Enrolled Agent (EA) Exam Questions
And Correct Answers (Verified Answers)
Plus Rationales 2026 Q&A | Instant
Download Pdf
1. A taxpayer receives W-2 income and has no deductions. Which form is
typically used to file their federal tax return?
A. Form 1040
B. Form 1065
C. Form 1120
D. Form 709
Answer: A
Rationale: Form 1040 is used for individual income tax returns.
2. A taxpayer receives a CP2000 notice from the IRS. This notice generally
indicates:
A. An audit has been completed
B. A proposed adjustment due to income mismatch
C. A refund approval
D. Criminal charges filed
Answer: B
Rationale: CP2000 is issued when reported income does not match IRS
records.
3. Which filing status generally results in the lowest tax liability for a qualifying
taxpayer?
A. Single
B. Married Filing Separately
C. Head of Household
D. Qualified Widow(er)
, Answer: D
Rationale: Qualified Widow(er) often retains joint filing benefits for two
years.
4. A taxpayer earns self-employment income. They are required to pay:
A. Only income tax
B. Self-employment tax for Social Security and Medicare
C. No tax if under $50,000
D. Only state tax
Answer: B
Rationale: Self-employed individuals pay both income and SE tax.
5. A taxpayer contributes to a Traditional IRA. The primary tax benefit is:
A. Tax-free withdrawals immediately
B. Tax deduction or deferral of income
C. No required distributions
D. Tax-free contributions only
Answer: B
Rationale: Traditional IRA contributions may be tax-deductible.
6. A taxpayer receives dividend income classified as “qualified dividends.”
These are generally taxed at:
A. Ordinary income rates
B. Capital gains rates
C. Self-employment tax
D. Payroll tax rates
Answer: B
Rationale: Qualified dividends are taxed at preferential capital gains rates.
7. A taxpayer sells stock held for 10 months at a gain. This is treated as:
A. Long-term capital gain
B. Short-term capital gain
C. Ordinary income
D. Tax-exempt income
Answer: B
Rationale: Assets held under one year are short-term gains.
,8. Which expense is deductible for self-employed individuals?
A. Personal groceries
B. Business-related travel expenses
C. Home mortgage principal
D. Personal clothing
Answer: B
Rationale: Ordinary and necessary business expenses are deductible.
9. A taxpayer receives unemployment compensation. It is:
A. Tax-free
B. Fully taxable income
C. Capital gain
D. Exempt foreign income
Answer: B
Rationale: Unemployment benefits are taxable.
10.A taxpayer contributes excess funds to an IRA. The penalty is generally:
A. 5%
B. 6% excise tax per year
C. 10%
D. No penalty
Answer: B
Rationale: Excess IRA contributions incur a 6% penalty annually.
11.A taxpayer is audited by the IRS. The Enrolled Agent’s primary role is to:
A. Represent taxpayer before IRS
B. Arrest IRS agents
C. Approve refunds
D. Change tax law
Answer: A
Rationale: EAs can represent taxpayers before IRS.
12.Which form is used by partnerships?
A. 1040
B. 1120
C. 1065
D. 941
, Answer: C
Rationale: Partnerships file Form 1065.
13.A C Corporation pays tax at:
A. Individual rates
B. Corporate tax rates
C. No tax
D. Payroll rates
Answer: B
Rationale: C Corps are taxed separately.
14.A shareholder receives a dividend from a C Corporation. It is taxed:
A. Only at corporate level
B. Only at shareholder level
C. Double taxation applies
D. Not taxable
Answer: C
Rationale: Corporate earnings are taxed twice.
15.A taxpayer receives a Form 1099-NEC. It represents:
A. Employee wages
B. Nonemployee compensation
C. Interest income
D. Dividend income
Answer: B
Rationale: 1099-NEC reports independent contractor income.
16.A taxpayer itemizes deductions. Which is deductible?
A. Personal gym membership
B. Mortgage interest (qualified residence)
C. Clothing
D. Grocery bills
Answer: B
Rationale: Mortgage interest may be deductible.
