Free EA Part 1 Exam Flashcards

An automatic six-month extension of time to file — to October 15, 2026 for a 2025 calendar-year Form 1040. It does not extend the time to pay, so interest and the failure-to-pay penalty still run from the original April 15, 2026 due date.

Be present at least 31 days in the current year and 183 weighted days over three years — all current-year days, one-third of last year's days, and one-sixth of the days from two years back. Meeting the test makes the person a resident alien taxed on worldwide income unless the closer-connection exception applies.

Be unmarried or considered unmarried on the last day of the year, pay more than half the cost of keeping up the home, and have a qualifying person live with you more than half the year. A dependent parent is the exception — the parent does not have to live with you.

Not be anyone's qualifying child; be a listed relative or live with the taxpayer all year; have 2025 gross income under $5,200; and receive more than half of their support from the taxpayer. Nontaxable income such as most Social Security benefits is left out of the gross income test, which is why a retired parent often qualifies.

The two tax years after the year of death, provided the survivor has not remarried, has a dependent child who lived in the home all year, and paid over half the cost of keeping up that home. The year of death itself is normally filed married filing jointly.

Above $2,700. For 2025 the first $1,350 is covered by the dependent's standard deduction, the next $1,350 is taxed at the child's own rate, and everything over $2,700 is taxed at the parent's marginal rate on Form 8615.

$400 or more of net earnings from self-employment (a fixed threshold, unchanged for 2025) creates a filing requirement so self-employment tax can be reported on Schedule SE. Church employee income of $108.28 or more triggers the same result.

The e-filed return is rejected. The six-digit IP PIN is reissued every year and must be entered for the taxpayer, the spouse, and any dependent who has one; a paper return filed without it is delayed until the IRS can verify the filer's identity.

When the income is credited, set apart, or otherwise made available to draw on without substantial restriction. A payment check available on December 31, 2025 is 2025 income even if the taxpayer waits until January to deposit it.

Provisional income is AGI (before benefits) plus tax-exempt interest plus half the Social Security benefits. Up to 50% of benefits becomes taxable once it passes $25,000 single or $32,000 joint, and up to 85% above $34,000 or $44,000 — base amounts that apply for 2025 and are not indexed for inflation.

Only the amount by which liabilities exceeded the fair market value of assets immediately before the discharge; anything beyond that is taxable. The exclusion is claimed on Form 982 and requires reducing tax attributes such as NOLs and basis.

A dual basis: the donor's carryover basis to figure a gain, and fair market value on the date of the gift to figure a loss. If the property later sells for an amount between those two figures, no gain or loss is recognized.

Basis is generally fair market value on the date of death, or the alternate valuation date six months later if the executor elects it. The holding period is automatically long-term no matter how briefly the decedent or the heir held the asset.

It is deferred, not lost: when substantially identical stock is bought within 30 days before or after the loss sale, the disallowed loss is added to the basis of the replacement shares and the original holding period tacks on. The rule applies only to losses, never to gains.

The five-year holding period must be satisfied and the distribution must follow age 59½, death, disability, or a first-time home purchase (a fixed $10,000 lifetime cap, still $10,000 for 2025). Ordering rules pull regular contributions out first, so those always come back tax- and penalty-free.

A 25% excise tax on the shortfall, reduced to 10% if corrected within the two-year correction window. RMDs begin at age 73 under SECURE 2.0, and Roth IRAs require no distributions during the owner's lifetime.

Depreciation allowed or allowable becomes unrecaptured section 1250 gain taxed at a maximum 25% rate, while the remaining gain keeps the 0/15/20% long-term rates. Section 1245 recapture on personal property is ordinary income instead.

Anyone covered by a high deductible health plan (2025 minimum deductible $1,650 self-only or $3,300 family) with no other disqualifying coverage, not enrolled in Medicare, and not claimable as a dependent. The contribution is an above-the-line deduction (Form 8889) capped for 2025 at $4,300 self-only or $8,550 family, plus $1,000 more at age 55 or older.

