ENROLLED AGENT EXAMS SCRIPT 2025/2026 QUESTIONS WITH SOLUTIONS RATED A+

ENROLLED AGENT EXAMS SCRIPT 2025/2026 QUESTIONS
WITH SOLUTIONS RATED A+
..
✔✔CALCULATION OF NON-TAXABLE PERCETANGE (%) OF IRA DISTRIBUTIONS -
✔✔(BEG OF YEAR BASIS + CONTRIBUTION)
_________________________________________________________________ = %
(TOTAL VALUE OF ALL IRA - DISTRIBUTIONS)

TAXABLE AMOUNT = (% X DISTRIBUTIONS) - DISTRIBUTIONS

✔✔ROTH IRA - ✔✔1. NO AGE LIMIT TO CONTRIBUTE
2. REQUIRE A TAXABLE COMPENSATION
3. HE CAN CONTRIBUTE IF COVERING BY A RETIREMENT PLAN AT WORK.
4. INCOME LIMITATION FOR CONTRIBUTIONS

5. ROTH IRA INCOME LIMITATION TO CONTRIBUTE IS:
Single $125,000-$140,000
MFJ $198,000-$208,000
MFS *$0-$10,000

✔✔STUDENT LOAN INTEREST DEDUCTION (ADJUST INCOME) - ✔✔* UP TO
$2500 OF INTEREST PAID ON QUALIFIED STUDENT LOAN
* NO FOR MFJ
* MAGI < $85,000 (<$170,000 MFJ)
* CANNOT BE CLAIMED AS A DEPENDENT
* STUDENT LOAN INTEREST DEDCUTION PHASE OUT IS:
SINGLE & OTHER >$70,000 <$85,000
MFJ >$140,000 <$170,000

* EXAMPLE:
PAID: $2.750 ON INTEREST AND MFJ
MAGI: $155,000.
(NOTE: WHEN MFJ DENOMINATOR IS ALWAYS $30,000 AND FOR SINGLE IS
$15,000)

THEREFORE,

$2,500 X ($155,000 - $140,000 (BEG OF PHASE OUT))
______________________________________________________________________
________
($30,000 BECAUSE MFJ)

= $400 DEDUCTION REDUCE ALLOWED DUE TO PHASE OUT THRESHOLD.

,✔✔SELF-EMPLOYED HEALTH INSURANCE (ADJUST TO INCOME) - ✔✔*
MEDICAL, DENTAL, & QUALIFIED LONG TERM CARE INSURANCE PREMIUMS
FOR HIMSELF, WIFE, DEPENDENTS, & CHILD (EVEN IF NOT DEPENDENT) < 27
YEARS

✔✔SELF-EMPLOYED RETIREMENT PLAN CONTRIBUTIONS (ADJ TO INCOME) -
✔✔* KEOGH PLANS: BUSINESS OWNER USE NET EARNINGS FROM SELF
EMPLOYMENT (NEFSE)

* QUALIFIED PLANS (LIKE KEOGH PLANS):
EMPLOYERS DEDUCT CONTRIBUTION.

1. DEFINED CONTRIBUTION PLAN:

CONTRIBUTIONS ARE THE LESSER OF:
* 100% OF COMPENSATION (NEFSE)
OR
* $58,000 FOR 2021

2. DEFINED BENEFIT PLANS
NOTE: KEOGH PLANS CANNOT BE MORE THAN 20% OF NET EARNING
(WITHOUT DEDUCTION CONSTRIBUTIONS OF YOURSELF)

* SEP-IRA:

ALLOWS EMPLOYERS TO CONTRIBUTE TO TRADITIONAL IRAs (SEP-IRA).
- CANNOT EXCEED LOWER OF:
* 25% OF THE EMPLOYEE'S COMPENSATION
OR
* $58,000

* SIMPLE IRA:

- 100 OR FEWER EMPLOYEES AND @ AT LEAST MAKING 5K IN
COMPENSATION.
- EMPLOYEES CAN CHOOSE SALARY REDUCTION OF UP TO $13,500 IN 2021 &
EMPLOYERS UP TO 3% MATCHING OR 2% NON-XXLECTIVE CONTRIBUTION
- AVOID ADDITIONAL TAX. IF NOT MAINTAINED FOR @ LEAST 2 YEAR, IT'D BE
25%.

✔✔COMPENSATION FOR THE SELF-EMPLOYED PLAN ALLOCATION (ADJUST TO
INCOME) - ✔✔SPECIAL COMPUTATION TO DETERMINE CONTRIBUTIONS FOR
HIS OWN (FORM 1040, SCHEDULE 1):
RATE
--------
(1 + RATE)

, ✔✔NET EARNINGS FROM SELF-EMPLOYMENT - ✔✔NET EARNINGS FROM SELF
EMPLOYMENT IS:

GROSS INCOME MINUS ALLOWABLE BUSINESS DEDUCTIONS.

THEREFORE, COMPENSATION (CALCULATED ABOVE) IS SUBJECT TO PLAN'S
FULL RATE:
LESSER OF:
100% OF NET EARNING FROM SELF-EMPLOY
OR
$58,000 FOR 2021

NOTE: ALLOWABLE BUSINESS DEDUCTIONS ARE ALSO: COMMON LAW
EMPLOYEES & DEDUCTIONS FOR DEDUCTIBLE PART OF SELF-EMPLOYMENT

✔✔HEALTH SAVING ACCOUNT (HSA) (ADJUST TO INCOME) FORM 8889 - ✔✔*
MAXIMUM CONTRIBUTION DEPENDS ON THE TYPE OF THE HDHP (HIGH
DEDUCTIBLE HEALTH PLAN)

* MAXIMUN CONTRIBUTION UP TO $3,600 & FAMILY UP TO $7,200. ADDITIONAL
$1,000 >= 55 YEAR * MINIMUN DEDUCTIBLE $1,400 SELF & $2,800 MFJ *
MAXIMUN OUT OF POCKETS EXPENSES $7,000 SINGLE & $14,000 MFJ

* APRIL 15 FOR 2021

* ANY BODY CAN CONTRIBUTE ON BEHALF OF ELEGIBLE INDIVIDUAL.

* EMPLOYER'S HSA CONTRIBUTIONS ARE EXCLUDABLE FROM INCOME

* 20% ADDITIONAL TAX ON DISTRIBUTIONS NOT USED FOR QUALIFIED
EXPENSES UNLESS >= 65 YEAR, DISABLE OR DECEASE.

* IT IS PORTABLE

* AN HDHP CANNOT TREAT INSURANCE PREMIUMS UNLESS PAG 116

✔✔EXCLUDABLE FROM INCOME - ✔✔* CAFETERIA PLAN
* EMPLOYER'S HSA CONTRIBUTIONS

✔✔CASUALTY & THEFT LOSSES FROM FEDERALLY DECLARED DISASTER (SCH
A LINE 15 & FORM 4684 FOR EACH OR SCH A LINE 16 & FORM 4684 WHEN
QUALIFIED-MAJOR) (DEDUCTION FROM AGI) - ✔✔* $100 PLUS 10% AGI
LIMITATION WHEN FEDERALLY DECLARED DISASTER