17.A taxpayer has capital losses exceeding gains. They may deduct up to:
A. $1,000 per year
B. $3,000 per year
And Correct Answers (Verified Answers)
Plus Rationales 2026 Q&A | Instant
Download Pdf
1. A taxpayer receives W-2 income and has no deductions. Which form is
typically used to file their federal tax return?
A. Form 1040
B. Form 1065
C. Form 1120
D. Form 709
Answer: A
Rationale: Form 1040 is used for individual income tax returns.
2. A taxpayer receives a CP2000 notice from the IRS. This notice generally
indicates:
A. An audit has been completed
B. A proposed adjustment due to income mismatch
C. A refund approval
D. Criminal charges filed
Answer: B
Rationale: CP2000 is issued when reported income does not match IRS
records.
3. Which filing status generally results in the lowest tax liability for a qualifying
taxpayer?
A. Single
B. Married Filing Separately
C. Head of Household
D. Qualified Widow(er)
, Answer: D
Rationale: Qualified Widow(er) often retains joint filing benefits for two
years.
4. A taxpayer earns self-employment income. They are required to pay:
A. Only income tax
B. Self-employment tax for Social Security and Medicare
C. No tax if under $50,000
D. Only state tax
Answer: B
Rationale: Self-employed individuals pay both income and SE tax.
5. A taxpayer contributes to a Traditional IRA. The primary tax benefit is:
A. Tax-free withdrawals immediately
B. Tax deduction or deferral of income
C. No required distributions
D. Tax-free contributions only
Answer: B
Rationale: Traditional IRA contributions may be tax-deductible.
6. A taxpayer receives dividend income classified as “qualified dividends.”
These are generally taxed at:
A. Ordinary income rates
B. Capital gains rates
C. Self-employment tax
D. Payroll tax rates
Answer: B
Rationale: Qualified dividends are taxed at preferential capital gains rates.
7. A taxpayer sells stock held for 10 months at a gain. This is treated as:
A. Long-term capital gain
B. Short-term capital gain
C. Ordinary income
D. Tax-exempt income
Answer: B
Rationale: Assets held under one year are short-term gains.
,8. Which expense is deductible for self-employed individuals?
A. Personal groceries
B. Business-related travel expenses
C. Home mortgage principal
D. Personal clothing
Answer: B
Rationale: Ordinary and necessary business expenses are deductible.
9. A taxpayer receives unemployment compensation. It is:
A. Tax-free
B. Fully taxable income
C. Capital gain
D. Exempt foreign income
Answer: B
Rationale: Unemployment benefits are taxable.
10.A taxpayer contributes excess funds to an IRA. The penalty is generally:
A. 5%
B. 6% excise tax per year
C. 10%
D. No penalty
Answer: B
Rationale: Excess IRA contributions incur a 6% penalty annually.
11.A taxpayer is audited by the IRS. The Enrolled Agent’s primary role is to:
A. Represent taxpayer before IRS
B. Arrest IRS agents
C. Approve refunds
D. Change tax law
Answer: A
Rationale: EAs can represent taxpayers before IRS.
12.Which form is used by partnerships?
A. 1040
B. 1120
C. 1065
D. 941
, Answer: C
Rationale: Partnerships file Form 1065.
13.A C Corporation pays tax at:
A. Individual rates
B. Corporate tax rates
C. No tax
D. Payroll rates
Answer: B
Rationale: C Corps are taxed separately.
14.A shareholder receives a dividend from a C Corporation. It is taxed:
A. Only at corporate level
B. Only at shareholder level
C. Double taxation applies
D. Not taxable
Answer: C
Rationale: Corporate earnings are taxed twice.
15.A taxpayer receives a Form 1099-NEC. It represents:
A. Employee wages
B. Nonemployee compensation
C. Interest income
D. Dividend income
Answer: B
Rationale: 1099-NEC reports independent contractor income.
16.A taxpayer itemizes deductions. Which is deductible?
A. Personal gym membership
B. Mortgage interest (qualified residence)
C. Clothing
D. Grocery bills
Answer: B
Rationale: Mortgage interest may be deductible.
17.A taxpayer has capital losses exceeding gains. They may deduct up to:
A. $1,000 per year
B. $3,000 per year
