TABLE OF CONTENTS
- Introduction
- Overview of the Enrolled Agent Exam
Exam Content
Exam Format
Enrollment After Passing the Exam - Sample Questions with Answers
- Conclusion
- FAQs
INTRODUCTION
Enjoy flexible work options, high demand, and higher earnings by becoming an Enrolled Agent. Furthermore, you don’t need a college degree to become one or even an accounting background. Becoming an EA provides a clear path to a rewarding career in the field of taxation.
OVERVIEW OF THE ENROLLED AGENT EXAM
The biggest hindrance to becoming an enrolled agent is the exam itself. It is, however, not impossible. The Enrolled Agent exam is a comprehensive test in which candidates prove their readiness to represent clients. Moreover, the exam is comprised of three separate parts, each covering a different set of everything about taxes.
Exam Content
The three-parts cover individual, business taxes, representation, practice, and procedures.
- Individual
- Preliminary Work with taxpayer information
- Income and Assets
- Credits and Deductions
- Taxation
- Advising the Taxpayer
- Specialized Individual Returns
- Business
- Business Entities and Considerations
- Tax Preparation
- Specialized Returns and Taxpayers
- Representation, Practice, and Procedures
- Procedures and Practices
- IRS representation
- Specific Areas of Representation
- Filing Process
Exam Format
Each part consists of 100 multiple-choice questions divided into two sections of 50 questions each. Only 85 of the questions are scored, the remaining 15 are considered ‘experimental questions’ that cover topics that may be integrated later into the scored exam questions. Nonetheless, you will not know which questions are scored and which are experimental, thus, you should answer all questions as best you can.
Three types of multiple-choice questions you will see on the exam, include:
- Direct questions. You will be asked a direct question and must choose the right answer from among the choices given.
- Incomplete sentence. You will be asked a question wherein the choices complete the statement.
- All of the following except. It’s a question in which all the responses provided are correct except for one, and you must choose correctly.
Enrollment After Passing the Exam
Upon passing the Enrolled Agent exam, the next step you have to take is to enroll in the IRS within the year of passing all three parts. The background check is a critical part of the process. Moreover, you shouldn’t have dues left in your tax returns.
SAMPLE QUESTIONS WITH ANSWERS
Be prepared for the actual Enrolled Agent exam. Below are just a few authentic exam-emulating questions with answers. These sample questions are written for the single purpose of providing exam candidates an understanding of the kind of questions that could appear on the Enrolled Agent exam.
1. Which of the following statements is correct based on Form 1095A, or the Health Insurance Marketplace Statement?
a. Taxpayers don’t need Form 1095A to accomplish Form 8962, Premium Tax Credit, to reconcile advance premium tax credit payments or claim the premium tax credit on the tax return.
b. A taxpayer will receive Form 1095A to accomplish Form 8962, Premium Tax Credit if he or she has been covered by an employer insurance plan for the whole year.
c. Form 1095A is used by taxpayers to accomplish Form 8962, Premium Tax Credit, to reconcile the payments made in advance of the premium tax credit, or claim the premium tax on their return.
d. Taxpayers must attach Form 1095A with their tax return to reconcile advance premium tax credit payments or claim the premium credit on their return.
The answer is C.
2. Two taxpayers got married on November 30. The husband enrolled in an accredited college to further his career in the same year and subsequently received Form 1098-T, Tuition Statement. The wife was employed with a $45,000 income and paid for the education expenses of her husband. What is the correct method to report the education credit based on these circumstances?
a. The two taxpayers must file a joint return to claim an education credit.
b. They’re not qualified to claim an education credit based on the AGI of the wife.
c. Husband is not eligible to claim an education credit since the wife paid for his education expenses.
d. Wife should report non-qualified education expenses on Form 8863, Education Credits.
The answer is A.
3. Which of the following situations will disqualify a single taxpayer from claiming the premium tax credit?
a. Marriage to a person enrolled in a qualified health plan.
b. Becoming eligible as a dependent on the joint tax return of the parents.
c. Increase in household income to 390 percent of the federal poverty line.
d. $1,100,000 non-income producing vacation home inheritance.
The answer is B.
4. To avoid the penalty for not having insurance, taxpayers should be enrolled in health coverage, known also as minimum essential coverage. All of the following are examples of a minimum essential coverage EXCEPT:
a. Specific insurance coverage that could provide limited benefits. This includes but is not limited to, the following kinds of plans: accident or disability income or worker’s compensation, stand-alone dental, and vision.
b. Employer-sponsored coverage. This includes, but is not limited to these kinds of plans: self-insured group health plans for employees, retirees, and COBRA coverage.
c. Individual health coverage. This includes but is not limited to, the following kinds of plans: health insurance directly purchased from an insurance firm, or Health Insurance Marketplace.
d. Coverage under government-sponsored programs. This includes, but is not limited to the following: Medicare Advantage Plans and most Medical Coverage, Medicare Part A coverage.
The answer is A.
5. All of these income types are reported on Form 1099-MISC, except for:
a. Non-employee compensation over $600.
b. Payments made to a supplier or supplier of medical or healthcare services or a physician of $600 or more made in the course of the business trade.
c. Canceled debt payments of $600 or above.
d. Crop insurance proceeds of $600 or above.
The answer is C.
The items above are only a few of the many possible questions you will face during the actual exam. Make sure to be aligned with a review course to ensure a high success rate.
CONCLUSION
As you can see, the questions and answers above are some of the best sample questions to familiarize yourself with and will introduce you to the kind of questions in the exams. For better preparation, your best bet is to enroll in a top online training institute that could offer you the best preparation assistance, provide you with study guides and materials, and more.
FAQs
Q. Is being an Enrolled Agent beneficial for me?
Ans. Being an EA enables you to advance your career and grow professionally, as well as increase your earning potential by an average of 10 percent.
Q. What is the duration of the Enrolled Agent course?
Ans. The course duration could range from two to six months, depending on the paper of your choice.
Q. How do I apply for the EA exam?
Ans. To apply, you have to visit the IRS website to get the necessary instructions and forms. Moreover, you have to complete the application and submit it together with the exam fee.
Q. What subjects are covered on the Enrolled Agent exam?
Ans. The EA exam covers different topics, including individual taxation, business taxation, practice and procedures, IRS ethical standards, and representation.
Q. Will I become an EA if I have tax obligations issues?
Ans. Failure to file tax returns on time or to pay your taxes could serve as grounds for denying your enrollment application.