2026 July Enrolled Agent Exam Part 1 Individuals

$23,625

What is the basic standard deduction for a taxpayer filing as Head of Household for the 2025 tax year?

$2,200

$2,200 per qualifying child. This enhanced credit is available for children under age 17 and is indexed for inflation, replacing the previous $2,000 limit.

For 2025, the "One Big Beautiful Bill" Act increased the maximum Child Tax Credit to what amount per qualifying child?

$40,000

The phase-out begins for taxpayers with a Modified Adjusted Gross Income (MAGI) over $500,000 ($250,000 for married filing separately). The cap is reduced by 30 cents for every dollar over the threshold, fully phasing out back down to a $10,000 cap ($5,000 MFS) for those with a MAGI of $600,000 or more ($300,000 MFS).

Under the 2025 tax law, what is the maximum deduction for State and Local Taxes (SALT) for a married couple filing jointly with a modified AGI of $400,000?

$8,000

$7,000 under age 50; $8,000 for age 50+.

What is the 2025 maximum contribution limit to a traditional IRA for an individual who is 52 years old?

$34,750

This is composed of a $23,500 base contribution plus an $11,250 "super catch-up" contribution specifically for ages 60–63. Total contributions, including employer profit-sharing, cannot exceed $70,000 (or 100% of compensation), although the 401(k) and profit-sharing plan contribution limits allow this $34,750 to be solely from the employee.

For 2025, a self-employed taxpayer aged 62 may contribute up to what amount to their Solo 401(k) as an elective deferral?

$7,152

To qualify for this maximum amount, the filer's adjusted gross income (AGI) must be within specific limits, generally under $57,310 (or $64,430 if married filing jointly). Investment income must be $11,950 or less.

For 2025, what is the maximum Earned Income Tax Credit (EITC) for a filer with two qualifying children?

Form W-7

Which form is used by an individual to apply for an IRS Individual Taxpayer Identification Number (ITIN)?

$23,750

This total includes the base 2025 standard deduction ($15,750), an additional standard deduction for being 65+ ($2,000), and a new $6,000 "bonus" senior deduction for certain taxpayers. The 2025–2028 "senior bonus" deduction (from the One Big Beautiful Bill Act) provides an extra $6,000 deduction ($12,000 married filing jointly) for those aged 65+, with phase-out beginning at $75,000 (single/head of household) and $150,000 (married filing jointly) Modified Adjusted Gross Income (MAGI). The deduction fully phases out at $175,000 (single) and $250,000 (joint).

A single taxpayer, age 67, is not blind. What is their total standard deduction for the 2025 tax year?

24%

In 2025, for single filers, the 24% bracket applies to taxable income between $103,351 and $197,300.

A single taxpayer has a taxable income of $120,000 in 2025. Which marginal tax bracket does their top dollar fall into?

2 years

If converted before two years, the 10% penalty usually applies. Additionally, a 5-year waiting period applies to withdrawing the converted amount penalty-free if under age 59½.

How many years must a taxpayer wait before they can convert a SIMPLE IRA into a Roth IRA without the 10% early distribution penalty?

0%

The 0% rate applies to long-term gains for single filers with taxable income up to $48,350.

A single taxpayer has taxable income of $45,000, including a $2,000 long-term capital gain from the sale of stock. What is the tax rate applied to this $2,000 gain for the 2025 tax year?

$50,000

With a gain of $550,000 ($850k sale - $300k basis), they qualify to exclude up to $500,000 (married filing jointly) because they met the ownership/use tests. Only the remaining gain over $500k—$50,000—is taxable as a long-term capital gain. Lived in the home for 10 years, easily passing the 2-out-of-5-year test.

In 2025, a married couple filing jointly sells their primary residence for $850,000. They purchased it 10 years ago for $300,000 and have lived in it ever since. How much of their gain is taxable?

Disallowed under the wash-sale rule and added to the basis of the new stock.

An individual sells 100 shares of XYZ stock at a loss of $1,000 on December 20, 2025. On January 10, 2026, they purchase 100 shares of "substantially identical" XYZ stock. What is the tax treatment of the $1,000 loss on their 2025 return?

$3,000

For the 2025 tax year, what is the maximum net capital loss a married couple filing jointly can use to offset ordinary income?

Rare coin collection held for two years

Assets subject to a maximum 28% long-term capital gains tax rate include collectibles (such as art, coins, antiques, stamps, and precious metals) and Section 1202 qualified small business stock. These are officially known as "collectibles gains" or gains from specialized stock under IRS rules.

