Enrolled Agent Exam Part 1 - Individual Taxation (Practice Questions)

The IRS has created a system of IP PINs as a step toward combating: A.Taxpayer abuse of the Earned Income Tax Credit. B.Practitioner fraud. C.Unenrolled preparer fraud. D.Identity theft. - ANS D.Identity theft. 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-7 application form for an EIN, 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-9 application form for an ITIN, 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. - ANS 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. What biographical information, at a minimum, is required on each individual taxpayer's federal income tax return? A.Taxpayer name, taxpayer identification number, and mailing address. B.Taxpayer name and taxpayer identification number. C.Taxpayer name, taxpayer identification number, physical address, phone number, and email address. D.Taxpayer name, taxpayer identification number, physical address, and phone number - ANS A.Taxpayer name, taxpayer identification number, and mailing address. What is IRS Form W-7 used for? A.It is used to report employee withholding. B.It is used to apply for an ITIN. C.It is used to report contractor payments. D.It is used to report backup withholding. - ANS B.It is used to apply for an ITIN. Generally, every taxpayer who files a tax return must use an identifying number. Which of the following is NOT a taxpayer identification number for IRS purposes? A.Adoption taxpayer identification number (ATIN). B.Individual tax identification number (ITIN). C.Preparer tax identification number (PTIN). D.Social Security number (SSN). - ANS C.Preparer tax identification number (PTIN). All of the following statements regarding the Adoption Taxpayer Identification Number (ATIN) are correct except: A.An ATIN can be used to claim any tax credit that is available to someone with an SSN. B.An ATIN can be used for a domestic adoption or a foreign adoption if the child has a permanent resident alien card or certificate of citizenship. C.An ATIN can be requested by a taxpayer who is unable to secure a Social Security number for a child until his adoption is final. D.An ATIN can be obtained even if an adoption has not been finalized. - ANS A.An ATIN can be used to claim any tax credit that is available to someone with an SSN. An ATIN cannot be used to claim the Earned Income Tax Credit, or the Child Tax Credit. To prepare an accurate tax return, a tax preparer needs all of the following information about a client except: A.Prior-year AGI B.Citizenship or residency. C.Date of birth. D.Social Security number or taxpayer identification number. - ANS A.Prior-year AGI Penny was the victim of identity theft last year. She received an IP PIN from the IRS this year. She plans to use a paid preparer to file her return. How should the IP PIN be used? A.The preparer does not need to enter Penny's IP PIN on the tax return. It is for her records only. B.The preparer should enter Penny's IP PIN on the tax return next to her signature block. C.The preparer should enter Penny's IP PIN on the tax return in the PTIN section. D.The preparer should enter Penny's IP PIN on the tax return in the third party designee area. - ANS B.The preparer should enter Penny's IP PIN on the tax return next to her signature block. The issuance of an ITIN does not: A.Create a presumption regarding the individual's immigration status. B.Give the individual the right to work in the United States. C.Entitle the recipient to Social Security benefits or the Earned Income Tax Credit. D.All of the above. - ANS D.All of the above. Which individual tax form is designed specifically for seniors? A.Form 1040-PR B.Form 1040-NR C.Form 1040-SR D.Form 1040 - ANS C.Form 1040-SR Theadora applies for an automatic six-month extension using Form 4868. She knows that she will owe taxes this year, so she wants to file on the last possible day. When will a penalty for "failure to pay" begin to accrue? A.As soon as the filing deadline has passed on April 15. B.Never. C.The penalties begin to accrue immediately upon filing the extension. D.As soon as the EXTENDED filing deadline has passed on October 15. - ANS A. As soon as the filing deadline has passed on April 15 Which of the following taxpayers must file an individual tax return? A.A single taxpayer with $900 in dividends. B.A single taxpayer with $1,000 in interest earnings. C.A single taxpayer with self-employment net earnings of $400 or more. D.A single taxpayer with $2,000 in wage income. - ANS C. A single taxpayer with self-employment net earnings of $400 or more Which of the following taxpayers is required to file a return in 2023? A.Gary, who is 15 years old and had $800 in interest income. He is claimed as a dependent by his parents. B.Terry, age 60, who is Single and had $300 in self-employment income and $9,000 in wages. C.Westin, age 45, who is Single and earned $12,500 in wages. D.Paula, age 33, who is Married Filing Separate, and had $1,000 in interest income only. - ANS D. Paula, age 33, who is Married Filing Separate, and had $1,000 in interest income only. A taxpayer filing MFS with gross income of at least $5, must file a return regardless of their age. Emilio's 2020 tax return was due April 15, 2021. He filed it early, on January 23, 2021. Later, he finds an error on the return, and wants to amend it, expecting the correction to result in a refund. If he gets it postmarked on or before _____________ he will receive a refund from the IRS. A.April 15, 2025 B.April 15, 2024 C.January 23, 2025 D.January 23, 2024 - ANS B. April 15, 2024 U.S. citizens and U.S. residents compute their U.S. taxes based on their _____________. A.Passive income. B.Worldwide income. C.Passive and non-passive income.