Free sample
Part 1 practice questions
Work each question, then open the answer. Every explanation cites the rule it rests on.
Question 1 · Preliminary Work to Prepare Tax Returns
Renee, an enrolled agent, opens her own practice on January 2, 2026. She will personally prepare and sign roughly 40 individual returns for a fee, and has arranged for an unrelated transmitter to electronically file all of them on her behalf. Which of the following must Renee obtain in her own name and renew every year before she is paid to prepare any of those returns?
- A. An Electronic Filing Identification Number for the returns she has prepared.
- B. A Centralized Authorization File number covering the clients she prepares for.
- C. A Preparer Tax Identification Number, applied for on Form W-12.
- D. A signed Form 2848 from each client she prepares a return for that year.
Show answer & explanation
Answer: C. Every individual who prepares, or assists in preparing, a federal tax return for compensation must hold a valid PTIN and renew it for each calendar year. Because an unrelated transmitter is e-filing the returns, that transmitter holds the EFIN; an EFIN is issued to the firm that transmits and is not renewed annually. A CAF number is assigned automatically when a representation authorization is processed and is not a preparer credential, and preparing a return requires no power of attorney.
Question 2 · Preliminary Work to Prepare Tax Returns
Ingrid is a citizen and resident of Norway who owns a rental house in Florida. She has never been present in the United States, is not eligible for a Social Security number, and must file a U.S. income tax return to report the rental income. Which of the following correctly describes how Ingrid obtains the taxpayer identification number she needs?
- A. She files Form W-8BEN with the IRS, which issues an identification number to a foreign individual on request.
- B. She files Form SS-4 with the IRS to obtain an employer identification number for the rental activity.
- C. She files Form SS-5 with the Social Security Administration and attaches the denial notice to her return in place of a number.
- D. She files Form W-7 with the IRS, generally attaching it to the U.S. return for the first year she is required to file.
Show answer & explanation
Answer: D. An individual who must furnish a U.S. taxpayer identification number but is not eligible for an SSN applies for an ITIN on Form W-7. The application is normally filed together with the tax return for the first year the number is needed, with the required identity and foreign-status documentation attached.
Question 3 · Preliminary Work to Prepare Tax Returns
Wendell brings a copy of his prior-year Form 1040, including all schedules, to his first appointment with a new enrolled agent. All of the following are items the enrolled agent can reasonably expect to learn from that return EXCEPT:
- A. Whether the Internal Revenue Service has selected any of Wendell's earlier returns for examination.
- B. The depreciation method and remaining basis for the rental property Wendell reported on Schedule E.
- C. Whether Wendell itemized deductions, which affects how much of any state refund he received is taxable.
- D. The unused capital loss and charitable contribution carryforwards available to Wendell in the current year.
Show answer & explanation
Answer: A. A prior-year return shows carryforwards, depreciation schedules, elections and the itemizing history that drives the current year's computations, which is why reviewing it is standard intake work. It says nothing about examination activity; that is learned from IRS notices or an account transcript obtained under an authorization.
Question 4 · Preliminary Work to Prepare Tax Returns
Priya prepares a 2025 return for a client who files as head of household and claims the earned income tax credit, the child tax credit, and the American opportunity tax credit. Which of the following statements about Priya's due diligence obligation on that return is correct?
- A. She must complete a separate Form 8867 for each of the three credits, but the filing status requires no checklist.
- B. She must complete Form 8867 for the earned income tax credit only, as the other items carry no due diligence requirement.
- C. She must complete Form 8867 and retain it in her own files, but it is not submitted with the return.
- D. She must complete one Form 8867 covering the head of household status and all three credits, and submit it with the return.
Show answer & explanation
Answer: D. A single Form 8867 covers every item on the return subject to the section 6695(g) requirements — the earned income tax credit, the child tax credit and additional child tax credit, the credit for other dependents, the American opportunity tax credit, and head of household filing status. The completed checklist is filed with the return, and the supporting worksheets and records are retained separately.
Question 5 · Preliminary Work to Prepare Tax Returns
Devon prepares Ellen's 2025 Form 1040, which claims the earned income tax credit. The unextended due date of the return is April 15, 2026. Devon obtains an extension to October 15, 2026 but electronically files the return on September 8, 2026. Under the due diligence regulations, Devon must retain the completed Form 8867 and the related worksheets until at least:
- A. September 8, 2029.
- B. October 15, 2029.
- C. April 15, 2029.
- D. April 15, 2032.
Show answer & explanation
Answer: A. The regulations under section 6695(g) require the records to be kept for three years after the later of the due date of the return determined without regard to extensions, or the date the return was actually filed. April 15, 2026 and September 8, 2026 are compared, the filing date is later, and three years from it is September 8, 2029.
Question 6 · Preliminary Work to Prepare Tax Returns
A client's circumstances changed repeatedly during 2025: she married in June, her only child moved out permanently in September, and she moved to a different state in November. She files her 2025 return on March 3, 2026. In determining her filing status, whether her child is her dependent, and her eligibility for the child-related credits for 2025, the enrolled agent generally applies the facts as they stood on:
- A. December 31, 2025, the last day of the tax year in question.
- B. April 15, 2026, the unextended due date of the 2025 return.
- C. March 3, 2026, the date the 2025 return was actually filed.
- D. January 1, 2025, the first day of the tax year in question.
Show answer & explanation
Answer: A. Marital status for filing purposes, and most dependency and credit determinations, are made as of the last day of the tax year. Some tests, such as the residency test for a qualifying child, look at the whole year, but the status date itself is December 31 for a calendar-year taxpayer — which is why intake questions are framed around the client's position at year end rather than at the appointment.
