Part 1 - Individuals - Taxation And Advice

This section of the exam covers material regarding taxation, how individuals can minimize their tax burden through adjustments, deduction and credits, and how Enrolled Agents can advise individual taxpayers.

Taxation
This section includes information regarding some of the various types of taxes for which a taxpayer may be liable and that may affect his or her tax return. Enrolled Agents should understand the role of taxation and how to calculate tax liabilities for a federal income tax return. Different topics include:

  • Alternative Minimum Tax
  • Credit for prior year minimum tax
  • Penalties and exceptions on premature distributions from qualified retirement plans and IRAs
  • Household employment taxes
  • Self-employment tax – rates and exemptions
  • Excess social security withholding
  • Conditions for filing a claim for a refund
  • Underpayment penalties and interest
  • Tax provisions for members of the clergy

Advising the Individual Taxpayer
An Enrolled Agent, by definition, is a federally licensed tax practitioner with technical expertise in the field of taxation. Enrolled Agents advise, represent and prepare tax returns for individuals (and other entities). In addition to tax preparation and taxpayer representation, Enrolled Agents may also offer services such as accounting and bookkeeping, financial planning and budgeting, payroll services and financial statement preparation. All Enrolled Agents specialize in taxes (unlike attorneys and certified public accountants) and receive their right to practice from the United States government. As an Enrolled Agent, you may be responsible for advising taxpayer clients on a wide variety of tax-related topics, including:

  • Education planning – lifetime learning credit,529 plans
  • Estate planning – gift versus inheritance, trusts, family partnerships, charitable giving, long-term care, life insurance
  • Marriage and divorce – divorce settlements, common law, community property
  • Property sales –  home, stock, businesses
  • Reporting obligations individuals
  • Retirement planning – annuities, beneficiary ownership, employer plans, IRAs, etc.
  • Items that will affect future returns - carryovers, net operating loss, Schedule D, Form 8801
  • Injured spouse
  • Innocent spouse
  • Estimated tax
  • Adjustments, deductions, and credits for tax planning
  • Use of capital gain rates versus ordinary income rates - character of transaction
Specialized Returns For Individuals


Related Articles
  1. Professionals

    Introduction

    Introduction
  2. Professionals

    Representation Before The IRS

    Describes exam topics covering legal authority and reference for Enrolled Agents.
  3. Professionals

    Practices And Procedures

    Description of test topics covering what constitues practice before the IRS.
  4. Taxes

    What's IRS Form 1040 For?

    Most U.S. taxpayers will be familiar with the 1040. By the end of filling it out, you'll know how much tax you owe, or what your refund is.
  5. Professionals

    Business Financial Information

    Description of exam topics covering information regarding a business's finances.
  6. Professionals

    Part 3 - Representation, Practice And Procedures

    Includes exam topics on the SEE related to what constitutes practice before the IRS, the requirements for enrolled agents and sanctions and penalties against enrolled agents.
  7. Professionals

    Income And Assets

    This section of the exam details various income and asset sources for individual taxpayers.
  8. Professionals

    Deductions And Credits

    A description of the various deductions and credits that can be claimed on individuals' tax returns.
  9. Professionals

    Specific Types Of Representation

    Describes exam topics related the capacity in which an enrolled agent can represent clients.
  10. Taxes

    Match Your Tax Preparer to Your Tax Picture

    A tax pro can not only minimize the taxes you pay on tax day but may be able to help with other tax matters. Here's how to find the right one for you.
RELATED TERMS
  1. Enrolled Agent - EA

    A tax professional authorized by the U.S. government to be able ...
  2. Tax Break

    A tax break is a savings on a taxpayer's liability. A tax break ...
  3. IRS Publication 514

    A document published by the Internal Revenue Service that provides ...
  4. Tax Benefit

    A tax benefit is an allowable deduction on a tax return intended ...
  5. American Taxpayer Relief Act Of ...

    A U.S. bill signed by President Obama on January 2, 2013, that ...
  6. Direct Tax

    A tax that is paid directly by an individual or organization ...
RELATED FAQS
  1. Do financial advisors prepare tax returns for clients?

    Find out how financial advisors are often involved in tax planning and tax return preparation for their clients as well as ... Read Answer >>
  2. What is the difference between a state income tax and a federal income tax?

    Learn the difference between state income tax and federal income tax based on tax rates, deductions, tax credits and taxable ... Read Answer >>
  3. What are some ways to minimize tax liability?

    Learn what tax strategies are available to individuals and business owners that may allow for a reduction in tax liability ... Read Answer >>
  4. How does the marginal tax rate system work?

    The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. As the marginal tax ... Read Answer >>
  5. How can I lower my effective tax rate without lowering my income?

    Discover how to reduce your effective tax rate without losing income by maximizing adjustments and deductions, earning tax-free ... Read Answer >>
  6. What are the differences between regressive, proportional and progressive taxes?

    Understand the differences between the most common tax systems including regressive taxes, proportional taxes and progressive ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center