Enrolled Agent Exam Part 1 B| STUDY GUIDE
An alien who is both a nonresident and resident alien during the
Dual status alien
same tax year. The most common dual-status tax years are the
years of arrival and departure.
If either the green card test or the substantial presence test is
Resident Alien met. Even if the taxpayer does not meet either of these tests,
(s)he may be able to choose to be treated as a U.S. resident for
part of the year.
A taxpayer is a resident for tax purposes if (s)he was a lawful
Green Card Test
permanent resident (immigrant) of the United States at any time
during the year
A taxpayer is considered a U.S. resident if she/he was physically
Substantial presence Test present in the US for at least (1) 31 days during 2018 and 183 days
during 2018, 2017, and 2016, counting all days of physical presence
in 2018 but only 1/3 of days in 2017, and 1/6 of days in 2016
MFJ -- 32,000 to 44,000
Provisional Income
All Others-- 25,000 to 34,000
threshholds for exclusion of
MFSLT -- 0
SS Benefits from Income
Disability pay (excluded)
Accident insurance proceeds. sub for lost
income (excluded) Damages for emotional
distress (included if no physical injury) Punitive
damages (included)
What is excluded from gross income
Gross income does not include benefits specified that might be
in the case of insurance
received in the form of disability pay, health or accident
proceeds?
insurance proceeds (even if benefits are a substitute for lost
income), workers' compensation awards, or other damages for
personal physical injury or physical sickness. Also excluded are
damages received for emotional distress if an injury has its origin in
a physical injury or physical sickness (regardless of whether the
damages are received by a lawsuit or an agreement).
Punitive damages received are included in gross income even if in
connection with a physical injury or sickness
, Is unemployment compensation Yes
included in gross income?
Is disability pay included in gross No
income?
Are punitive damages included in Yes (unless you received a physical injury in connection with the punitive
gross income? damages)
Are benefits from a health and No (if you received a physical injury in connection with the benefits)
accident plan included in gross
income if paid by employer?
is compensation for lost wages No, as long as the income was given because of physical injury or illness
included in gross income?
is compensation due to punitive No, as long as the income was given because of physical injury or illness
damages included in gross
income?
In December 2018, Jim and Tina, a $300. Interest is excluded as long as the gross amount received
married couple with $50,000 in (principal and interest) do not exceed qualified educational
gross income, cashed qualified expenses. If they do exceed that amount, the amount excluded is
Series EE U.S. Savings Bonds, limited to the percentage. 2100/3500 = .6 *500 = 300. The exclusion
which they had purchased in is reduced when AGI exceeds a threshold of $79,550 (single) or
January 2015. The proceeds $119,300 (MFJ). completely phased out at $94,550 and $149,300
were used to help pay for their
son's 2018 college tuition. They
received gross proceeds of
$3,500, representing principal
of $3,000 and interest of $500.
The qualified higher educational
expenses they paid during 2018
totaled $2,100. Their modified
adjusted gross income for 2018
was $80,000. How much of the
$500 interest can Jim and Tina
exclude from income for 2018?
1. The taxpayer performs his or her business in the area
surrounding his/her main home and uses that for lodging
while in the area.
What factors determine tax home? 2. The taxpayer has living expenses at his or her main home
that are duplicated because business requires him/her to be
away from the main home.
3. The taxpayer has not abandoned the area in which both his/her
traditional place of lodging and man home; family members live at
his/her main home. She often uses this main home for lodging.
Under what circumstance is a If the taxpayer rents the home at fair rental value to any person
day NOT considered a day of (including relatives), such use by that person is not considered
personal use of a dwelling unit personal use of the home
for determining if it is used as a
home?
An alien who is both a nonresident and resident alien during the
Dual status alien
same tax year. The most common dual-status tax years are the
years of arrival and departure.
If either the green card test or the substantial presence test is
Resident Alien met. Even if the taxpayer does not meet either of these tests,
(s)he may be able to choose to be treated as a U.S. resident for
part of the year.
A taxpayer is a resident for tax purposes if (s)he was a lawful
Green Card Test
permanent resident (immigrant) of the United States at any time
during the year
A taxpayer is considered a U.S. resident if she/he was physically
Substantial presence Test present in the US for at least (1) 31 days during 2018 and 183 days
during 2018, 2017, and 2016, counting all days of physical presence
in 2018 but only 1/3 of days in 2017, and 1/6 of days in 2016
MFJ -- 32,000 to 44,000
Provisional Income
All Others-- 25,000 to 34,000
threshholds for exclusion of
MFSLT -- 0
SS Benefits from Income
Disability pay (excluded)
Accident insurance proceeds. sub for lost
income (excluded) Damages for emotional
distress (included if no physical injury) Punitive
damages (included)
What is excluded from gross income
Gross income does not include benefits specified that might be
in the case of insurance
received in the form of disability pay, health or accident
proceeds?
insurance proceeds (even if benefits are a substitute for lost
income), workers' compensation awards, or other damages for
personal physical injury or physical sickness. Also excluded are
damages received for emotional distress if an injury has its origin in
a physical injury or physical sickness (regardless of whether the
damages are received by a lawsuit or an agreement).
Punitive damages received are included in gross income even if in
connection with a physical injury or sickness
, Is unemployment compensation Yes
included in gross income?
Is disability pay included in gross No
income?
Are punitive damages included in Yes (unless you received a physical injury in connection with the punitive
gross income? damages)
Are benefits from a health and No (if you received a physical injury in connection with the benefits)
accident plan included in gross
income if paid by employer?
is compensation for lost wages No, as long as the income was given because of physical injury or illness
included in gross income?
is compensation due to punitive No, as long as the income was given because of physical injury or illness
damages included in gross
income?
In December 2018, Jim and Tina, a $300. Interest is excluded as long as the gross amount received
married couple with $50,000 in (principal and interest) do not exceed qualified educational
gross income, cashed qualified expenses. If they do exceed that amount, the amount excluded is
Series EE U.S. Savings Bonds, limited to the percentage. 2100/3500 = .6 *500 = 300. The exclusion
which they had purchased in is reduced when AGI exceeds a threshold of $79,550 (single) or
January 2015. The proceeds $119,300 (MFJ). completely phased out at $94,550 and $149,300
were used to help pay for their
son's 2018 college tuition. They
received gross proceeds of
$3,500, representing principal
of $3,000 and interest of $500.
The qualified higher educational
expenses they paid during 2018
totaled $2,100. Their modified
adjusted gross income for 2018
was $80,000. How much of the
$500 interest can Jim and Tina
exclude from income for 2018?
1. The taxpayer performs his or her business in the area
surrounding his/her main home and uses that for lodging
while in the area.
What factors determine tax home? 2. The taxpayer has living expenses at his or her main home
that are duplicated because business requires him/her to be
away from the main home.
3. The taxpayer has not abandoned the area in which both his/her
traditional place of lodging and man home; family members live at
his/her main home. She often uses this main home for lodging.
Under what circumstance is a If the taxpayer rents the home at fair rental value to any person
day NOT considered a day of (including relatives), such use by that person is not considered
personal use of a dwelling unit personal use of the home
for determining if it is used as a
home?