Question 7 · Preliminary Work to Prepare Tax Returns
A client's electronically filed 2025 return is rejected with an error stating that the identity protection PIN is missing or incorrect. The client confirms he received a CP01A notice from the IRS in December 2025 but has misplaced it, and he has the IP PIN the IRS issued him a year earlier. Which of the following is correct?
- A. He may electronically file using his prior-year adjusted gross income instead, which satisfies the same identity check.
- B. He may electronically file using his prior-year IP PIN, which stays valid until he asks the IRS to change it.
- C. He may omit the IP PIN entirely and instead attach Form 14039, Identity Theft Affidavit, to the return.
- D. He must retrieve his current-year IP PIN from the IRS before the return can be electronically filed successfully.
Show answer & explanation
Answer: D. The IRS issues a new six-digit IP PIN for each filing season, and once a taxpayer is in the program the current-year number must appear on the return. The client can retrieve it through his IRS online account or by requesting a replacement CP01A. An electronically filed return without the correct number is rejected, and a paper return filed without it is held for additional identity screening.
Question 8 · Preliminary Work to Prepare Tax Returns
An enrolled agent acting as an electronic return originator has finished preparing a client's Form 1040 and is ready to transmit it. Which of the following statements about Form 8879 is correct?
- A. Form 8879 is required only where the taxpayer owes a balance due to be paid by electronic funds withdrawal.
- B. The taxpayer must review the completed return and sign Form 8879 before the electronic return originator transmits it.
- C. Form 8879 is attached to the return and transmitted to the IRS along with it as part of the electronic record.
- D. The electronic return originator may transmit the return first and obtain the signed Form 8879 within three business days afterward.
Show answer & explanation
Answer: B. Form 8879 is the taxpayer's authorization for the ERO to transmit the return, and it must be signed after the taxpayer has reviewed the completed return but before transmission. The ERO keeps the signed form in its own records and produces it only if the IRS requests it; it is not filed with the return.
Question 9 · Filing Status
A couple separated in February 2025 and filed for divorce. The court signed the final decree on December 29, 2025, but the clerk did not enter it on the docket until January 6, 2026, and under the law of their state a divorce takes effect only when the decree is entered. They lived apart for the whole of the second half of 2025 and have no children or other dependents. What is each spouse's filing status for 2025?
- A. Each is single for 2025, because the judge signed the final decree before the end of the year.
- B. Each may elect to be treated as unmarried for 2025, having lived apart for the last six months of the year.
- C. Each is married for 2025, and so files either married filing jointly or married filing separately.
- D. Each files as head of household for 2025, having maintained a separate household for the last six months.
Show answer & explanation
Answer: C. Marital status is determined on the last day of the tax year, and whether a divorce is final on that date is a question of state law. Because the state treats the divorce as effective only on entry of the decree in January 2026, both spouses were still married on December 31, 2025. Living apart does not by itself change this: the rule that treats a married taxpayer as unmarried requires a qualifying child living in the home, which neither spouse has.
Question 10 · Filing Status
Marguerite's husband died in August 2023. She has not remarried, her dependent son has lived in her home continuously since then, and she has paid every cost of maintaining that home. Assuming the same facts continue, which filing status is available to Marguerite for 2025, and which for 2026?
- A. Qualifying surviving spouse for both 2025 and 2026.
- B. Qualifying surviving spouse for 2025, and head of household for 2026.
- C. Married filing jointly for 2025, and qualifying surviving spouse for 2026.
- D. Head of household for 2025, and head of household for 2026.
Show answer & explanation
Answer: B. Qualifying surviving spouse status is available for the two tax years following the year of death, which are 2024 and 2025 here, provided the taxpayer has not remarried and maintains a home for a dependent child. Once those two years are used, the status is exhausted. For 2026 Marguerite falls back on head of household, which the same facts satisfy because she is unmarried, keeps up the home, and has a qualifying person living in it.
Question 11 · Filing Status
Harold died on March 12, 2025. His widow Beatrice did not remarry during 2025, their two dependent children lived with her for the whole year, and she paid every cost of maintaining the home. Which filing status is available to Beatrice for the 2025 tax year and produces the most favorable result?
- A. Married filing jointly, because she is treated as married to Harold for the whole of 2025.
- B. Head of household, because she maintained the home for her dependent children for the entire year.
- C. Qualifying surviving spouse, because Harold died during the year and dependent children live in her home.
- D. Single, because Beatrice was not married to anyone on December 31, 2025.
Show answer & explanation
Answer: A. A surviving spouse who does not remarry before the end of the year is treated as married for the entire year of death and may file a joint return with the deceased spouse, reporting the decedent's income and deductions up to the date of death. Qualifying surviving spouse status is for the two years after the year of death, not the year of death itself.
Question 12 · Filing Status
All of the following are required for a taxpayer to file as a qualifying surviving spouse for the 2025 tax year EXCEPT:
- A. The taxpayer has a dependent child who was under age 19 at the end of 2025, or under 24 and a student.
- B. The taxpayer's spouse died in 2023 or 2024, and the taxpayer has not remarried before the end of 2025.
- C. The taxpayer was entitled to file a joint return with the spouse for the year in which the spouse died.
- D. The taxpayer paid more than half the cost of keeping up a home that was the child's main home for the whole year.
Show answer & explanation
Answer: A. Qualifying surviving spouse requires a child, stepchild or adopted child whom the taxpayer can claim as a dependent, but there is no separate age ceiling attached to the status itself. A dependent child who is permanently and totally disabled, or who qualifies as a dependent under the qualifying relative rules, satisfies the requirement at any age. The other three items are genuine conditions of the status.
