ENROLLED AGENT EXAM PART 1
QUESTIONS AND ANSWERS
Dualhostatushoalienho-hoans--
✔✔Anhoalienhowhohoishobothhoahononresidenthoandhoresidenthoalienhoduringhothehosameho
taxhoyear.hoThehomosthocommonhodual-
statushotaxhoyearshoarehothehoyearshoofhoarrivalhoandhodeparture.
ResidenthoAlienho-hoans--
✔✔Ifhoeitherhothehogreenhocardhotesthoorhothehosubstantialhopresencehotesthoishomet.hoEv
enhoifhothehotaxpayerhodoeshonothomeethoeitherhoofhothesehotests,ho(s)hehomayhobehoableh
otohochoosehotohobehotreatedhoashoahoU.S.horesidenthoforhoparthoofhothehoyear.
GreenhoCardhoTestho-hoans--
✔✔Ahotaxpayerhoishoahoresidenthoforhotaxhopurposeshoifho(s)hehowashoaholawfulhopermane
nthoresidentho(immigrant)hoofhothehoUnitedhoStateshoathoanyhotimehoduringhothehoyear
SubstantialhopresencehoTestho-hoans--
✔✔AhotaxpayerhoishoconsideredhoahoU.S.horesidenthoifhoshe/
hehowashophysicallyhopresenthoinhothehoUShoforhoatholeastho(1)ho31hodayshoduringho2018ho
andho183hodayshoduringho2018,ho2017,hoandho2016,hocountinghoallhodayshoofhophysicalhop
resencehoinho2018hobuthoonlyho1/3hoofhodayshoinho2017,hoandho1/6hoofhodayshoinho2016
ProvisionalhoIncomehothreshholdshoforhoexclusionhoofhoSShoBenefitshofromhoIncomeho-
hoans--✔✔MFJho--ho32,000hotoho44,000
AllhoOthers--ho25,000hotoho34,000
MFSLTho--ho0
Whathoishoexcludedhofromhogrosshoincomehoinhothehocasehoofhoinsurancehoproceeds?ho-
hoans--✔✔Disabilityhopayho(excluded)
Accidenthoinsurancehoproceeds.hosubhoforholosthoincomeho(excluded)
Damageshoforhoemotionalhodistressho(includedhoifhonohophysicalhoinjury)
Punitivehodamagesho(included)
Grosshoincomehodoeshonothoincludehobenefitshospecifiedhothathomighthobehoreceivedhoinho
thehoformhoofhodisabilityhopay,hohealthhoorhoaccidenthoinsurancehoproceedsho(evenhoifhobe
nefitshoarehoahosubstitutehoforholosthoincome),howorkers'hocompensationhoawards,hoorhoot
herhodamageshoforhopersonalhophysicalhoinjuryhoorhophysicalhosickness.hoAlsohoexcludedh
oarehodamageshoreceivedhoforhoemotionalhodistresshoifhoanhoinjuryhohashoitshooriginhoinhoa
, hophysicalhoinjuryhoorhophysicalhosicknessho(regardlesshoofhowhetherhothehodamageshoare
horeceivedhobyhoaholawsuithoorhoanhoagreement).hoPunitivehodamageshoreceivedhoarehoinc
ludedhoinhogrosshoincomehoevenhoifhoinhoconnectionhowithhoahophysicalhoinjuryhoorhosickne
ss
Ishounemploymenthocompensationhoincludedhoinhogrosshoincome?ho-hoans--✔✔Yes
Ishodisabilityhopayhoincludedhoinhogrosshoincome?ho-hoans--✔✔No
Arehopunitivehodamageshoincludedhoinhogrosshoincome?ho-hoans--
✔✔Yesho(unlesshoyouhoreceivedhoahophysicalhoinjuryhoinhoconnectionhowithhothehopunitive
hodamages)
Arehobenefitshofromhoahohealthhoandhoaccidenthoplanhoincludedhoinhogrosshoincomehoifhop
aidhobyhoemployer?ho-hoans--
✔✔Noho(ifhoyouhoreceivedhoahophysicalhoinjuryhoinhoconnectionhowithhothehobenefits)
ishocompensationhoforholosthowageshoincludedhoinhogrosshoincome?ho-hoans--
✔✔No,hoasholonghoashothehoincomehowashogivenhobecausehoofhophysicalhoinjuryhoorhoillne
ss
ishocompensationhoduehotohopunitivehodamageshoincludedhoinhogrosshoincome?ho-hoans--