$2,000 per condition if unmarried (not a surviving spouse), or $1,600 per condition per qualifying married taxpayer; age and blindness count separately. These stack on the 2025 base amounts: $15,750 single or MFS, $31,500 MFJ or qualifying surviving spouse, $23,625 head of household. The separate $6,000 senior deduction for 2025 phases out above $75,000 modified AGI ($150,000 joint).

The $40,000 cap ($20,000 married filing separately) is reduced by 30% of the amount by which modified AGI exceeds $500,000 ($250,000 MFS), but never below $10,000 ($5,000 MFS). A taxpayer with MAGI of $600,000 or more is therefore back at the $10,000 cap for 2025.

Up to $5,000 per eligible child became refundable starting in tax year 2025; before that the credit was entirely nonrefundable. The maximum total credit is $17,280 per child, and the nonrefundable balance carries forward up to five years on Form 8839.

Only when the proceeds buy, build, or substantially improve the home that secures the loan, and only within the overall acquisition-debt cap: $750,000 ($375,000 married filing separately) for debt taken out after December 15, 2017, or $1,000,000 for older debt. Interest on home equity debt spent on anything else, such as paying off credit cards, is not deductible.

A bank record or written communication from the charity for every cash gift, plus a contemporaneous written acknowledgment — obtained before the return is filed — for any single contribution of $250 or more. For 2025, cash gifts to public charities are deductible up to 60% of AGI, with a five-year carryover of the excess.

Above $197,300 ($394,600 married filing jointly) the W-2 wage and property limits and the specified service trade or business rules start phasing in, applying fully $50,000 ($100,000 MFJ) higher. Below the threshold the deduction is simply 20% of qualified business income.

Up to $1,700 of the $2,200 credit per child under 17 can be refunded as the additional child tax credit, generally 15% of earned income above $2,500. The credit phases out above $200,000 modified AGI ($400,000 joint), and both the child and the taxpayer (at least one spouse on a joint return) need an SSN valid for employment.

Multiply work-related expenses — capped at $3,000 for one qualifying person or $6,000 for two or more, and never more than the lower-earning spouse's earned income — by a rate from 35% (AGI of $15,000 or less) down to 20% (AGI over $43,000). Form 2441 must show the care provider's name, address, and taxpayer identification number.

For 2025 the AOTC is up to $2,500 per student, 40% refundable to a maximum $1,000, and limited to four years of at-least-half-time undergraduate study. The Lifetime Learning Credit is up to $2,000 per return, nonrefundable, with no year limit and no enrollment minimum.

Investment income over $11,950 for 2025, filing Form 2555 for foreign earned income, nonresident alien status without a joint-return election, or a missing work-valid SSN for the taxpayer or spouse. Married filing separately also disqualifies unless the taxpayer lived with a qualifying child more than half the year and lived apart from the spouse for the last six months of 2025 or under a separation decree.

Multiply net profit by 92.35% to reach net earnings, then apply 15.3% — 12.4% Social Security up to the $176,100 wage base for 2025 plus 2.9% Medicare with no ceiling. One-half of the resulting tax is an above-the-line deduction.

Individuals whose wages plus self-employment income exceed $200,000 (single or head of household), $250,000 (joint), or $125,000 (married filing separately) — thresholds that apply for 2025 and are not indexed. Employers must begin withholding once wages pass $200,000, and the taxpayer reconciles it on Form 8959.

The lesser of net investment income or the excess of modified AGI over $200,000 single, $250,000 joint, or $125,000 married filing separately (unindexed thresholds that apply for 2025), computed on Form 8960. Wages, self-employment income, and qualified retirement plan distributions are not net investment income.

$88,100 for unmarried filers, phasing out from $626,350, and $137,000 for joint filers, phasing out from $1,252,700. AMT paid on deferral items creates a minimum tax credit claimed in a later year on Form 8801.

Pay at least 90% of the current year's tax or 100% of the prior year's tax, raised to 110% when prior-year AGI exceeded $150,000 ($75,000 married filing separately) — an unindexed threshold that still applies for 2025. Withholding counts as paid evenly through the year no matter when it was actually withheld.