Question 13 · Filing Status
Delia is unmarried, and her 20-year-old son, a full-time student she properly claims as a dependent, lived in her home for all of 2025. The costs relating to that home for 2025 were rent of $18,000, utilities of $3,600, homeowners insurance of $900, food eaten in the home of $6,000, and Delia's commuting expenses of $2,400. Delia paid her own commuting, and of the remaining costs she paid $15,000, her sister, who lives elsewhere, paying the rest. May Delia file as head of household for 2025?
- A. No. Delia's son was 20 at the end of the year and so cannot be a qualifying person for this status.
- B. No. The amounts listed total $30,900, and Delia's $15,000 is less than half of that figure.
- C. No. Delia must also show that she furnished more than half of her son's total support for the year.
- D. Yes. Commuting expenses are not a cost of keeping up a home, so the qualifying costs were $28,500 and Delia paid more than half.
Show answer & explanation
Answer: D. The cost of keeping up a home includes rent, utilities, insurance on the home, repairs, property taxes and food consumed in the home. It excludes items such as clothing, education, medical care, life insurance, transportation and the value of the taxpayer's own services. Removing the $2,400 of commuting leaves $28,500 of qualifying costs, half of which is $14,250, and Delia's $15,000 exceeds it.
Question 14 · Filing Status
Bernard is unmarried and rents his own apartment. His widowed mother, whom he properly claims as a dependent, lived all of 2025 in an assisted living facility that charged $48,000 for the year. Bernard paid $30,000 of that charge, his mother's Social Security benefits covered $14,000, and Bernard's brother paid the remaining $4,000. May Bernard file as head of household for 2025?
- A. Yes, but only if Bernard also paid more than half the cost of keeping up his own apartment.
- B. No. A care facility is not a home, so its cost cannot satisfy the cost of keeping up a home test.
- C. No. A qualifying person must live in Bernard's own home for more than half of the tax year.
- D. Yes. A dependent parent need not live with him, and he paid more than half the cost of her main home.
Show answer & explanation
Answer: D. A dependent parent is the one qualifying person who need not live with the taxpayer. The taxpayer qualifies by paying more than half the cost of keeping up a home that was the parent's main home for the year, and a rest home or assisted living facility counts as that main home. Bernard's $30,000 is more than half of the $48,000 total.
Question 15 · Filing Status
Marisol and her husband separated on July 10, 2025, and did not live together again at any point during the rest of the year. Their dependent daughter lived with Marisol for the whole of 2025, and Marisol paid every cost of keeping up their home. Marisol will file a separate return. May she file as head of household for 2025?
- A. No. A taxpayer who is still legally married must file jointly or separately, whichever produces the lower tax.
- B. Yes. Her daughter lived with her all year and she paid all the household costs, which is what the status requires.
- C. No. Her husband lived in the home during July, so they did not live apart for the whole of the last six months.
- D. Yes. They lived apart for well over half of 2025, which is what the requirement calls for.
Show answer & explanation
Answer: C. To be considered unmarried, a married taxpayer must not have lived with the spouse at any time during the last six months of the tax year, which for a calendar year means July 1 through December 31. The husband was in the home for the first ten days of July, so the condition fails and Marisol must file married filing separately, even though the cost and qualifying-person tests are both satisfied.
Question 16 · Filing Status
Two spouses filed a joint 2023 return. The IRS later determined a $22,000 deficiency arising entirely from consulting income earned and concealed by one spouse, of which the other spouse was genuinely unaware. Which of the following states the unaware spouse's position?
- A. She is liable for none of the deficiency, because it arose entirely from income she did not earn.
- B. She is liable for half the deficiency, because a joint return divides the liability equally between the spouses.
- C. She is liable for the entire $22,000, subject to any relief she can obtain under the innocent spouse provisions.
- D. She is liable for the entire $22,000, and no relief is available once a joint return has been filed.
Show answer & explanation
Answer: C. Spouses who file jointly are jointly and severally liable for the whole of the tax, interest and penalties, whichever of them earned the income. The IRS may collect the entire amount from either. IRC section 6015 provides the escape route, and facts of this kind are exactly what innocent spouse relief exists for, but the liability attaches first and relief must be claimed.
Question 17 · Filing Requirements
All of the following bear on whether an individual is required to file a 2025 federal income tax return EXCEPT:
- A. The filing status the taxpayer is entitled to use for the year.
- B. Whether the taxpayer received a Form W-2 or Form 1099 reporting the income to the IRS.
- C. Whether the taxpayer had reached age 65 by the end of the tax year.
- D. The amount of the taxpayer's gross income for the year.
Show answer & explanation
Answer: B. The filing requirement turns on the taxpayer's gross income measured against a threshold set by filing status and increased for a taxpayer who is 65 or older, together with certain special situations that require a return whatever the income. Whether a payer happened to issue an information return is irrelevant: income is reportable because it is income, not because a form was sent.
Question 18 · Filing Requirements
Nia is single, under 65, and cannot be claimed as a dependent. She had no wages during 2025. She received $3,200 of gross receipts from freelance graphic design work and had $2,750 of deductible business expenses, and she had no other income of any kind. Must Nia file a 2025 federal income tax return?
- A. Yes. Her net earnings from self-employment are $416, which is $400 or more.
- B. No. Her net profit of $450 is below the $600 threshold for reporting self-employment income.
- C. Yes. Her gross receipts of $3,200 exceed $400, which is the self-employment filing threshold.
- D. No. Her gross income of $3,200 is far below the $15,750 filing threshold for a single taxpayer.
Show answer & explanation
Answer: A. A taxpayer must file if net earnings from self-employment are $400 or more, whatever the general threshold, because self-employment tax is owed. Net earnings are net profit multiplied by 0.9235: net profit is $3,200 less $2,750, or $450, and $450 x 0.9235 is $416. That is at least $400, so a return is required even though her income is nowhere near the general filing threshold.
