EA Exam Part 1 || 100% Verified Answers.
If a tax professional discovers an error on a client's prior-year return, and the client wants to
correct the error, what steps should the preparer take next?
A. The preparer should advise the client they can avoid audit risk by not amending their return.
B. The preparer should ignore the error and focus on the current year's return.
C. It would be best to report the error to the IRS anonymously.
D. The preparer should file an amended return to correct the mistake. correct answers D
A tax preparer has discovered a significant error on their client's prior-year return, but the client
does not want to pay for an amended tax return. What is the preparer's responsibility, in this
scenario?
A. The preparer must inform the taxpayer of the error and its potential consequences. However,
the preparer is not obligated to correct the error.
B. If the client refuses to correct the error, the preparer must always disengage from the client.
C. If the client refuses to correct the error, the preparer must report the error to the IRS
anonymously.
D. Tax practitioners are obligated to fix any errors they discover on a prior-year return. correct
answers A
Which of the following items would "carryforward" on a taxpayer's return, requiring a preparer
to see the prior-year return?
A. Suspended passive losses
B. Hobby expenses in excess of hobby income
C. State income tax deduction that was limited by the SALT cap
D. Gambling losses in excess of gambling winnings correct answers A
,Layla is self-employed and expects to owe $2,500 of taxes for 2023. Her tax liability for the
prior tax year was zero because her Schedule C business had a loss in the prior year. Which of
the following statements is correct?
A. Layla is required to pay the full amount due before December 31 or she will be subject to an
estimated tax penalty.
B. Layla is required to pay estimated taxes.
C. Layla is not required to pay estimated taxes.
D. Layla must pay at least $1,500 of estimated tax during the year, so she can be under the safe
harbor threshold of $1,000 for the year. correct answers B
Which of the following situations might require a preparer to review a taxpayer's previous year's
tax return?
A. The taxpayer was a full-time student.
B. The taxpayer received a scholarship in the current year.
C. The taxpayer owns a rental property with prior-year depreciation.
D. The taxpayer's income was below the filing threshold. correct answers C
Why is reviewing prior-year tax returns important for tax professionals?
A. It ensures the taxpayer is not practicing tax evasion.
B. It allows preparers to fix the mistakes made by the taxpayer.
C. It helps them identify potential errors and omissions.
D. It provides a way to generate more revenue by amending prior-year returns. correct answers C
A tax preparer discovers an omission in a client's prior-year return related to a tax credit. What
should the preparer do?
, A. File an amended return without notifying the client.
B. Ignore the omission since it's from a previous year.
C. Promptly inform the client of the omission and its potential impact.
D. Report the omission to the IRS directly. correct answers C
What biographical information, at a minimum, is required on each individual taxpayer's federal
income tax return?
A. Taxpayer name, taxpayer identification number, physical address, phone number, and email
address.
B. Taxpayer name and taxpayer identification number.
C. Taxpayer name, taxpayer identification number, and mailing address.correct
D. Taxpayer name, taxpayer identification number, physical address, and phone number. correct
answers D
Jamila is a nonresident alien that owns a rental property in the US that she inherited from her
brother, who was a green-card holder. Jamila must file a U.S. tax return, but she is not eligible
for a Social Security Number. What must she do?
A. She must fill out a W-9 application form for an ITIN, and submit it to the IRS along with a
completed tax return.
B. She must fill out a W-7 form for an ATIN, and submit it to the IRS along with a completed tax
return.
C. She must fill out a W-7 application form for an EIN, and submit it to the IRS along with a
completed tax return.
D. She must fill out a W-7 application form for an ITIN, and submit it to the IRS along with a
completed tax return. correct answers D
If a tax professional discovers an error on a client's prior-year return, and the client wants to
correct the error, what steps should the preparer take next?
A. The preparer should advise the client they can avoid audit risk by not amending their return.
B. The preparer should ignore the error and focus on the current year's return.
C. It would be best to report the error to the IRS anonymously.
D. The preparer should file an amended return to correct the mistake. correct answers D
A tax preparer has discovered a significant error on their client's prior-year return, but the client
does not want to pay for an amended tax return. What is the preparer's responsibility, in this
scenario?
A. The preparer must inform the taxpayer of the error and its potential consequences. However,
the preparer is not obligated to correct the error.
B. If the client refuses to correct the error, the preparer must always disengage from the client.
C. If the client refuses to correct the error, the preparer must report the error to the IRS
anonymously.
D. Tax practitioners are obligated to fix any errors they discover on a prior-year return. correct
answers A
Which of the following items would "carryforward" on a taxpayer's return, requiring a preparer
to see the prior-year return?
A. Suspended passive losses
B. Hobby expenses in excess of hobby income
C. State income tax deduction that was limited by the SALT cap
D. Gambling losses in excess of gambling winnings correct answers A
,Layla is self-employed and expects to owe $2,500 of taxes for 2023. Her tax liability for the
prior tax year was zero because her Schedule C business had a loss in the prior year. Which of
the following statements is correct?
A. Layla is required to pay the full amount due before December 31 or she will be subject to an
estimated tax penalty.
B. Layla is required to pay estimated taxes.
C. Layla is not required to pay estimated taxes.
D. Layla must pay at least $1,500 of estimated tax during the year, so she can be under the safe
harbor threshold of $1,000 for the year. correct answers B
Which of the following situations might require a preparer to review a taxpayer's previous year's
tax return?
A. The taxpayer was a full-time student.
B. The taxpayer received a scholarship in the current year.
C. The taxpayer owns a rental property with prior-year depreciation.
D. The taxpayer's income was below the filing threshold. correct answers C
Why is reviewing prior-year tax returns important for tax professionals?
A. It ensures the taxpayer is not practicing tax evasion.
B. It allows preparers to fix the mistakes made by the taxpayer.
C. It helps them identify potential errors and omissions.
D. It provides a way to generate more revenue by amending prior-year returns. correct answers C
A tax preparer discovers an omission in a client's prior-year return related to a tax credit. What
should the preparer do?
, A. File an amended return without notifying the client.
B. Ignore the omission since it's from a previous year.
C. Promptly inform the client of the omission and its potential impact.
D. Report the omission to the IRS directly. correct answers C
What biographical information, at a minimum, is required on each individual taxpayer's federal
income tax return?
A. Taxpayer name, taxpayer identification number, physical address, phone number, and email
address.
B. Taxpayer name and taxpayer identification number.
C. Taxpayer name, taxpayer identification number, and mailing address.correct
D. Taxpayer name, taxpayer identification number, physical address, and phone number. correct
answers D
Jamila is a nonresident alien that owns a rental property in the US that she inherited from her
brother, who was a green-card holder. Jamila must file a U.S. tax return, but she is not eligible
for a Social Security Number. What must she do?
A. She must fill out a W-9 application form for an ITIN, and submit it to the IRS along with a
completed tax return.
B. She must fill out a W-7 form for an ATIN, and submit it to the IRS along with a completed tax
return.
C. She must fill out a W-7 application form for an EIN, and submit it to the IRS along with a
completed tax return.
D. She must fill out a W-7 application form for an ITIN, and submit it to the IRS along with a
completed tax return. correct answers D
