When two choices are very similar, one of them is often correct. Examine the differences between them to determine which one aligns best with the question.
- Pay Attention to Grammatical Consistency: The correct answer should fit grammatically with the question stem. If an option doesn’t fit grammatically, it’s likely incorrect.
- Manage Your Time Effectively: Allocate your time wisely. If a question is taking too long, move on and return to it later. This strategy ensures you have the opportunity to answer all questions within the time limit.
- Review Your Answers: If time permits, revisit your answers to check for mistakes or misinterpretations. However, avoid changing answers unless you have a strong reason, as your first choice is often correct.
- Stay Calm and Focused: Maintain a positive attitude and stay focused throughout the exam. Stress can impair your ability to think clearly, so take deep breaths and stay composed.
By implementing these strategies, you can enhance your ability to select the correct answers and improve your overall performance on multiple-choice exams.
FAQs
Use up-to-date study materials focused on tax laws and practice questions. A solid study plan and familiarity with the test format are essential.
The test is challenging but manageable with proper preparation and EA prep courses. It requires a strong understanding of tax laws and procedures.
Seasonal promotions like Black Friday and Cyber Monday are the best times to get discounts, but Enrolled Agent course discounts are available year-round.
Each part of the EA exam includes 100 multiple-choice questions, totaling 300 questions across all three sections.
The SEE is a comprehensive test for candidates aiming to become Enrolled Agents. It assesses knowledge of tax laws, preparation, and representation, including topics like filing statuses (such as married filing jointly or separately), installment agreements, and tax years covered by IRS regulations.
The SEE equips candidates with the expertise to assist taxpayers by focusing on critical areas of tax law. It ensures proficiency in handling scenarios like married filing statuses, setting up an installment agreement, and navigating tax years, making them effective representatives before the IRS.