Question 19 · Filing Requirements
For most taxpayers under age 65 who cannot be claimed as a dependent, the level of gross income that triggers a 2025 filing requirement is equal to:
- A. The basic standard deduction for the taxpayer's filing status.
- B. The basic standard deduction for the filing status plus the additional amount allowed at age 65.
- C. The taxpayer's taxable income after all deductions and credits have been applied.
- D. The basic standard deduction plus the personal exemption amount for the taxpayer.
Show answer & explanation
Answer: A. The general filing threshold is set at the basic standard deduction for the taxpayer's status, on the reasoning that income below that amount produces no tax. Because the standard deduction is adjusted annually, the thresholds move each year, and the amounts were raised for 2025 by the One Big Beautiful Bill Act to $15,750, $31,500 and $23,625 for single, joint and head of household filers respectively.
Question 20 · Filing Requirements
An individual taxpayer keeps his books and files on a fiscal year ending June 30. Absent any extension, when is his income tax return for the fiscal year ended June 30, 2025 due?
- A. April 15, 2026, the date that applies to individual income tax returns.
- B. December 31, 2025, six months after the close of the fiscal year.
- C. October 15, 2025, the fifteenth day of the fourth month after the close of the fiscal year.
- D. September 15, 2025, the fifteenth day of the third month after the close of the fiscal year.
Show answer & explanation
Answer: C. An individual income tax return is due on the fifteenth day of the fourth month following the close of the tax year. April 15 is simply that rule applied to a calendar year. For a fiscal year ending June 30, 2025 the fourth month after the close is October, so the return is due October 15, 2025.
Question 21 · Filing Requirements
A calendar-year individual taxpayer timely files Form 4868 for her 2025 return. What does that filing give her?
- A. An automatic six-month extension of time both to file and to pay, running to October 15, 2026.
- B. A six-month extension of time to file, but only once the IRS notifies her that the request is approved.
- C. An automatic four-month extension of time to file, running to August 15, 2026.
- D. An automatic six-month extension of time to file, to October 15, 2026, with no additional time to pay.
Show answer & explanation
Answer: D. Form 4868 produces an automatic six-month extension of the time to file, moving the deadline for a 2025 calendar-year return to October 15, 2026. It does not extend the time to pay: any tax owed remains due on the original April date, and interest and the failure-to-pay penalty run from then on whatever is unpaid.
Question 22 · Filing Requirements
A U.S. citizen has lived and worked in Singapore since 2022, and both her tax home and her abode were outside the United States and Puerto Rico on April 15, 2026. Her 2025 return shows a $7,000 balance due. Which of the following is correct?
- A. She has an automatic extension to October 15, 2026 to file, and interest runs from April 15, 2026.
- B. She has an automatic extension to June 15, 2026 to file and pay, and no interest accrues until that date.
- C. She has an automatic extension to June 15, 2026 to file and pay, but interest runs on the $7,000 from April 15, 2026.
- D. She must file by April 15, 2026 unless she first obtains approval of a request on Form 2350.
Show answer & explanation
Answer: C. A citizen or resident whose tax home and abode are both outside the United States and Puerto Rico on the regular due date receives an automatic two-month extension, to June 15 for a calendar-year filer, for both filing and payment. Interest nevertheless accrues on any unpaid tax from the original April due date. A further extension can be requested on Form 4868, or on Form 2350 for someone awaiting qualification for the foreign earned income exclusion.
Question 23 · Filing Requirements
A single taxpayer under 65, who cannot be claimed as a dependent, had $9,400 of wages during 2025, $780 of federal income tax withheld from those wages, and no other income. Which of the following is correct?
- A. She is not required to file, and the $780 will be refunded automatically without her filing a return.
- B. She is required to file, because her wages exceed the $400 threshold that applies to self-employment.
- C. She is not required to file, but should do so in order to obtain a refund of the $780 withheld.
- D. She is required to file, because federal income tax was withheld from her wages during the year.
Show answer & explanation
Answer: C. Her $9,400 of gross income is below the $15,750 threshold for a single filer under 65 for 2025, so no return is required. Filing is nonetheless the only way to recover tax that has been withheld, and it is also how a taxpayer claims a refundable credit such as the earned income tax credit. A refund is never issued on its own initiative.
Question 24 · Filing Requirements
A taxpayer's gross income for 2025 is $8,000, comfortably below the filing threshold for her status. Which of the following would nevertheless oblige her to file a 2025 return?
- A. She realized a $2,400 net capital loss on a sale of stock during the year.
- B. She owes the additional tax on a $6,000 early distribution from her traditional IRA.
- C. She received $3,000 of tax-exempt interest on municipal bonds during the year.
- D. She received a $20,000 cash gift from her father during the year.
Show answer & explanation
Answer: B. Certain liabilities require a return whatever the taxpayer's gross income, because there is no other way to report them. They include the additional tax on an early distribution from a retirement plan, household employment taxes, the alternative minimum tax, self-employment tax on net earnings of $400 or more, and repayment of an advance premium tax credit.
Question 25 · Dependents
Each of the following individuals lived with a taxpayer for all of 2025, is 12 years old, and provided none of their own support. Which one satisfies the relationship test to be the taxpayer's qualifying child?
- A. The taxpayer's younger half-brother's father-in-law's grandson, unrelated to the taxpayer by blood.
- B. The taxpayer's nephew, being the son of the taxpayer's brother.
- C. The taxpayer's grandmother's brother, who is a great-uncle of the taxpayer.
- D. The taxpayer's first cousin, being the son of the taxpayer's uncle.
Show answer & explanation
Answer: B. The relationship test for a qualifying child is satisfied by the taxpayer's child, stepchild, eligible foster child or a descendant of any of them, and by the taxpayer's brother, sister, half or step sibling or a descendant of any of them. A nephew is the descendant of a sibling and so qualifies. A cousin is the descendant of an aunt or uncle, which is a line the definition does not reach.
