Free SEE: IRS Special Enrollment Examination (Enrolled Agent) Exam Questions and Answers

Generally, if an unmarried dependent child, John, earns $4,200 wages during the summer, has no tips, has $200 in interest/dividends, and no income tax withheld, he would not be required to file a tax return for 2002.

• AA. True
• BB. False

Mary’s husband died in 1999. Her son Bob is her dependent and has lived in her house since his birth in 1992. In 2002, Mary may file as qualifying widow because she has not remarried.

• AA. True
• BB. False

Rosemary’s home is used exclusively as her residence all year except for 10 days. During this time, Rosemary rents out her home to alumni while the local college has its homecoming celebration. The rent does not need to be included in income.

• AA. True
• BB. False

Derek is a self-employed carpenter and is also an employee of Krispy, Inc. His self-employment net income is $35,000, and he received a W-2 for salaries and wages of $25,000. He is covered by his employer’s pension plan. Derek is not eligible to take a deduction for an IRA but he can deduct 50% of his self-employment tax and 70% of his health insurance premiums for 2002.

• AA. True
• BB. False

Jim files his tax return as married filing separately. He has not lived with his wife for two years. In tax year 2002, by court order, he paid her $500 per month as separate maintenance. He will be able to deduct $6,000 as alimony.

• AA. True
• BB. False

George and Jean, a married couple living together, have no income other than their wages. George earned $12,000 and Jean earned $9,000. They have two minor children and have decided to file married filing separate tax returns, each claiming one child as a dependent. This way they will both qualify for the earned income credit.

• AA. True
• BB. False

To qualify for the earned income credit, the taxpayer must have a dependent child.

• AA. True
• BB. False

Anthony, filing single, has one household employee, and attaches Schedule H to his individual tax return for reporting. He may use his W-2 withholdings to offset the Schedule H tax liabilities.

• AA. True
• BB. False

The President and CEO of Online, Inc., who had no direct or indirect ownership interest in Online, Inc., personally advanced $50,000 to the corporation as a temporary loan. Online, Inc. declared bankruptcy and was discharged from bankruptcy without repaying the $50,000. This should be treated as a non-business bad debt.

• AA. True
• BB. False

Two taxpayers married on November 30. That same year, the husband enrolled in an accredited college to further his career and subsequently received a Form 1098-T, Tuition Statement. The wife was employed with an income of $45,000 and paid for the husband's education expenses. The taxpayers did not receive any other income for the year. Based on their circumstances, what is the correct method to report the education credit?

• AA. Taxpayers must file a joint return to claim an education credit
• BB. Based on the wife's AGI, they do not qualify to claim an education credit
• CC. Husband is ineligible to claim an education credit because the wife paid his education expenses
• DD. Wife should report nonqualified education expenses on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)