Which of the following assets is subject to a maximum long-term capital gains tax rate of 28%?

$380

The single filer owes $380 in Net Investment Income Tax (NIIT) for 2025. The tax is 3.8% of the lesser of their net investment income ($10,000) or the excess MAGI over the $200,000 threshold ($225,000 - $200,000 = $25,000). Therefore, the 3.8% tax applies to the $10,000 of investment income, as it is the smaller amount (10,000 × 0.038 = $380).

A single filer has a Modified Adjusted Gross Income (MAGI) of $225,000 in 2025, which includes $10,000 of net investment income. What amount of Net Investment Income Tax (NIIT) do they owe?

$2,000

The taxpayer’s recognized gain is $2,000. Inherited property receives a "stepped-up" basis to its Fair Market Value (FMV) at the date of the decedent’s death. The calculation is: $7,000(Sale Price) - $5,000 (FMV at Death) = $2,000 gain.

A taxpayer sells a painting they inherited 3 years ago. The decedent’s original cost was $1,000, the Fair Market Value (FMV) at the date of death was $5,000, and the sale price was $7,000. What is the taxpayer’s recognized gain?

Taxable income over $533,400

What is the 2025 long-term capital gains threshold for a 20% tax rate for a single filer?

2 out of the last 5 years

To qualify for the Section 121 primary residence exclusion, a taxpayer must generally have owned and used the home as a principal residence for at least:

$3,000 net long-term loss

In 2025, a taxpayer has $5,000 in short-term capital gains and $8,000 in long-term capital losses. After netting, what is the result reported on Schedule D?

$300

What is the maximum "above-the-line" educator expense deduction for an eligible K-12 teacher for the 2025 tax year?

$4,300

For 2025, what is the maximum amount an individual with self-only coverage under a High Deductible Health Plan (HDHP) can contribute to a Health Savings Account (HSA)?

$9,550

This includes the 2025 maximum annual contribution of $8,550 for family coverage plus the $1,000 "catch-up" contribution allowed for individuals aged 55 or older.

A taxpayer is 56 years old and has family HDHP coverage. What is their total allowable HSA contribution limit for 2025 (including catch-up)?

$0

For a single taxpayer in 2025 who is an active participant in an employer-sponsored retirement plan, a Modified Adjusted Gross Income (MAGI) of $105,000 exceeds the phase-out range ($79,000–$89,000), meaning the maximum Traditional IRA deduction they can claim is $0.

A single taxpayer, who is an active participant in an employer-sponsored retirement plan, has a Modified Adjusted Gross Income (MAGI) of $105,000 in 2025. What is the maximum Traditional IRA deduction they can claim?

$2,500

The maximum student loan interest deduction for the 2025 tax year is $2,500. This allows borrowers to deduct up to $2,500 of interest paid on qualified student loans from their gross income, provided their Modified Adjusted Gross Income (MAGI) is within specified limits, specifically phasing out for single filers between $85,000–$100,000 and joint filers between $170,000–$200,000.

What is the 2025 maximum student loan interest deduction?

$100,000

Phasing out for single filers between $85,000–$100,000 and joint filers between $170,000–$200,000.

For 2025, at what MAGI level does the student loan interest deduction completely phase out for a taxpayer filing as Single?

Charitable contributions for non-itemizers

Starting in 2026, under the One Big Beautiful Bill Act, non-itemizers can claim an "above-the-line" deduction for cash contributions to qualified charities, up to $1,000 for single filers or $2,000 for married couples filing jointly. These must be cash donations to public charities, not donor-advised funds (DAFs).

Which of the following is NOT an adjustment to income on Schedule 1 (Form 1040)?

No limit

In 2025, if a taxpayer is married filing jointly and neither spouse is covered by a retirement plan at work, what is the MAGI limit for their Traditional IRA deduction?

$1,000

Individuals aged 55 or older can make an additional annual HSA catch-up contribution of $1,000. This amount, which is not indexed for inflation, allows eligible individuals to boost their savings for future health care expenses. For married couples where both spouses are 55 or older, each can make a $1,000 catch-up contribution to their own separate HSA.

What is the additional HSA catch-up contribution amount for an individual who is age 55 or older?

100%

For the 2025 tax year, a self-employed individual can deduct 100% of their health insurance premiums (including medical, dental, and vision) as an adjustment to income. This deduction is taken on Schedule 1 (Form 1040) and is subject to having net profit from the business, as the deduction cannot exceed the business's net income.