Question 26 · Dependents
Marcus turned 19 on December 14, 2025. During 2025 he was enrolled as a full-time student for four months, worked for the rest of the year and earned $9,400, lived with his parents for the whole year, and did not provide more than half of his own support. Both parents are 45. May his parents claim Marcus as a qualifying child for 2025?
- A. No, because he was 19 at the end of the year and was a full-time student for fewer than five months.
- B. Yes, because he lived with them all year and did not provide more than half of his own support.
- C. No, because his earned income of $9,400 exceeds the gross income limit for a qualifying child.
- D. Yes, because he was under 24 at the end of the year and was enrolled full time during it.
Show answer & explanation
Answer: A. A qualifying child must be under 19 at the end of the year, or under 24 and a full-time student. To count as a student the individual must be enrolled full time for at least five calendar months during the year. Marcus was 19 on December 31 and a student for only four months, so both routes fail and he is not a qualifying child. His income also puts him beyond the qualifying relative gross income limit.
Question 27 · Dependents
A taxpayer's 20-year-old daughter, a full-time student, lived at her university residence from September 2024 until she graduated in June 2026, returning to the taxpayer's home only for holidays. She maintained no other permanent address and did not provide more than half of her own support. For 2025, does she meet the residency test as the taxpayer's qualifying child?
- A. No, because the temporary absence rule covers illness and military service but not education.
- B. No, because she physically lived in the taxpayer's home for well under half of 2025.
- C. Yes, because time away at school is a temporary absence and counts as time living with the taxpayer.
- D. Yes, but only for the months of 2025 in which she actually returned to the taxpayer's home.
Show answer & explanation
Answer: C. A temporary absence due to special circumstances counts as time the individual lived with the taxpayer. Education is expressly among those circumstances, alongside illness, business, vacation, military service and detention in a juvenile facility. A student who keeps the taxpayer's home as her permanent address is therefore treated as having lived there throughout, and the residency test is met for the whole year.
Question 28 · Dependents
A 17-year-old's total support for 2025 was $18,000. She contributed $8,200 of it from her part-time earnings, her mother paid $6,800, and her grandmother paid the remaining $3,000. She lived with her mother all year. Which of the following is correct about the support test for treating her as her mother's qualifying child?
- A. The test fails, because her mother provided less than half of her total support for the year.
- B. The test is met, because the daughter did not provide more than half of her own support.
- C. The test is met, because her mother contributed more toward her support than the grandmother did.
- D. The test fails, because the daughter contributed the largest single share of her own support.
Show answer & explanation
Answer: B. The qualifying child support test asks only whether the child provided more than half of her own support. It does not require the taxpayer to have provided any particular share. The daughter's $8,200 is less than half of the $18,000 total, so the test is satisfied even though her mother's $6,800 is also below half. That framing is the reverse of the qualifying relative test.
Question 29 · Dependents
A taxpayer's 19-year-old son married in 2025 and lived with the taxpayer, along with his wife, for the whole year. Neither the son nor his wife had any tax liability, and they filed a joint return solely to recover the $600 of federal income tax withheld from their part-time wages. Neither would have owed tax had they filed separately. May the taxpayer claim the son as a dependent?
- A. No, because a person who is married at the end of the year cannot be another taxpayer's dependent.
- B. Yes, because the joint return was filed only to claim a refund and neither spouse would have owed tax separately.
- C. Yes, but only if the son and his wife first amend the joint return to file as married filing separately.
- D. No, because filing any joint return with a spouse disqualifies a person from being claimed as a dependent.
Show answer & explanation
Answer: B. The joint return test generally bars a dependency claim where the person files jointly with a spouse, but it does not apply where the joint return was filed only as a claim for refund of withheld or estimated tax and neither spouse would have had any tax liability on separate returns. Both conditions are satisfied here, so the exception preserves the claim.
Question 30 · Dependents
A child lived with her mother for 183 nights of 2025 and with her father for 182 nights. The parents are divorced, do not file together, no release has been signed, and both claim the child. The mother's adjusted gross income for 2025 was $52,000 and the father's was $94,000. Which parent is entitled to claim the child?
- A. The mother, because the child lived with her for the greater number of nights during the year.
- B. The father, because his higher income means he is presumed to have furnished more of the child's support.
- C. The father, because where both claimants are parents the higher adjusted gross income prevails.
- D. Neither, because the near-equal split means the child is the qualifying child of no one for 2025.
Show answer & explanation
Answer: A. Where two parents both claim the same qualifying child, the first tie-breaker is the number of nights the child spent with each. The child is treated as the qualifying child of the parent with whom she lived for the longer period, and adjusted gross income is consulted only if the nights are exactly equal. A one-night margin is enough to settle it in the mother's favor.
Question 31 · Dependents
Each of the following individuals is properly supported by the taxpayer and has gross income below the qualifying relative limit, but none of them lived in the taxpayer's home at any time during 2025. Which one can still be the taxpayer's qualifying relative?
- A. The taxpayer's domestic partner, who lived at a separate address throughout the year.
- B. The taxpayer's widowed mother, who lived in her own apartment throughout the year.
- C. The taxpayer's first cousin, who lived in her own apartment throughout the year.
- D. The taxpayer's unrelated former colleague, who lived in his own home throughout the year.
Show answer & explanation
Answer: B. The qualifying relative relationship test is satisfied either by one of the listed relationships, in which case residence with the taxpayer is unnecessary, or by living in the taxpayer's household for the whole year. Parents, grandparents, children, grandchildren, siblings, aunts, uncles, nieces, nephews and certain in-laws are on the list. A cousin is deliberately absent from it, and unrelated individuals must rely on the full-year residence route.
