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

    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.
  2. 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.
  3. Taxes

    Federal Tax Brackets

    Why do we have income tax brackets? What do they do for us? Read this to understand the basics and where to find your own bracket.
  4. Taxes

    New Tax Rules Target The Top Tax Bracket

    The American Taxpayer Relief Act brings about new tax rules for the wealthy that people such as Warren Buffett have been calling for over the last few years.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Taxes

    Getting A Job As The Tax Man

    If you'd like the IRS to pay you some money for a change, consider a career working in taxes.
  7. Taxes

    Who Does The Current Tax Code Benefit?

    Are the non-workers benefiting from the current tax code in any way or is it the wealthy who are still getting the big breaks?
  8. Taxes

    A Concise History Of Changes In U.S. Tax Law

    We look at how U.S. taxes have changed since their inception.
  9. Taxes

    What's an Indirect Tax?

    An indirect tax is levied on goods or services rather than on an individual or a company.
  10. 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.
Trading Center