For 2025, a self-employed individual can deduct what percentage of their health insurance premiums as an adjustment to income?

$25,000

Under the 2025 tax law, what is the maximum amount an individual may deduct for "Qualified Tip Income," provided they meet the modified adjusted gross income (MAGI) requirements?

Form 4547

Which new form was introduced for the 2025 tax year to allow authorized individuals to establish a "Trump account" for a child born after 2024?

70 cents per mile

For 2025, what is the standard mileage rate for the business use of a vehicle?

$19,000

For 2025, what is the annual exclusion for gifts to any one person (other than a non-citizen spouse)?

$10,000

A taxpayer purchased a passenger vehicle for personal use in 2025. What is the maximum amount of "qualified passenger vehicle loan interest" they may be eligible to deduct, assuming they meet income requirements?

File a joint return

To be eligible for the new "No Tax on Overtime" deduction in 2025, a married couple must:

C. Head of Household

Mark and Sarah were married on December 30, 2025. They lived together all year. Which of the following filing statuses is NOT available to them for the 2025 tax year?

A. Married Filing Jointly

B. Married Filing Separately

C. Head of Household

D. Both B and C

$0

Under the One Big Beautiful Bill Act (OBBBA), passed in July 2025, personal and dependent exemptions are permanently eliminated. Previously suspended by the 2017 TCJA through 2025, OBBBA makes this $0 exemption status indefinite, replacing them with a larger, permanent standard deduction and enhanced tax credits like the Child Tax Credit ($2,200).

Under the 2025 tax law, what is the amount of the personal or dependency exemption allowed for a qualifying child?

D. Qualified Foster Care Payments

Which of the following is NOT included in a taxpayer's gross income?

A. Interest on a state bond

B. Compensation for services

C. Gains from property sales

D. Qualified Foster Care Payments

15%

For the 2025 tax year (taxes filed in 2026), the 24% ordinary tax bracket applies to single filers with taxable income between $103,350 and $197,300. For married couples filing jointly, this bracket covers income from $206,700 to $394,600.

A taxpayer sold a stock for $10,000 that they purchased for $4,000 five years ago. The taxpayer is in the 24% ordinary tax bracket. What is the maximum federal tax rate applied to this gain in 2025?

Under age 17

For the 2025 tax year, what is the maximum age of a qualifying child for the Child Tax Credit?

Form 1040 Schedule C

Which form is required to be filed by a taxpayer who has self-employment income of $400 or more?

$150,000

An individual is considered to have paid enough estimated tax by paying 100% of their 2024 tax liability if their Adjusted Gross Income (AGI) for the 2024 tax year was $150,000 or less ($75,000 or less if married filing separately). If the 2024 AGI exceeded $150,000 ($75,000 married filing separately), they generally must pay 110% of the prior year's tax to meet the safe harbor. The 2024 return must have covered a full 12-month period.

An individual is considered to have paid enough estimated tax if they paid 100% of the tax shown on the 2024 return (assuming 2024 was a full 12-month year) and their AGI for 2024 was less than:

C. Gross income test (Child must earn less than $5,200)

Which of the following is NOT a requirement to claim a person as a Qualifying Child?

A. Relationship test

B. Support test (Child did not provide more than half of their own support)

C. Gross income test (Child must earn less than $5,200)

D. Abode test (Lived with taxpayer for more than half the year)

73

Under the SECURE 2.0 Act, the age at which Required Minimum Distributions (RMDs) must generally begin in 2025 is 73. This age applies to individuals who turn 72 after December 31, 2022, and turn 73 before January 1, 2033. The first RMD must be taken by April 1 of the year following the year you turn 73. The RMD age will increase to 75 beginning in 2033.

Under the SECURE 2.0 Act rules applicable in 2025, what is the age at which Required Minimum Distributions (RMDs) must generally begin?

$250,000

A taxpayer sells their primary residence in 2025. They are single and lived in the home for 4 of the last 5 years. What is the maximum gain they can exclude from income?

$168,600

For 2025, the Social Security wage base (the maximum earnings subject to OASDI tax) is:

Child Tax Credit

The Additional Child Tax Credit (ACTC) is the partially refundable portion of the Child Tax Credit, specifically designed for taxpayers with earned income of at least $2,500. For the 2025 tax year, this allows for a refund of up to $1,700 per qualifying child if the credit exceeds the tax owed.

Which credit is partially refundable for taxpayers with earned income of at least $2,500?

