Enrolled Agent Exam Part 1 Questions
and Answers
Dual istatus ialien i- iCorrect iAnswers i-An ialien iwho iis iboth ia inonresident iand iresident
ialien iduring ithe isame itax iyear. iThe imost icommon idual-status itax iyears iare ithe iyears
iof iarrival iand ideparture.
Resident iAlien i- iCorrect iAnswers i-If ieither ithe igreen icard itest ior ithe isubstantial
ipresence itest iis imet. iEven iif ithe itaxpayer idoes inot imeet ieither iof ithese itests, i(s)he
imay ibe iable ito ichoose ito ibe itreated ias ia iU.S. iresident ifor ipart iof ithe iyear.
Green iCard iTest i- iCorrect iAnswers i-A itaxpayer iis ia iresident ifor itax ipurposes iif i(s)he
iwas ia ilawful ipermanent iresident i(immigrant) iof ithe iUnited iStates iat iany itime iduring
ithe iyear
Substantial ipresence iTest i- iCorrect iAnswers i-A itaxpayer iis iconsidered ia iU.S. iresident
iif ishe/he iwas iphysically ipresent iin ithe iUS ifor iat ileast i(1) i31 idays iduring i2018 iand
i183 idays iduring i2018, i2017, iand i2016, icounting iall idays iof iphysical ipresence iin
i2018 ibut ionly i1/3 iof idays iin i2017, iand i1/6 iof idays iin i2016
Provisional iIncome ithreshholds ifor iexclusion iof iSS iBenefits ifrom iIncome i- iCorrect
iAnswers i-MFJ i-- i32,000 ito i44,000
All iOthers-- i25,000 ito i34,000
MFSLT i-- i0
What iis iexcluded ifrom igross iincome iin ithe icase iof iinsurance iproceeds? i- iCorrect
iAnswers i-Disability ipay i(excluded)
Accident iinsurance iproceeds. isub ifor ilost iincome i(excluded)
Damages ifor iemotional idistress i(included iif ino iphysical iinjury)
Punitive idamages i(included)
Gross iincome idoes inot iinclude ibenefits ispecified ithat imight ibe ireceived iin ithe iform iof
idisability ipay, ihealth ior iaccident iinsurance iproceeds i(even iif ibenefits iare ia isubstitute
ifor ilost iincome), iworkers' icompensation iawards, ior iother idamages ifor ipersonal
iphysical iinjury ior iphysical isickness. iAlso iexcluded iare idamages ireceived ifor
iemotional idistress iif ian iinjury ihas iits iorigin iin ia iphysical iinjury ior iphysical isickness
i(regardless iof iwhether ithe idamages iare ireceived iby ia ilawsuit ior ian iagreement).
, iPunitive idamages ireceived iare iincluded iin igross iincome ieven iif iin iconnection iwith ia
iphysical iinjury ior isickness
Is iunemployment icompensation iincluded iin igross iincome? i- iCorrect iAnswers i-Yes
Is idisability ipay iincluded iin igross iincome? i- iCorrect iAnswers i-No
Are ipunitive idamages iincluded iin igross iincome? i- iCorrect iAnswers i-Yes i(unless iyou
ireceived ia iphysical iinjury iin iconnection iwith ithe ipunitive idamages)
Are ibenefits ifrom ia ihealth iand iaccident iplan iincluded iin igross iincome iif ipaid iby
iemployer? i- iCorrect iAnswers i-No i(if iyou ireceived ia iphysical iinjury iin iconnection iwith
ithe ibenefits)
is icompensation ifor ilost iwages iincluded iin igross iincome? i- iCorrect iAnswers i-No, ias
ilong ias ithe iincome iwas igiven ibecause iof iphysical iinjury ior iillness
is icompensation idue ito ipunitive idamages iincluded iin igross iincome? i- iCorrect
iAnswers i-No, ias ilong ias ithe iincome iwas igiven ibecause iof iphysical iinjury ior iillness
In iDecember i2018, iJim iand iTina, ia imarried icouple iwith i$50,000 iin igross iincome,
icashed iqualified iSeries iEE iU.S. iSavings iBonds, iwhich ithey ihad ipurchased iin
iJanuary i2015. iThe iproceeds iwere iused ito ihelp ipay ifor itheir ison's i2018 icollege
ituition. iThey ireceived igross iproceeds iof i$3,500, irepresenting iprincipal iof i$3,000 iand
iinterest iof i$500. iThe iqualified ihigher ieducational iexpenses ithey ipaid iduring i2018
itotaled i$2,100. iTheir imodified iadjusted igross iincome ifor i2018 iwas i$80,000. iHow
imuch iof ithe i$500 iinterest ican iJim iand iTina iexclude ifrom iincome ifor i2018? i- iCorrect
iAnswers i-$300. iInterest iis iexcluded ias ilong ias ithe igross iamount ireceived i(principal
iand iinterest) ido inot iexceed iqualified ieducational iexpenses. iIf ithey ido iexceed ithat
iamount, ithe iamount iexcluded iis ilimited ito ithe ipercentage. i2100/3500 i= i.6 i*500 i=
i300. iThe iexclusion iis ireduced iwhen iAGI iexceeds ia ithreshold iof i$79,550 i(single) ior
i$119,300 i(MFJ). icompletely iphased iout iat i$94,550 iand i$149,300
What ifactors idetermine itax ihome? i- iCorrect iAnswers i-1. iThe itaxpayer iperforms ihis ior
iher ibusiness iin ithe iarea isurrounding ihis/her imain ihome iand iuses ithat ifor ilodging
iwhile iin ithe iarea.