Question 32 · Dependents
A taxpayer supports his mother, who lives in her own home. During 2025 she received $14,000 of Social Security benefits, none of which is taxable to her, $4,800 of taxable pension income, and $700 of tax-exempt municipal bond interest. Does she satisfy the gross income test to be his qualifying relative for 2025?
- A. No, because her pension of $4,800 and her municipal bond interest of $700 total $5,500.
- B. No, because her total receipts for the year of $19,500 are far above the $5,200 limit.
- C. Yes, because pension income is excluded from gross income for the purposes of this test.
- D. Yes, because only the $4,800 of taxable pension counts and that is below the $5,200 limit.
Show answer & explanation
Answer: D. The gross income test for 2025 requires the person's gross income to be less than $5,200. Gross income means income that is not exempt from tax, so nontaxable Social Security benefits and tax-exempt municipal bond interest are both left out. Only the $4,800 pension counts, and it is below the limit, so the test is met.
Question 33 · Dependent's Unearned Income
A father whose marginal rate is 35% transferred corporate bonds to his 12-year-old daughter in 2024, intending to have the interest taxed in her bracket rather than his. In 2025 the bonds paid her $9,400 of taxable interest, her only income for the year. Which of the following statements is correct?
- A. The transfer shelters only $2,700 of the interest, and the remaining $6,700 is taxed at his marginal rate.
- B. The transfer moves the whole $9,400 out of his 35% bracket, because the bonds are legally hers.
- C. The transfer shelters $2,700 of the interest, and the remaining $6,700 is taxed at the compressed trust and estate rates.
- D. The transfer achieves nothing, because all $9,400 is taxed at his marginal rate once the bonds were a gift from him.
Show answer & explanation
Answer: A. For 2025 a dependent child with only unearned income has a $1,350 standard deduction, the next $1,350 is taxed at the child's own rate, and net unearned income above $2,700 is taxed at the parent's marginal rate. Of the $9,400, therefore, $2,700 escapes the father's bracket and $6,700 does not — which is precisely the income-shifting the kiddie tax was enacted to stop (IRC §1(g); Instructions for Form 8615).
Question 34 · Dependent's Unearned Income
A 12-year-old is claimed as her parents' dependent for 2025. Her only income for the year was $2,100 of taxable interest, she had no wages and no tax was withheld. Which of the following statements is correct?
- A. She has no filing requirement, because a dependent with no earned income is never required to file.
- B. She has no filing requirement, because her income is below the $2,700 figure at which the kiddie tax begins.
- C. She must file her own return, because a dependent's unearned income exceeded $1,350, but Form 8615 is not required.
- D. She must file her own return, and must attach Form 8615 because her unearned income exceeded $1,350.
Show answer & explanation
Answer: C. Two different figures are at work. A single dependent under 65 must file a 2025 return once unearned income exceeds $1,350, so her $2,100 obliges her to file. Form 8615 is a separate matter and is required only where unearned income is more than $2,700, which hers is not. Her $2,100 less the $1,350 dependent standard deduction leaves $750 taxed at her own rate (Pub 501, Table 2; 2025 Instructions for Form 8615).
Question 35 · Dependent's Unearned Income
Owen turned 21 in 2025 and was enrolled as a full-time student for both the spring and the autumn terms. His support for the year came to $26,000, of which he paid $11,700 out of his wages. He also received $5,400 of taxable dividends, and both of his parents are living. Which of the following statements is correct?
- A. Form 8615 applies only if his parents also claim him as a dependent on their own return.
- B. Form 8615 does not apply, because he had passed his 18th birthday before the end of the year.
- C. Form 8615 does not apply, because he paid $11,700 toward his own support and is therefore self-supporting.
- D. Form 8615 applies, because he was a full-time student under 24 whose $11,700 of earned income did not exceed half of his $26,000 of support.
Show answer & explanation
Answer: D. The kiddie tax reaches a child who is under 18 at year end, a child who is 18 whose earned income did not exceed half of the child's support, or a full-time student aged 19 through 23 subject to that same earned income condition. Half of Owen's $26,000 of support is $13,000, and his $11,700 of earned income is below it, so the condition is met and his $5,400 of dividends is tested against the $2,700 threshold (IRC §1(g)(2); 2025 Instructions for Form 8615).
Question 36 · Dependent's Unearned Income
A 16-year-old had $7,000 of wages and $6,200 of taxable interest during 2025. She is her parents' dependent, is single and is not blind, and Form 8615 applies to her. How is her income taxed?
- A. $5,750 — the whole of her taxable income — is taxed at her parents' rate.
- B. $3,500 is taxed at her parents' rate and the remaining $2,250 of taxable income at her own rate.
- C. $4,850 is taxed at her parents' rate, because only the $1,350 minimum standard deduction offsets unearned income.
- D. $6,200 is taxed at her parents' rate and the remainder of her taxable income at her own rate.
Show answer & explanation
Answer: B. Her standard deduction is the greater of $1,350 or earned income plus $450, capped at $15,750, which gives $7,450. Taxable income is $13,200 less $7,450, or $5,750. Net unearned income is $6,200 less the $2,700 allowance, or $3,500, and that figure does not exceed taxable income, so $3,500 is taxed at the parents' rate and the remaining $2,250 at her own (Instructions for Form 8615; Pub 501).
Question 37 · Dependent's Unearned Income
A married couple has three children who are each subject to the kiddie tax for 2025, with net unearned income of $4,000, $6,000 and $10,000. How is the tax at the parents' rate determined?
- A. The whole $20,000 is reported on the parents' return and the children file no returns of their own.