✔✔No,hoasholonghoashothehoincomehowashogivenhobecausehoofhophysicalhoinjuryhoorhoillne
ss
InhoDecemberho2018,hoJimhoandhoTina,hoahomarriedhocouplehowithho$50,000hoinhogrosshoi
ncome,hocashedhoqualifiedhoSerieshoEEhoU.S.hoSavingshoBonds,howhichhotheyhohadhopur
chasedhoinhoJanuaryho2015.hoThehoproceedshowerehousedhotohohelphopayhoforhotheirhoson
'sho2018hocollegehotuition.hoTheyhoreceivedhogrosshoproceedshoofho$3,500,horepresenting
hoprincipalhoofho$3,000hoandhointeresthoofho$500.hoThehoqualifiedhohigherhoeducationalhoe
xpenseshotheyhopaidhoduringho2018hototaledho$2,100.hoTheirhomodifiedhoadjustedhogrossh
oincomehoforho2018howasho$80,000.hoHowhomuchhoofhotheho$500hointeresthocanhoJimhoan
dhoTinahoexcludehofromhoincomehoforho2018?ho-hoans--
✔✔$300.hoInteresthoishoexcludedhoasholonghoashothehogrosshoamounthoreceivedho(princip
alhoandhointerest)hodohonothoexceedhoqualifiedhoeducationalhoexpenses.hoIfhotheyhodohoex
ceedhothathoamount,hothehoamounthoexcludedhoisholimitedhotohothehopercentage.ho2100/3
500ho=ho.6ho*500ho=ho300.hoThehoexclusionhoishoreducedhowhenhoAGIhoexceedshoahothres
holdhoofho$79,550ho(single)hoorho$119,300ho(MFJ).hocompletelyhophasedhoouthoatho$94,5
50hoandho$149,300
Whathofactorshodeterminehotaxhohome?ho-hoans--
✔✔1.hoThehotaxpayerhoperformshohishoorhoherhobusinesshoinhothehoareahosurroundinghohi
s/herhomainhohomehoandhouseshothathoforholodginghowhilehoinhothehoarea.
2.hoThehotaxpayerhohasholivinghoexpenseshoathohishoorhoherhomainhohomehothathoarehodup
licatedhobecausehobusinesshorequireshohim/
herhotohobehoawayhofromhothehomainhohome.ho
QUESTIONS AND ANSWERS
Dualhostatushoalienho-hoans--
✔✔Anhoalienhowhohoishobothhoahononresidenthoandhoresidenthoalienhoduringhothehosameho
taxhoyear.hoThehomosthocommonhodual-
statushotaxhoyearshoarehothehoyearshoofhoarrivalhoandhodeparture.
ResidenthoAlienho-hoans--
✔✔Ifhoeitherhothehogreenhocardhotesthoorhothehosubstantialhopresencehotesthoishomet.hoEv
enhoifhothehotaxpayerhodoeshonothomeethoeitherhoofhothesehotests,ho(s)hehomayhobehoableh
otohochoosehotohobehotreatedhoashoahoU.S.horesidenthoforhoparthoofhothehoyear.
GreenhoCardhoTestho-hoans--
✔✔Ahotaxpayerhoishoahoresidenthoforhotaxhopurposeshoifho(s)hehowashoaholawfulhopermane
nthoresidentho(immigrant)hoofhothehoUnitedhoStateshoathoanyhotimehoduringhothehoyear
SubstantialhopresencehoTestho-hoans--
✔✔AhotaxpayerhoishoconsideredhoahoU.S.horesidenthoifhoshe/
hehowashophysicallyhopresenthoinhothehoUShoforhoatholeastho(1)ho31hodayshoduringho2018ho
andho183hodayshoduringho2018,ho2017,hoandho2016,hocountinghoallhodayshoofhophysicalhop
resencehoinho2018hobuthoonlyho1/3hoofhodayshoinho2017,hoandho1/6hoofhodayshoinho2016
ProvisionalhoIncomehothreshholdshoforhoexclusionhoofhoSShoBenefitshofromhoIncomeho-
hoans--✔✔MFJho--ho32,000hotoho44,000
AllhoOthers--ho25,000hotoho34,000
MFSLTho--ho0
Whathoishoexcludedhofromhogrosshoincomehoinhothehocasehoofhoinsurancehoproceeds?ho-
hoans--✔✔Disabilityhopayho(excluded)
Accidenthoinsurancehoproceeds.hosubhoforholosthoincomeho(excluded)
Damageshoforhoemotionalhodistressho(includedhoifhonohophysicalhoinjury)