2. iThe itaxpayer ihas iliving iexpenses iat ihis ior iher imain ihome ithat iare iduplicated
ibecause ibusiness irequires ihim/her ito ibe iaway ifrom ithe imain ihome. i
3. iThe itaxpayer ihas inot iabandoned ithe iarea iin iwhich iboth ihis/her itraditional iplace iof
ilodging iand iman ihome; ifamily imembers ilive iat ihis/her imain ihome. iShe ioften iuses
ithis imain ihome ifor ilodging.
Under iwhat icircumstance iis ia iday iNOT iconsidered ia iday iof ipersonal iuse iof ia
idwelling iunit ifor idetermining iif iit iis iused ias ia ihome? i- iCorrect iAnswers i-If ithe
itaxpayer irents ithe ihome iat ifair irental ivalue ito iany iperson i(including irelatives), isuch
iuse iby ithat iperson iis inot iconsidered ipersonal iuse iof ithe ihome
and Answers
Dual istatus ialien i- iCorrect iAnswers i-An ialien iwho iis iboth ia inonresident iand iresident
ialien iduring ithe isame itax iyear. iThe imost icommon idual-status itax iyears iare ithe iyears
iof iarrival iand ideparture.
Resident iAlien i- iCorrect iAnswers i-If ieither ithe igreen icard itest ior ithe isubstantial
ipresence itest iis imet. iEven iif ithe itaxpayer idoes inot imeet ieither iof ithese itests, i(s)he
imay ibe iable ito ichoose ito ibe itreated ias ia iU.S. iresident ifor ipart iof ithe iyear.
Green iCard iTest i- iCorrect iAnswers i-A itaxpayer iis ia iresident ifor itax ipurposes iif i(s)he
iwas ia ilawful ipermanent iresident i(immigrant) iof ithe iUnited iStates iat iany itime iduring
ithe iyear
Substantial ipresence iTest i- iCorrect iAnswers i-A itaxpayer iis iconsidered ia iU.S. iresident
iif ishe/he iwas iphysically ipresent iin ithe iUS ifor iat ileast i(1) i31 idays iduring i2018 iand
i183 idays iduring i2018, i2017, iand i2016, icounting iall idays iof iphysical ipresence iin
i2018 ibut ionly i1/3 iof idays iin i2017, iand i1/6 iof idays iin i2016
Provisional iIncome ithreshholds ifor iexclusion iof iSS iBenefits ifrom iIncome i- iCorrect
iAnswers i-MFJ i-- i32,000 ito i44,000
All iOthers-- i25,000 ito i34,000
MFSLT i-- i0
What iis iexcluded ifrom igross iincome iin ithe icase iof iinsurance iproceeds? i- iCorrect
iAnswers i-Disability ipay i(excluded)
Accident iinsurance iproceeds. isub ifor ilost iincome i(excluded)
Damages ifor iemotional idistress i(included iif ino iphysical iinjury)
Punitive idamages i(included)
Gross iincome idoes inot iinclude ibenefits ispecified ithat imight ibe ireceived iin ithe iform iof
idisability ipay, ihealth ior iaccident iinsurance iproceeds i(even iif ibenefits iare ia isubstitute
ifor ilost iincome), iworkers' icompensation iawards, ior iother idamages ifor ipersonal
iphysical iinjury ior iphysical isickness. iAlso iexcluded iare idamages ireceived ifor
iemotional idistress iif ian iinjury ihas iits iorigin iin ia iphysical iinjury ior iphysical isickness
i(regardless iof iwhether ithe idamages iare ireceived iby ia ilawsuit ior ian iagreement).