- B. Each child's net unearned income is figured separately, with each child starting again at the bottom of the parents' rate brackets.
- C. The tax on the combined $20,000 is figured once at the parents' rates and allocated to each child in proportion to that child's share — 20%, 30% and 50%.
- D. Only the child with the largest net unearned income uses the parents' rates; the other two use their own.
Show answer & explanation
Answer: C. Where a parent has more than one child subject to the kiddie tax, Form 8615 combines all of the children's net unearned income, computes the tax on the total using the parent's taxable income and filing status, and then allocates the resulting tax among the children in proportion to each child's net unearned income. Each child reports only the allocated share on his or her own return (Instructions for Form 8615, lines 7 and 13).
Question 38 · Dependent's Unearned Income
A 14-year-old with $8,300 of taxable interest must file Form 8615 for 2025. His parents are married but file separate returns: his father's taxable income is $96,000 and his father claims him as a dependent, and his mother's taxable income is $141,000. The boy lived with his father for the greater part of the year. Whose figures does Form 8615 use?
- A. His mother's, because she is the parent with the greater taxable income for the year.
- B. His father's, because his father claims him as a dependent on his own separate return.
- C. His father's, because he is the parent with whom the child lived for the greater part of the year.
- D. The combined $237,000, because both parents filed returns for the year.
Show answer & explanation
Answer: A. Where the child's parents are married to each other but file separate returns, Form 8615 uses the taxable income and filing status of the parent with the greater taxable income — here the mother's $141,000. Which parent claims the child, and which parent the child lived with, are irrelevant to that choice (2025 Instructions for Form 8615).
Question 39 · Dependent's Unearned Income
Parents would like to report their 9-year-old daughter's 2025 income on their own return rather than have her file. Her only income was $8,400 of taxable interest and $2,300 of ordinary dividends; nothing was withheld and she made no estimated payments. Which of the following statements is correct?
- A. They may not make the Form 8814 election, because her income exceeds the $2,700 threshold at which the kiddie tax begins.
- B. They may make the Form 8814 election, because her only income is interest and dividends and totals $10,700, which is under $13,500.
- C. They may make the Form 8814 election only for the $8,400 of interest; the dividends must go on her own return.
- D. They must make the Form 8814 election, because a child under 19 whose only income is interest and dividends may not file separately.
Show answer & explanation
Answer: B. The Form 8814 election is available where the child's only income is interest, dividends and capital gain distributions, that income is less than $13,500 for 2025, the child meets the age condition, no tax was withheld, no estimated payments were made, and the child does not file a joint return. Her $10,700 satisfies the ceiling (2025 Instructions for Form 8814).
Question 40 · Dependent's Unearned Income
A couple with adjusted gross income just below the phase-out range for several credits are deciding whether to elect on Form 8814 to report their son's $11,000 of interest income on their own 2025 return instead of having him file. Which of the following statements is correct?
- A. The election has no effect on their adjusted gross income, because the child's income is reported separately and taxed on its own.
- B. The election is compulsory once the child's unearned income exceeds $2,700, so there is nothing to compare.
- C. The election produces the lower total tax, because the parents' standard deduction absorbs part of the child's income.
- D. The election increases their adjusted gross income, which can reduce deductions and credits that phase out with income, so the two methods should be compared before electing.
Show answer & explanation
Answer: D. Income brought onto the parents' return under Form 8814 is included in their adjusted gross income. That can push them into or through phase-out ranges for credits, deductions and other income-sensitive limits, so the election can cost more overall than having the child file with Form 8615 even though it saves the trouble of a second return (Pub 929; Instructions for Form 8814).
Question 41 · Nonresident & Dual-Status Aliens
Anika became a lawful permanent resident of the United States on 12 March 2023 and has held her green card ever since. During 2025 she was physically present in the United States for 14 days; she lived and worked in Singapore for the rest of the year. How is she treated for U.S. federal income tax purposes for 2025?
- A. As a dual-status alien, a resident only for the 14 days she was actually present.
- B. As a nonresident alien, because 14 days falls far short of the substantial presence test.
- C. As a nonresident alien, because her salary was taxed by Singapore for the year.
- D. As a U.S. resident for the whole year, reporting worldwide income on Form 1040.
Show answer & explanation
Answer: D. The green card test makes an individual a U.S. resident for tax purposes from the moment lawful permanent resident status is granted, and keeps that status in place regardless of how little time is spent in the United States. She therefore reports worldwide income on Form 1040 for all of 2025 (IRC §7701(b)(1)(A)(i); Pub 519).
Question 42 · Nonresident & Dual-Status Aliens
Mateo, who holds a B-1/B-2 visitor visa and is not an exempt individual, was physically present in the United States on 130 days during 2025, 150 days during 2024 and 120 days during 2023. Does he meet the substantial presence test for 2025?
- A. No — the weighted count is 130 plus 25 plus 10, or 165 days.
- B. Yes — the weighted count is 130 plus 50 plus 20, or 200 days.
- C. Yes — his 400 days of presence across the three years comfortably exceed 183.
- D. No — only the 130 days of the current year are counted, and that is fewer than 183.
Show answer & explanation
Answer: B. The substantial presence test requires at least 31 days of presence in the current year and a weighted total of at least 183 days, being all current-year days, plus one-third of the first preceding year's days, plus one-sixth of the second preceding year's days. That gives 130 + (150 ÷ 3 = 50) + (120 ÷ 6 = 20) = 200 days, so Mateo is a resident alien for 2025 (IRC §7701(b)(3); Pub 519).
Question 43 · Nonresident & Dual-Status Aliens
All of the following individuals may exclude their days of U.S. presence as exempt individuals for the substantial presence test EXCEPT:
- A. A student temporarily present on an F-1 visa who substantially complies with the requirements of that visa.