70 ½

In 2025, an individual can make a tax-free Qualified Charitable Distribution (QCD) from their IRA directly to a qualified charity starting at age 70½ or older. This allows individuals to transfer up to $108,000 annually (in 2025) directly to charity without treating the amount as taxable income, even if they have not yet reached the age for Required Minimum Distributions (currently 73).

In 2025, an individual can make a tax-free Qualified Charitable Distribution (QCD) from their IRA directly to a charity starting at what age?

Schedule C

Which form is used by an individual to report a net profit or loss from a sole proprietorship?

$7,000 is the limit for 2024/2025; catch-up is an additional $1,000

For 2025, what is the maximum contribution an individual under age 50 can make to a traditional or Roth IRA?

A. $6,500

B. $7,000

C. $7,500

D. $8,000

$4,900

1. Initial Loss: $15,000

2. Subtract $100 Floor: $15,000 - $100 = $14,900

3. Calculate 10% AGI Floor: 10% of $100,000 AGI = $10,000

4. Subtract AGI Floor: $14,900 - $10,000 = $4,900

In 2025, Sam (Single) has an AGI of $100,000. He suffers a loss of $15,000 due to a federally declared disaster. After the $100 floor, what is his deductible casualty loss?

A. Yes, they were married before December 31, 2025.

Yes, Mark and Sarah can file as Married Filing Jointly (MFJ) for 2025 because they were legally married on or before December 31, 2025. However, Sarah should be aware that by filing jointly, she becomes liable for Mark's outstanding 2024 debt and any penalties/interest. Mark should file his 2024 return immediately to resolve his outstanding balance. If Sarah does not want to be liable for Mark's 2024 debt, she may choose to file as Married Filing Separately, though this often results in a higher tax liability overall.

Mark and Sarah were married on December 30, 2025. They wish to file a joint return. However, Mark has not yet filed his 2024 tax return and owes taxes from that year. Can Mark and Sarah file as Married Filing Jointly for 2025?

A. Yes, they were married before December 31, 2025.

B. No, they must file Married Filing Separately.

C. No, because Mark is not compliant with his 2024 filing.

D. Yes, but they must use Form 1040-X for the joint election.

$12,000

Mr. Smith (age 67) and Mrs. Smith (age 65) are filing a joint return for 2025. Both are active and meet all requirements. What is the maximum extra enhanced deduction for seniors they can take in 2025, in addition to the regular standard deduction?

$6,000 as long-term capital gain on Schedule D.

IRS Schedule D (Form 1040) is used to report capital gains and losses from the sale of assets like stocks, bonds, and real estate held for investment. It calculates short-term ( ≤ 1 year ) and long-term ( > 1 year ) gains/losses, which are then reported on your main tax return. Form 8949 is usually required to list transaction details first.

Jane sold Bitcoin on July 1, 2025, for $10,000. She originally purchased it for $4,000 on January 1, 2024. How should this transaction be reported?

$1,250

1. Determine the AGI Floor: 7.5% X $50,000 (AGI) = $3,750.

2. Calculate Deductible Amount: $5,000 (Expenses) - $3,750 (Floor) = $1,250.

Sarah is 45 years old and has an Adjusted Gross Income (AGI) of $50,000 for 2025. During the year, she paid $5,000 in qualified, unreimbursed medical expenses (not covered by insurance). How much can she claim as an itemized deduction on Schedule A?

$1,000

1. Early Withdrawal Penalty: $10,000 X 10% = $1,000

2. Income Tax: $10,000 X 22% = $2,200

3. Total Cost: $3,200 (Total amount withheld from the $10k or owed).

John, age 50, withdrew $10,000 from his traditional IRA in 2025 to pay for a vacation. He is in the 22% tax bracket. What is the 10% early withdrawal penalty?

Yes, because she paid $2,800.

Yes, Mary must pay Social Security and Medicare taxes (FICA) in 2025. The threshold for household employee cash wages is $2,800 for 2025. Since Mary paid exactly $2,800, she meets the criteria. Both Mary and the employee are responsible for their respective shares of FICA taxes (6.2% Social Security + 1.45% Medicare). If you pay total cash wages of $1,000 or more in any calendar quarter, you must also pay Federal Unemployment Tax (FUTA).

Mary hired a nanny in 2025 and paid her $2,800 for the year. Does Mary have to pay household employment taxes (Social Security and Medicare)?

Total payments exceed $20,000 and more than 200 transactions.

In 2025, which of the following scenarios triggers a Form 1099-K to be sent to the taxpayer by a third-party payment network?