, iPunitive idamages ireceived iare iincluded iin igross iincome ieven iif iin iconnection iwith ia
iphysical iinjury ior isickness
Is iunemployment icompensation iincluded iin igross iincome? i- iCorrect iAnswers i-Yes
Is idisability ipay iincluded iin igross iincome? i- iCorrect iAnswers i-No
Are ipunitive idamages iincluded iin igross iincome? i- iCorrect iAnswers i-Yes i(unless iyou
ireceived ia iphysical iinjury iin iconnection iwith ithe ipunitive idamages)
Are ibenefits ifrom ia ihealth iand iaccident iplan iincluded iin igross iincome iif ipaid iby
iemployer? i- iCorrect iAnswers i-No i(if iyou ireceived ia iphysical iinjury iin iconnection iwith
ithe ibenefits)
is icompensation ifor ilost iwages iincluded iin igross iincome? i- iCorrect iAnswers i-No, ias
ilong ias ithe iincome iwas igiven ibecause iof iphysical iinjury ior iillness
is icompensation idue ito ipunitive idamages iincluded iin igross iincome? i- iCorrect
iAnswers i-No, ias ilong ias ithe iincome iwas igiven ibecause iof iphysical iinjury ior iillness
In iDecember i2018, iJim iand iTina, ia imarried icouple iwith i$50,000 iin igross iincome,
icashed iqualified iSeries iEE iU.S. iSavings iBonds, iwhich ithey ihad ipurchased iin
iJanuary i2015. iThe iproceeds iwere iused ito ihelp ipay ifor itheir ison's i2018 icollege
ituition. iThey ireceived igross iproceeds iof i$3,500, irepresenting iprincipal iof i$3,000 iand
iinterest iof i$500. iThe iqualified ihigher ieducational iexpenses ithey ipaid iduring i2018
itotaled i$2,100. iTheir imodified iadjusted igross iincome ifor i2018 iwas i$80,000. iHow
imuch iof ithe i$500 iinterest ican iJim iand iTina iexclude ifrom iincome ifor i2018? i- iCorrect
iAnswers i-$300. iInterest iis iexcluded ias ilong ias ithe igross iamount ireceived i(principal
iand iinterest) ido inot iexceed iqualified ieducational iexpenses. iIf ithey ido iexceed ithat
iamount, ithe iamount iexcluded iis ilimited ito ithe ipercentage. i2100/3500 i= i.6 i*500 i=
i300. iThe iexclusion iis ireduced iwhen iAGI iexceeds ia ithreshold iof i$79,550 i(single) ior
i$119,300 i(MFJ). icompletely iphased iout iat i$94,550 iand i$149,300
What ifactors idetermine itax ihome? i- iCorrect iAnswers i-1. iThe itaxpayer iperforms ihis ior
iher ibusiness iin ithe iarea isurrounding ihis/her imain ihome iand iuses ithat ifor ilodging
iwhile iin ithe iarea.
2. iThe itaxpayer ihas iliving iexpenses iat ihis ior iher imain ihome ithat iare iduplicated
ibecause ibusiness irequires ihim/her ito ibe iaway ifrom ithe imain ihome. i
3. iThe itaxpayer ihas inot iabandoned ithe iarea iin iwhich iboth ihis/her itraditional iplace iof
ilodging iand iman ihome; ifamily imembers ilive iat ihis/her imain ihome. iShe ioften iuses
ithis imain ihome ifor ilodging.
Under iwhat icircumstance iis ia iday iNOT iconsidered ia iday iof ipersonal iuse iof ia
idwelling iunit ifor idetermining iif iit iis iused ias ia ihome? i- iCorrect iAnswers i-If ithe
itaxpayer irents ithe ihome iat ifair irental ivalue ito iany iperson i(including irelatives), isuch
iuse iby ithat iperson iis inot iconsidered ipersonal iuse iof ithe ihome
