Enrolled Agent Special Enrollment Exam
Practice Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. A taxpayer operates a sole proprietorship and reports business income
and expenses on Schedule C. During the tax year, the taxpayer
purchased a vehicle used 80% for business and 20% for personal
purposes. Which method is generally used to determine the
deductible portion of vehicle expenses?
A. Deduct 100% of all vehicle expenses because the vehicle is primarily used
for business
B. Deduct only the portion of expenses attributable to business use
C. Deduct only the personal-use portion because commuting is a personal
expense
D. Deduct the full cost of the vehicle as an ordinary business expense
Answer: B
The deductible vehicle expenses for a sole proprietor must be allocated
based on the percentage of business use. Personal-use expenses are not
deductible.
, 2. An individual taxpayer receives a Form W-2 showing wages and a
Form 1099-NEC showing payments for freelance work. Which form is
generally used to report the freelance income?
A. Schedule A
B. Schedule B
C. Schedule C
D. Schedule E
Answer: C
Self-employment income from freelance activities is generally reported on
Schedule C, Profit or Loss From Business, unless another reporting rule
applies.
3. An enrolled agent preparing a federal tax return discovers that the
taxpayer intentionally omitted substantial income from a prior year
return. What is the most appropriate action?
A. Ignore the issue because the prior return has already been filed
B. Help the taxpayer conceal the omission
C. Advise the taxpayer of the issue and recommend corrective action
D. Report the taxpayer immediately to the IRS without discussion
Answer: C
Enrolled agents must follow Circular 230 ethical standards, including
advising clients about errors and helping them comply with tax
obligations.
4. Which IRS form is generally used by individuals to claim a refund of
federal income taxes withheld from wages?
,A. Form 1040
B. Form 941
C. Form 1065
D. Form 1120
Answer: A
Individual taxpayers generally file Form 1040 to report income, deductions,
credits, and claim refunds of withholding.
5. A taxpayer receives interest income from a savings account. Where is
this income generally reported on an individual income tax return?
A. Schedule C
B. Schedule B when required
C. Schedule F
D. Form 4562
Answer: B
Taxable interest income is reported on Form 1040, and Schedule B may be
required when interest and dividend income exceed certain thresholds or
other conditions apply.
6. Which taxpayer is generally required to file a federal income tax
return?
A. A person with no income and no filing requirement
B. A taxpayer whose gross income exceeds the applicable filing threshold
C. A person who received only tax-exempt interest
D. A child with no income
Answer: B
, Filing requirements depend primarily on gross income, filing status, age,
and other IRS rules.
7. Which filing status generally provides the most favorable tax
treatment for a qualifying unmarried taxpayer who maintains a home
for a dependent?
A. Single
B. Married Filing Separately
C. Head of Household
D. Qualifying Widow(er)
Answer: C
Head of Household status generally provides lower tax rates and a higher
standard deduction than Single status for eligible taxpayers.
8. A taxpayer is legally married but lived apart from their spouse for the
entire last six months of the year and maintained a household for a
child. Which filing status may apply if all requirements are met?
A. Single
B. Head of Household
C. Married Filing Jointly only
D. Qualifying Widow(er)
Answer: B
A married taxpayer may qualify for Head of Household status if considered
unmarried under IRS rules and meets household and dependent
requirements.
Practice Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. A taxpayer operates a sole proprietorship and reports business income
and expenses on Schedule C. During the tax year, the taxpayer
purchased a vehicle used 80% for business and 20% for personal
purposes. Which method is generally used to determine the
deductible portion of vehicle expenses?
A. Deduct 100% of all vehicle expenses because the vehicle is primarily used
for business
B. Deduct only the portion of expenses attributable to business use
C. Deduct only the personal-use portion because commuting is a personal
expense
D. Deduct the full cost of the vehicle as an ordinary business expense
Answer: B
The deductible vehicle expenses for a sole proprietor must be allocated
based on the percentage of business use. Personal-use expenses are not
deductible.
, 2. An individual taxpayer receives a Form W-2 showing wages and a
Form 1099-NEC showing payments for freelance work. Which form is
generally used to report the freelance income?
A. Schedule A
B. Schedule B
C. Schedule C
D. Schedule E
Answer: C
Self-employment income from freelance activities is generally reported on
Schedule C, Profit or Loss From Business, unless another reporting rule
applies.
3. An enrolled agent preparing a federal tax return discovers that the
taxpayer intentionally omitted substantial income from a prior year
return. What is the most appropriate action?
A. Ignore the issue because the prior return has already been filed
B. Help the taxpayer conceal the omission
C. Advise the taxpayer of the issue and recommend corrective action
D. Report the taxpayer immediately to the IRS without discussion
Answer: C
Enrolled agents must follow Circular 230 ethical standards, including
advising clients about errors and helping them comply with tax
obligations.
4. Which IRS form is generally used by individuals to claim a refund of
federal income taxes withheld from wages?
,A. Form 1040
B. Form 941
C. Form 1065
D. Form 1120
Answer: A
Individual taxpayers generally file Form 1040 to report income, deductions,
credits, and claim refunds of withholding.
5. A taxpayer receives interest income from a savings account. Where is
this income generally reported on an individual income tax return?
A. Schedule C
B. Schedule B when required
C. Schedule F
D. Form 4562
Answer: B
Taxable interest income is reported on Form 1040, and Schedule B may be
required when interest and dividend income exceed certain thresholds or
other conditions apply.
6. Which taxpayer is generally required to file a federal income tax
return?
A. A person with no income and no filing requirement
B. A taxpayer whose gross income exceeds the applicable filing threshold
C. A person who received only tax-exempt interest
D. A child with no income
Answer: B
, Filing requirements depend primarily on gross income, filing status, age,
and other IRS rules.
7. Which filing status generally provides the most favorable tax
treatment for a qualifying unmarried taxpayer who maintains a home
for a dependent?
A. Single
B. Married Filing Separately
C. Head of Household
D. Qualifying Widow(er)
Answer: C
Head of Household status generally provides lower tax rates and a higher
standard deduction than Single status for eligible taxpayers.
8. A taxpayer is legally married but lived apart from their spouse for the
entire last six months of the year and maintained a household for a
child. Which filing status may apply if all requirements are met?
A. Single
B. Head of Household
C. Married Filing Jointly only
D. Qualifying Widow(er)
Answer: B
A married taxpayer may qualify for Head of Household status if considered
unmarried under IRS rules and meets household and dependent
requirements.
