Enrolled Agent (IRS) EXAM QUESTIONS
AND CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES
2025/2026 Q&A | INSTANT DOWNLOAD
PDF
Question 1
What is the primary purpose of the Internal Revenue Service (IRS)?
A. To provide legal defense for taxpayers
B. To administer and enforce federal tax laws
C. To create state tax laws
D. To issue business licenses
Correct Answer: B
Rationale: The IRS is responsible for administering and enforcing federal tax laws,
including collection of taxes and taxpayer compliance.
Question 2
Which tax form is primarily used by individual taxpayers to file federal income tax
returns?
A. Form 1120
B. Form 1065
C. Form 1040
D. Form W-2
Correct Answer: C
,Rationale: Form 1040 is used by individuals to file their federal income tax return.
Question 3
Gross income generally includes:
A. Only wages
B. All income from whatever source derived unless excluded by law
C. Only business income
D. Only investment income
Correct Answer: B
Rationale: Gross income includes all income unless specifically excluded by the
Internal Revenue Code.
Question 4
Which of the following is generally excluded from gross income?
A. Wages
B. Interest income
C. Gifts
D. Business profits
Correct Answer: C
Rationale: Gifts are generally excluded from gross income under IRC rules.
Question 5
The standard deduction is:
A. A required tax payment
B. A fixed dollar amount reducing taxable income
C. A business expense only
D. A penalty deduction
,Correct Answer: B
Rationale: The standard deduction reduces taxable income and varies by filing
status.
Question 6
Which filing status generally provides the lowest tax rates for married couples?
A. Single
B. Married Filing Jointly
C. Married Filing Separately
D. Head of Household
Correct Answer: B
Rationale: Married Filing Jointly typically provides the most favorable tax brackets
and deductions.
Question 7
A taxpayer who is unmarried and pays more than half the cost of maintaining a
home for a qualifying person may file as:
A. Single
B. Head of Household
C. Married Filing Separately
D. Qualified Widow(er)
Correct Answer: B
Rationale: Head of Household status applies when support and dependent
requirements are met.
Question 8
What is taxable income?
, A. Gross income minus deductions and exemptions
B. Gross income only
C. Refund amount
D. Payroll wages only
Correct Answer: A
Rationale: Taxable income is gross income reduced by allowable deductions.
Question 9
Which item is considered earned income?
A. Interest
B. Dividends
C. Wages and salaries
D. Capital gains
Correct Answer: C
Rationale: Earned income includes compensation from work such as wages and
salaries.
Question 10
Which income is considered unearned income?
A. Wages
B. Salaries
C. Interest and dividends
D. Self-employment income
Correct Answer: C
Rationale: Unearned income includes investment income such as interest and
dividends.
Question 11
AND CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES
2025/2026 Q&A | INSTANT DOWNLOAD
Question 1
What is the primary purpose of the Internal Revenue Service (IRS)?
A. To provide legal defense for taxpayers
B. To administer and enforce federal tax laws
C. To create state tax laws
D. To issue business licenses
Correct Answer: B
Rationale: The IRS is responsible for administering and enforcing federal tax laws,
including collection of taxes and taxpayer compliance.
Question 2
Which tax form is primarily used by individual taxpayers to file federal income tax
returns?
A. Form 1120
B. Form 1065
C. Form 1040
D. Form W-2
Correct Answer: C
,Rationale: Form 1040 is used by individuals to file their federal income tax return.
Question 3
Gross income generally includes:
A. Only wages
B. All income from whatever source derived unless excluded by law
C. Only business income
D. Only investment income
Correct Answer: B
Rationale: Gross income includes all income unless specifically excluded by the
Internal Revenue Code.
Question 4
Which of the following is generally excluded from gross income?
A. Wages
B. Interest income
C. Gifts
D. Business profits
Correct Answer: C
Rationale: Gifts are generally excluded from gross income under IRC rules.
Question 5
The standard deduction is:
A. A required tax payment
B. A fixed dollar amount reducing taxable income
C. A business expense only
D. A penalty deduction
,Correct Answer: B
Rationale: The standard deduction reduces taxable income and varies by filing
status.
Question 6
Which filing status generally provides the lowest tax rates for married couples?
A. Single
B. Married Filing Jointly
C. Married Filing Separately
D. Head of Household
Correct Answer: B
Rationale: Married Filing Jointly typically provides the most favorable tax brackets
and deductions.
Question 7
A taxpayer who is unmarried and pays more than half the cost of maintaining a
home for a qualifying person may file as:
A. Single
B. Head of Household
C. Married Filing Separately
D. Qualified Widow(er)
Correct Answer: B
Rationale: Head of Household status applies when support and dependent
requirements are met.
Question 8
What is taxable income?
, A. Gross income minus deductions and exemptions
B. Gross income only
C. Refund amount
D. Payroll wages only
Correct Answer: A
Rationale: Taxable income is gross income reduced by allowable deductions.
Question 9
Which item is considered earned income?
A. Interest
B. Dividends
C. Wages and salaries
D. Capital gains
Correct Answer: C
Rationale: Earned income includes compensation from work such as wages and
salaries.
Question 10
Which income is considered unearned income?
A. Wages
B. Salaries
C. Interest and dividends
D. Self-employment income
Correct Answer: C
Rationale: Unearned income includes investment income such as interest and
dividends.
Question 11