- B. A software engineer present on an H-1B visa working full time for a U.S. employer.
- C. A professional tennis player temporarily in the United States to compete in a charitable tournament.
- D. A diplomat present on an A-2 visa, together with the members of her immediate family.
Show answer & explanation
Answer: B. The exempt individual categories are foreign government-related individuals on A or G visas and their immediate families, teachers and trainees on J or Q visas, students on F, J, M or Q visas, and professional athletes temporarily present to compete in a charitable sports event. An H-1B worker is in none of these categories, so every day of presence counts (IRC §7701(b)(5); Pub 519).
Question 44 · Nonresident & Dual-Status Aliens
Klaus, who had never previously been in the United States, arrived on 1 May 2025 on an L-1 visa and remained through 31 December, a total of 245 days. How is he treated for 2025?
- A. As a dual-status alien whose residency begins on the day he completed 183 days of presence.
- B. As a nonresident alien for the whole of 2025, because he was present for less than the full year.
- C. As a resident alien for the whole of 2025, because he met the substantial presence test for the year.
- D. As a dual-status alien: a nonresident through 30 April and a resident from 1 May, his first day of presence.
Show answer & explanation
Answer: D. Meeting the substantial presence test does not make an individual a resident from 1 January. For someone who was not a U.S. resident in the preceding year, the residency starting date is the first day of physical presence in the calendar year in which the test is met — here 1 May. He is therefore a nonresident for January through April and a resident thereafter, and files a dual-status return (IRC §7701(b)(2)(A); Pub 519).
Question 45 · Nonresident & Dual-Status Aliens
Ines was a nonresident alien until her residency began on 1 June 2025 and a resident for the rest of the year. Before 1 June she earned the equivalent of $60,000 as an employee in Spain and received $4,000 of U.S.-source dividends. After 1 June she earned $80,000 of U.S. wages and $9,000 of rent from a Spanish flat. What does her 2025 dual-status return include?
- A. Her worldwide income for the entire year, because she was a U.S. resident at the end of it.
- B. The $60,000 Spanish salary and the $9,000 of rents, the U.S. items being fully covered by withholding.
- C. The $4,000 of dividends from the nonresident period, plus the $80,000 of wages and $9,000 of rents from the resident period.
- D. Only the $80,000 of U.S. wages, because income from the nonresident period is outside the U.S. tax base.
Show answer & explanation
Answer: C. A dual-status taxpayer is taxed on worldwide income for the resident part of the year, and only on U.S.-source income and income effectively connected with a U.S. trade or business for the nonresident part. Her Spanish salary earned before residency began is therefore outside the U.S. base, while her Spanish rents earned after it are inside (Pub 519).
Question 46 · Nonresident & Dual-Status Aliens
A dual-status alien with $61,000 of income for 2025 asks his preparer why the completed return shows no standard deduction. The correct explanation is that:
- A. A dual-status taxpayer may not claim the standard deduction at all and must itemize instead.
- B. The standard deduction is available only to a dual-status taxpayer who is a resident on 31 December.
- C. The standard deduction was omitted in error; a dual-status taxpayer is entitled to the full $15,750.
- D. The standard deduction is available but must be prorated over the resident portion of the year.
Show answer & explanation
Answer: A. A dual-status taxpayer cannot take the standard deduction for any part of the year and may deduct only allowable itemized deductions. The single narrow exception is treaty-based, for certain students and business apprentices from India. Dual-status filers also face restrictions on filing status and generally cannot file a joint return absent an election (Pub 519).
Question 47 · Nonresident & Dual-Status Aliens
Sofia is a U.S. citizen. Her husband Tomas is a nonresident alien living abroad whose 2025 income is $95,000 of Spanish salary and nothing from U.S. sources. They are considering the election under IRC §6013(g). Which of the following statements is correct?
- A. The election lets them file a joint return while Tomas's $95,000 of Spanish salary stays outside the U.S. tax base.
- B. The election makes Tomas a resident for the whole year so they may file jointly, but it brings his $95,000 into the U.S. tax base and continues until terminated.
- C. The election applies only to 2025 and must be made afresh each year they wish to file jointly.
- D. No election is needed, because a U.S. citizen may file a joint return with a nonresident alien spouse as of right.
Show answer & explanation
Answer: B. A §6013(g) election allows a U.S. citizen or resident and a nonresident alien spouse to be treated as U.S. residents for the entire tax year so that a joint return may be filed. The price is that the couple's combined worldwide income becomes subject to U.S. tax, and once made the election continues for all later years until it is revoked, or ends by death, divorce or a failure to keep adequate records (Pub 519).
Question 48 · Nonresident & Dual-Status Aliens
Elena was physically present in the United States for 170 days in 2025, 180 days in 2024 and 174 days in 2023. She keeps her home, her family and her business affairs in Italy, and has never applied for lawful permanent resident status. Which of the following statements is correct?
- A. She does not meet the substantial presence test, because 170 days is fewer than 183.
- B. She may claim the closer connection exception without filing anything, because her tax home is plainly in Italy.
- C. She meets the substantial presence test and cannot avoid it, because the closer connection exception exists only where a treaty provides one.
- D. She meets the substantial presence test but may claim the closer connection exception, because she was present fewer than 183 days in 2025, and she must file Form 8840 to do so.
Show answer & explanation
Answer: D. Her weighted count is 170 + (180 ÷ 3 = 60) + (174 ÷ 6 = 29) = 259 days, so the substantial presence test is met. The closer connection exception nonetheless applies where the individual was present fewer than 183 actual days in the current year, maintained a tax home in a foreign country for the whole year, had a closer connection to that country, and has not applied for permanent residence. The claim is made on Form 8840 (IRC §7701(b)(3)(B); Pub 519).
