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IRS EA Part 1Free Enrolled Agent — Individuals practice test
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10 real IRS EA Part 1 practice questions with instant answers and explanations — no account, no credit card, no email. Score yourself, then unlock the full bank of 300 questions whenever you’re ready. The IRS EA Part 1 passing score is 105 (scaled 40–130).
Which of the following amounts is generally reported in Box 1 (Wages, tips, other compensation) of Form W-2?
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All 10 IRS EA Part 1 questions & answers
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Q1. Which of the following amounts is generally reported in Box 1 (Wages, tips, other compensation) of Form W-2?
Correct answer: A. Compensation reduced by pretax elective deferrals to a 401(k) plan and pretax cafeteria plan contributions
Box 1 reflects taxable wages after subtracting pretax deferrals like 401(k) and cafeteria plan contributions; employer matches are not included in wages.
Q2. A taxpayer receives $1,200 of interest income from bonds issued by a state government. How is this interest generally treated for federal income tax purposes?
Correct answer: B. Generally exempt from federal income tax
Interest on most state and municipal bonds is exempt from federal income tax, though it may be subject to state tax or the AMT in limited cases.
Q3. A single taxpayer with $50,000 of taxable income (all from wages) also received $2,000 in qualified dividends from a domestic corporation stock held for over a year. How are the qualified dividends generally taxed?
Correct answer: C. At the preferential long-term capital gains rates
Qualified dividends meeting the holding period requirement are taxed at the same preferential rates that apply to net long-term capital gains, not ordinary rates.
Q4. An individual purchased 100 shares of stock for $3,000 (including commission) and sold all 100 shares two years later for $4,500, paying a $50 commission on the sale. What is the recognized long-term capital gain?
Correct answer: D. $1,450
Amount realized ($4,500 sale price minus $50 selling commission = $4,450) minus adjusted basis ($3,000) equals a $1,450 long-term capital gain.
Q5. Which factor is most directly used to determine what portion, if any, of a taxpayer's Social Security benefits is taxable?
Correct answer: A. The taxpayer's provisional income, which includes half of Social Security benefits plus other income including tax-exempt interest
Taxability of Social Security benefits depends on provisional (combined) income - AGI plus tax-exempt interest plus half of benefits - compared to base amounts for the taxpayer's filing status.
Q6. A taxpayer inherited stock from a parent who died when the stock's fair market value was $40,000; the parent's original cost basis had been $10,000. The taxpayer sold the stock eight months later for $42,000. What is the amount and character of the gain?
Correct answer: B. $2,000 long-term capital gain, because inherited property is automatically treated as held long-term
Inherited property receives a stepped-up basis to fair market value at the decedent's death and is automatically treated as long-term regardless of the actual holding period; gain is $42,000 - $40,000 = $2,000.
Q7. A taxpayer's allowable itemized deductions total less than the applicable standard deduction. What is generally the most tax-advantageous approach?
Correct answer: C. Claim the standard deduction, since it is not less than the itemized total
A taxpayer should claim whichever is larger; if itemized deductions are less than the standard deduction, taking the standard deduction produces a lower tax liability.
Q8. Which of the following is an 'above-the-line' adjustment to income, deductible in arriving at adjusted gross income regardless of whether the taxpayer itemizes?
Correct answer: D. Educator expenses deduction
The educator expenses deduction is an adjustment to gross income (above-the-line) available whether or not the taxpayer itemizes; the others are itemized deductions.
Q9. To claim the Child Tax Credit for a qualifying child, which requirement must generally be met regarding the child's age at the end of the tax year?
Correct answer: A. The child must be under age 17
A qualifying child for the Child Tax Credit must be under age 17 at the end of the tax year; the higher age limits in option B relate to the general qualifying child dependency test, not the CTC age test.
Q10. Which statement about the Earned Income Tax Credit (EITC) is correct?
Correct answer: B. It is a refundable credit that phases in with earned income and phases out at higher income levels, and is subject to an investment income limit
The EITC is a refundable credit available to eligible workers with or without qualifying children, structured with a phase-in, plateau, and phase-out based on earned income and AGI, and it is disallowed if investment income exceeds a set threshold.
Exam facts and objectives sourced from the official IRS (Enrolled Agent / SEE) certification page. Last reviewed June 2026.
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