Yes. When combined wages exceed the $176,100 wage base for 2025, the extra 6.2% withheld is claimed as a refundable credit on Schedule 3. If a single employer over-withheld, only that employer can correct it.

Social Security and Medicare taxes start once cash wages to any one household employee reach $2,800 in 2025; FUTA starts once total household cash wages reach $1,000 in any calendar quarter. Both are reported on Schedule H filed with Form 1040.

It is excluded from income tax up to the lowest of the amount designated, actual housing costs, or fair rental value plus utilities. It still counts as self-employment income unless the minister holds an approved Form 4361 exemption.

It is taxed to whoever receives it — the estate or the beneficiary — keeps its original character, and gets no basis step-up. The recipient may deduct the federal estate tax attributable to that income under section 691(c).

Ownership and use of the home as the main home for at least two of the five years before the sale (the periods need not be continuous or the same two years), and no other home-sale exclusion in the two years before this sale. That excludes up to $250,000 of gain for 2025 — $500,000 on a joint return when either spouse meets ownership and both meet use.

Only if it is modified after December 31, 2018 and the modification expressly says the TCJA repeal applies; otherwise the payer keeps the deduction and the recipient keeps the income. Any instrument executed after 2018 is different from the start — alimony is neither deductible by the payer nor taxable to the recipient.

Form 8379 (injured spouse) reclaims one spouse's share of a joint refund that was seized for the other spouse's separate debt, such as past-due child support. Form 8857 (innocent spouse relief) asks to be released from joint liability created by the other spouse's erroneous items.

The later of three years from the date the return was filed or two years from the date the tax was paid; a return filed early counts as filed on the due date. Individuals make the claim on Form 1040-X.

Joint and several liability — the IRS can collect the entire joint tax from either spouse. Filing separately avoids that but generally forfeits the earned income credit and education credits, and both spouses must then either itemize or both take the standard deduction.

An IRA owner age 70½ or older may direct up to $108,000 for 2025 from the IRA trustee straight to a qualifying charity. The amount is excluded from income and counts toward the required minimum distribution, but it cannot also be deducted on Schedule A.

The earnings portion is ordinary income to the recipient plus a 10% additional tax, while the contribution portion comes back tax-free. Qualified uses for 2025 include college tuition, fees, books, and room and board for at least half-time students, up to $10,000 per year of K-12 expenses, and up to $10,000 lifetime of student loan repayment per beneficiary.

When the gross estate plus adjusted taxable gifts exceeds the $13,990,000 basic exclusion amount for 2025, or when the executor elects portability of the unused exclusion. It is due nine months after death, extendable six months on Form 4768.

The unlimited marital deduction removes the entire qualifying transfer when the surviving spouse is a U.S. citizen. A non-citizen spouse does not qualify, so a qualified domestic trust (QDOT) is generally needed to defer the tax.

When a gift to any one person exceeds the $19,000 annual exclusion for 2025, when spouses elect gift-splitting to treat a gift as made half by each (covering $38,000 per donee, and generally requiring a Form 709 to record the consent), or when any gift of a future interest is made. The return is due April 15 of the following year, and the excess simply uses up the donor's lifetime exclusion.

The annual exclusion covers only gifts of a present interest. A future interest — such as most transfers into a trust with no Crummey withdrawal right — is fully reportable on Form 709 regardless of how small it is.

FinCEN Form 114 is filed electronically through FinCEN's BSA E-Filing System — never attached to Form 1040 — whenever foreign financial accounts total more than $10,000 (a fixed threshold, still $10,000 for 2025) at any time in the year. It is due April 15 with an automatic extension to October 15, so no extension request is needed.

Form 8938 is filed with the income tax return under FATCA and covers specified foreign financial assets, not just accounts. For 2025 the thresholds for taxpayers living in the U.S. start at $50,000 on the last day of the year or $75,000 at any time ($100,000/$150,000 joint), so many taxpayers must file both.