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. 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.
  2. Financial Advisor

    How to Find the Best Life Insurance Agent

    Choosing a life insurance agent is the first and most important step in obtaining coverage. Buyers should pay attention to five key factors.
  3. Taxes

    20 Tax Changes You Need To Know About

    Don't miss out on the tax changes. Here's a list that you need to know about.
  4. Investing

    How Real Estate Agent and Broker Fees Work

    Buying or selling a home? What you need to know about real estate agent and broker fees.
  5. Financial Advisor

    A Day In The Life Of A Real Estate Agent

    While every day is unique for a real estate agent, there are some activities that may be a typical part of an agent's day.
  6. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  7. Financial Advisor

    Your Social Security Benefits: Who Gets Taxed?

    Many folks will pay some taxes on their Social Security benefits, but some will not. Here's the lowdown on who gets taxed by how much.
  8. Taxes

    How Obamacare Is Raising Your Taxes

    There are literally dozens of new, amended or broadened tax provisions under the Obamacare legislation. Find out how your taxes will be affected in the years to come.
  9. Taxes

    This Year's Tax Preparation Fees: What to Expect

    Tax preparation fees aren't one size fits all. What you pay will vary – depending on the complexity of your return, who does it and even where you live.
Frequently Asked Questions
  1. Where do most fund managers get their market information?

    Many fund managers, whether they manage a mutual fund, trust fund, pension or hedge fund, have access to resources that the ...
  2. What's the difference between short-term investments and marketable securities?

    Understand the difference between short-term investments and marketable equity securities, and learn the importance of short-term ...
  3. Are fringe benefits direct or indirect costs?

    Learn how to allocate costs associated with fringe benefits provided to employees and how to determine when a cost is either ...
  4. How is a bank guarantee different from a traditional loan?

    Read about the differences between a traditional bank loan and a bank guarantee, and why a third party might require a guarantee ...
Trading Center