ENROLLED AGENT SPECIAL ENROLLMENT EXAM
PART 1 |ACTUAL QUESTIONS AND VERIFIED
ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
1. Question ID: 95850111 (Topic: Use of Prior Years' Returns)
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 ANSWER
D
Question 2
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.
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,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 ANSWER
A
Question 3
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 ANSWER
A
Question 4
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.
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,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 ANSWER
B
Question 5
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 ANSWER
C
Question 6
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 ANSWER
C
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, Question 7
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 ANSWER
C
Question 8
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 ANSWER
D
Question 9
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PART 1 |ACTUAL QUESTIONS AND VERIFIED
ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
1. Question ID: 95850111 (Topic: Use of Prior Years' Returns)
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 ANSWER
D
Question 2
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.
1
,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 ANSWER
A
Question 3
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 ANSWER
A
Question 4
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.
2
,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 ANSWER
B
Question 5
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 ANSWER
C
Question 6
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 ANSWER
C
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, Question 7
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 ANSWER
C
Question 8
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 ANSWER
D
Question 9
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