Enrolled Agent Exam Part 1 Questions
and Answers| Latest Update
Minimum Tax Credit Correct Ans-Recompute the most recent year's AMT without
adjustment for exclusion items and add carryover MTC. MTC allowable is limited to current
year regular tax minus current year AMT. Any MTC can be carried forward indefinitely
Earned Income Credit Correct Ans-Credit is refundable. Must have SSN. Earned Income
includes wages, salaries, tips and net self employment income. Disqualified income cannot be
over $3500 (passive income).
Earned Income Credit -- Qualifying Child Correct Ans-Relationship (related by birth or
adoption, foster child, step child), residency (must live with tpayer in US for more than half
year), age (must be under age 19, be disabled, or a student under 24.
Earned income Credit --Calculations Correct Ans-0QC 7.65% EIC $6780. Max EIC $519
1QC 34% EIC $10,180. Max EIC $3461
2QC 40% EIC $14,290. Max EIC $5716.
3QC 45% $14290. Max EIC $6431
Earned Income Credit -- Phaseouts Correct Ans-Single -- Phaseout begins $8490 Ends
$15,270
MFJ -- Phaseout begins $14,170 Ends $20,950
,3 or more QC MFJ Begins $18,660. Ends $54,884
Must make estimated tax payments if... Correct Ans-Diff between withholdings and tax
liability is greater than $1000. Installments must be 25% of the least of the following: 100% of
PY tax (or 110% if AGI>$150,000), 90% of current year tax
Mortgage Credit Certificate/Residential Mortgage Interest Credit Correct Ans-If rate exceeds
20%, credit is limited to $2000 per year. can be carried forward four years if disallowed.
Dual status alien Correct Ans-An alien who is both a nonresident and resident alien during
the same tax year. The most common dual-status tax years are the years of arrival and departure.
Resident Alien Correct Ans-If either the green card test or the substantial presence test is met.
Even if the taxpayer does not meet either of these tests, (s)he may be able to choose to be treated
as a U.S. resident for part of the year.
Green Card Test Correct Ans-A taxpayer is a resident for tax purposes if (s)he was a lawful
permanent resident (immigrant) of the United States at any time during the year
Substantial presence Test Correct Ans-A taxpayer is considered a U.S. resident if she/he was
physically present in the US for at least (1) 31 days during 2018 and 183 days during 2018, 2017,
and 2016, counting all days of physical presence in 2018 but only 1/3 of days in 2017, and 1/6 of
days in 2016
, Provisional Income threshholds for exclusion of SS Benefits from Income Correct Ans-MFJ -
- 32,000 to 44,000
All Others-- 25,000 to 34,000
MFSLT -- 0
What is excluded from gross income in the case of insurance proceeds? Correct Ans-
Disability pay (excluded)
Accident insurance proceeds. sub for lost income (excluded)
Damages for emotional distress (included if no physical injury)
Punitive damages (included)
Gross income does not include benefits specified that might be received in the form of disability
pay, health or accident insurance proceeds (even if benefits are a substitute for lost income),
workers' compensation awards, or other damages for personal physical injury or physical
sickness. Also excluded are damages received for emotional distress if an injury has its origin in
a physical injury or physical sickness (regardless of whether the damages are received by a
lawsuit or an agreement). Punitive damages received are included in gross income even if in
connection with a physical injury or sickness
Is unemployment compensation included in gross income? Correct Ans-Yes
Is disability pay included in gross income? Correct Ans-No
Are punitive damages included in gross income? Correct Ans-Yes (unless you received a
physical injury in connection with the punitive damages)
and Answers| Latest Update
Minimum Tax Credit Correct Ans-Recompute the most recent year's AMT without
adjustment for exclusion items and add carryover MTC. MTC allowable is limited to current
year regular tax minus current year AMT. Any MTC can be carried forward indefinitely
Earned Income Credit Correct Ans-Credit is refundable. Must have SSN. Earned Income
includes wages, salaries, tips and net self employment income. Disqualified income cannot be
over $3500 (passive income).
Earned Income Credit -- Qualifying Child Correct Ans-Relationship (related by birth or
adoption, foster child, step child), residency (must live with tpayer in US for more than half
year), age (must be under age 19, be disabled, or a student under 24.
Earned income Credit --Calculations Correct Ans-0QC 7.65% EIC $6780. Max EIC $519
1QC 34% EIC $10,180. Max EIC $3461
2QC 40% EIC $14,290. Max EIC $5716.
3QC 45% $14290. Max EIC $6431
Earned Income Credit -- Phaseouts Correct Ans-Single -- Phaseout begins $8490 Ends
$15,270
MFJ -- Phaseout begins $14,170 Ends $20,950
,3 or more QC MFJ Begins $18,660. Ends $54,884
Must make estimated tax payments if... Correct Ans-Diff between withholdings and tax
liability is greater than $1000. Installments must be 25% of the least of the following: 100% of
PY tax (or 110% if AGI>$150,000), 90% of current year tax
Mortgage Credit Certificate/Residential Mortgage Interest Credit Correct Ans-If rate exceeds
20%, credit is limited to $2000 per year. can be carried forward four years if disallowed.
Dual status alien Correct Ans-An alien who is both a nonresident and resident alien during
the same tax year. The most common dual-status tax years are the years of arrival and departure.
Resident Alien Correct Ans-If either the green card test or the substantial presence test is met.
Even if the taxpayer does not meet either of these tests, (s)he may be able to choose to be treated
as a U.S. resident for part of the year.
Green Card Test Correct Ans-A taxpayer is a resident for tax purposes if (s)he was a lawful
permanent resident (immigrant) of the United States at any time during the year
Substantial presence Test Correct Ans-A taxpayer is considered a U.S. resident if she/he was
physically present in the US for at least (1) 31 days during 2018 and 183 days during 2018, 2017,
and 2016, counting all days of physical presence in 2018 but only 1/3 of days in 2017, and 1/6 of
days in 2016
, Provisional Income threshholds for exclusion of SS Benefits from Income Correct Ans-MFJ -
- 32,000 to 44,000
All Others-- 25,000 to 34,000
MFSLT -- 0
What is excluded from gross income in the case of insurance proceeds? Correct Ans-
Disability pay (excluded)
Accident insurance proceeds. sub for lost income (excluded)
Damages for emotional distress (included if no physical injury)
Punitive damages (included)
Gross income does not include benefits specified that might be received in the form of disability
pay, health or accident insurance proceeds (even if benefits are a substitute for lost income),
workers' compensation awards, or other damages for personal physical injury or physical
sickness. Also excluded are damages received for emotional distress if an injury has its origin in
a physical injury or physical sickness (regardless of whether the damages are received by a
lawsuit or an agreement). Punitive damages received are included in gross income even if in
connection with a physical injury or sickness
Is unemployment compensation included in gross income? Correct Ans-Yes
Is disability pay included in gross income? Correct Ans-No
Are punitive damages included in gross income? Correct Ans-Yes (unless you received a
physical injury in connection with the punitive damages)
