Enrolled Agent Exam Part 1 Questions
with 100% Correct Answers
How does the medical deduction work for 2018? - ✔✔The medical deduction is
your medical expenses minus 7.5% of your AGI.
At what rate do you report interest income on a personal loan? - ✔✔If you
agree on an interest rate lower than the AFR, you must report interest income
at the AFR (applicable federal rate) at the time of the loan.
How do members of the clergy (pastors, preachers, etc.) report their housing
allowance? - ✔✔Members of the clergy are allowed to exclude a housing
allowance, at the fair rental value, if their housing is provided as compensation
for services. However, the housing allowance is still subject to self employment
tax.
How does the tiebreaker rule work for a dependent who is eligible to be claimed
by two separate people? - ✔✔The dependents parent has priority over non-
parents. If both are a parent, the child is claimed by whoever they lived with
longer that year. If the dependent lived with both parents for the same amount
of time, they will be claimed by whoever has the higher AGI. If neither is a
parent, they will be claimed by whoever has the higher AGI.
Page 1 of 20
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
,What is the Retirement Savings Contribution Credit? - ✔✔The credit is 10%-15%
of retirement contributions up to a maximum of $1,000 or $2,000 MFJ.
- Must be 18 or older.
- Cannot be a dependent.
- Cannot be a student during the year.
What is the penalty for pledging a clients IRA as security for a loan? - ✔✔The
minimum penalty is 15% of the amount pledged but up to 100% of the amount
pledged.
How does a stock split affect the basis? - ✔✔The overall basis stays the same,
but the basis of each individual stock is decreased. Example:
- 5 shares at $20 a piece = a basis of $100
- A 2-1 (2 for 1) stock split occurs.
- Your basis is still $100, but you now have 10 shares at $10 a piece.
What are the percentages for the child care credit? - ✔✔The credit starts at 35%
if your AGI is $15,000 or less. Then, the credit percentage goes down 1% for
every $2,000 over $15,000. The percentage is applied to the amount spent on
child care expenses.
Page 2 of 20
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
, What factors distinguish an independent contractor from an employee? - ✔✔-
Behavioral control: instructions, training, duration of work, etc.
- Financial control: if an individual pays their own expenses and provides their
own equipment, if they can have a profit OR loss.
- Relationship of parties: employee benefits are indications of employment.
What is the basis of property that is gifted to someone, then inherited back to
the donor within one year of the gift. - ✔✔When a decedent acquires
appreciated property as a gift within one year of their death, and the property
then passes back to the donor or the donor's spouse, the original basis doesn't
change. They will have the same basis they had when they gifted the property.
What tests do you need to pass to qualify for the income exclusion from selling
a house? - ✔✔An individual must 1) have owned the house for at least 2 years
and 2) the house has to have been their PRIMARY residence for at least 2 years
out of the last 5 years.
What are some of the requirements for someone to be eligible to exclude
interest income from a US savings bond under the Education Savings Bond
Program? - ✔✔- The bond must be in the students name.
- You must be under 22 years of age.
- You can't be married filing separate.
Page 3 of 20
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
with 100% Correct Answers
How does the medical deduction work for 2018? - ✔✔The medical deduction is
your medical expenses minus 7.5% of your AGI.
At what rate do you report interest income on a personal loan? - ✔✔If you
agree on an interest rate lower than the AFR, you must report interest income
at the AFR (applicable federal rate) at the time of the loan.
How do members of the clergy (pastors, preachers, etc.) report their housing
allowance? - ✔✔Members of the clergy are allowed to exclude a housing
allowance, at the fair rental value, if their housing is provided as compensation
for services. However, the housing allowance is still subject to self employment
tax.
How does the tiebreaker rule work for a dependent who is eligible to be claimed
by two separate people? - ✔✔The dependents parent has priority over non-
parents. If both are a parent, the child is claimed by whoever they lived with
longer that year. If the dependent lived with both parents for the same amount
of time, they will be claimed by whoever has the higher AGI. If neither is a
parent, they will be claimed by whoever has the higher AGI.
Page 1 of 20
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
,What is the Retirement Savings Contribution Credit? - ✔✔The credit is 10%-15%
of retirement contributions up to a maximum of $1,000 or $2,000 MFJ.
- Must be 18 or older.
- Cannot be a dependent.
- Cannot be a student during the year.
What is the penalty for pledging a clients IRA as security for a loan? - ✔✔The
minimum penalty is 15% of the amount pledged but up to 100% of the amount
pledged.
How does a stock split affect the basis? - ✔✔The overall basis stays the same,
but the basis of each individual stock is decreased. Example:
- 5 shares at $20 a piece = a basis of $100
- A 2-1 (2 for 1) stock split occurs.
- Your basis is still $100, but you now have 10 shares at $10 a piece.
What are the percentages for the child care credit? - ✔✔The credit starts at 35%
if your AGI is $15,000 or less. Then, the credit percentage goes down 1% for
every $2,000 over $15,000. The percentage is applied to the amount spent on
child care expenses.
Page 2 of 20
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
, What factors distinguish an independent contractor from an employee? - ✔✔-
Behavioral control: instructions, training, duration of work, etc.
- Financial control: if an individual pays their own expenses and provides their
own equipment, if they can have a profit OR loss.
- Relationship of parties: employee benefits are indications of employment.
What is the basis of property that is gifted to someone, then inherited back to
the donor within one year of the gift. - ✔✔When a decedent acquires
appreciated property as a gift within one year of their death, and the property
then passes back to the donor or the donor's spouse, the original basis doesn't
change. They will have the same basis they had when they gifted the property.
What tests do you need to pass to qualify for the income exclusion from selling
a house? - ✔✔An individual must 1) have owned the house for at least 2 years
and 2) the house has to have been their PRIMARY residence for at least 2 years
out of the last 5 years.
What are some of the requirements for someone to be eligible to exclude
interest income from a US savings bond under the Education Savings Bond
Program? - ✔✔- The bond must be in the students name.
- You must be under 22 years of age.
- You can't be married filing separate.
Page 3 of 20
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