Punitivehodamagesho(included)
Grosshoincomehodoeshonothoincludehobenefitshospecifiedhothathomighthobehoreceivedhoinho
thehoformhoofhodisabilityhopay,hohealthhoorhoaccidenthoinsurancehoproceedsho(evenhoifhobe
nefitshoarehoahosubstitutehoforholosthoincome),howorkers'hocompensationhoawards,hoorhoot
herhodamageshoforhopersonalhophysicalhoinjuryhoorhophysicalhosickness.hoAlsohoexcludedh
oarehodamageshoreceivedhoforhoemotionalhodistresshoifhoanhoinjuryhohashoitshooriginhoinhoa
, hophysicalhoinjuryhoorhophysicalhosicknessho(regardlesshoofhowhetherhothehodamageshoare
horeceivedhobyhoaholawsuithoorhoanhoagreement).hoPunitivehodamageshoreceivedhoarehoinc
ludedhoinhogrosshoincomehoevenhoifhoinhoconnectionhowithhoahophysicalhoinjuryhoorhosickne
ss
Ishounemploymenthocompensationhoincludedhoinhogrosshoincome?ho-hoans--✔✔Yes
Ishodisabilityhopayhoincludedhoinhogrosshoincome?ho-hoans--✔✔No
Arehopunitivehodamageshoincludedhoinhogrosshoincome?ho-hoans--
✔✔Yesho(unlesshoyouhoreceivedhoahophysicalhoinjuryhoinhoconnectionhowithhothehopunitive
hodamages)
Arehobenefitshofromhoahohealthhoandhoaccidenthoplanhoincludedhoinhogrosshoincomehoifhop
aidhobyhoemployer?ho-hoans--
✔✔Noho(ifhoyouhoreceivedhoahophysicalhoinjuryhoinhoconnectionhowithhothehobenefits)
ishocompensationhoforholosthowageshoincludedhoinhogrosshoincome?ho-hoans--
✔✔No,hoasholonghoashothehoincomehowashogivenhobecausehoofhophysicalhoinjuryhoorhoillne
ss
ishocompensationhoduehotohopunitivehodamageshoincludedhoinhogrosshoincome?ho-hoans--
✔✔No,hoasholonghoashothehoincomehowashogivenhobecausehoofhophysicalhoinjuryhoorhoillne
ss
InhoDecemberho2018,hoJimhoandhoTina,hoahomarriedhocouplehowithho$50,000hoinhogrosshoi
ncome,hocashedhoqualifiedhoSerieshoEEhoU.S.hoSavingshoBonds,howhichhotheyhohadhopur
chasedhoinhoJanuaryho2015.hoThehoproceedshowerehousedhotohohelphopayhoforhotheirhoson
'sho2018hocollegehotuition.hoTheyhoreceivedhogrosshoproceedshoofho$3,500,horepresenting
hoprincipalhoofho$3,000hoandhointeresthoofho$500.hoThehoqualifiedhohigherhoeducationalhoe
xpenseshotheyhopaidhoduringho2018hototaledho$2,100.hoTheirhomodifiedhoadjustedhogrossh
oincomehoforho2018howasho$80,000.hoHowhomuchhoofhotheho$500hointeresthocanhoJimhoan
dhoTinahoexcludehofromhoincomehoforho2018?ho-hoans--
✔✔$300.hoInteresthoishoexcludedhoasholonghoashothehogrosshoamounthoreceivedho(princip
alhoandhointerest)hodohonothoexceedhoqualifiedhoeducationalhoexpenses.hoIfhotheyhodohoex
ceedhothathoamount,hothehoamounthoexcludedhoisholimitedhotohothehopercentage.ho2100/3
500ho=ho.6ho*500ho=ho300.hoThehoexclusionhoishoreducedhowhenhoAGIhoexceedshoahothres
holdhoofho$79,550ho(single)hoorho$119,300ho(MFJ).hocompletelyhophasedhoouthoatho$94,5
50hoandho$149,300
Whathofactorshodeterminehotaxhohome?ho-hoans--
✔✔1.hoThehotaxpayerhoperformshohishoorhoherhobusinesshoinhothehoareahosurroundinghohi
s/herhomainhohomehoandhouseshothathoforholodginghowhilehoinhothehoarea.
2.hoThehotaxpayerhohasholivinghoexpenseshoathohishoorhoherhomainhohomehothathoarehodup
licatedhobecausehobusinesshorequireshohim/
herhotohobehoawayhofromhothehomainhohome.ho
