IRS Practice Test

Key Takeaways

• The IRS (Internal Revenue Service Certified) Test is a vital certification for tax pros. It proves your knowledge and skill in tax prep and compliance.
• Passing the test shows you can prepare tax returns right, follow tax laws, and offer trustworthy tax services to clients.
• The test covers a wide range of topics. This includes tax law, tax return prep, and ethics. It makes sure tax pros can handle tough tax situations.
• Getting the IRS (Internal Revenue Service Certified) credential boosts your career. It opens up more job chances and lets you represent clients before the IRS.
• Prep well for the IRS test by knowing the rules, exam layout, and main topics. This boosts your success chances and makes you a certified tax pro.

IRS Exam at a Glance

What changed for IRS in 2026

• Mar 1, 2026: Starting March 1, 2026, the IRS Enrolled Agent Special Enrollment Exam is developed and administered by PSI Services instead of Prometric.^[3]

According to Internal Revenue Service (IRS), Return Preparer Office / Office of Enrollment — Enrolled Agent Special Enrollment Examin, “The examination contains three parts. Each part contains 100 multiple-choice questions including 85 scored questions and 15 unscored questions,”^[1]

IRS content outline and where to practise each area

The content areas below are copied from the official IRS content outline published by Internal Revenue Service (IRS), Return Preparer Office / Office of Enrollment — Enrolled Agent Special Enrollment Examin. The right-hand column shows which of our practice sets covers it.

Worked examples: how to reason through IRS questions

These are practice questions written for this site, not questions from the real exam. Each explanation shows why the right answer is right and why the others are wrong.

Example 1

Question: A freelance graphic designer receives a check for a completed project on December 30th of the current tax year but does not deposit it until January 2nd of the following year. According to the doctrine of constructive receipt, in which year should the income be reported?

1. The following year, when the check was deposited
2. The income can be split between the two years
3. The current tax year, when the check was received
4. The year the project was initially commissioned

Answer: C. The current tax year, when the check was received

Explanation:

C is correct. Under constructive receipt, income counts as received once it is available to you without substantial restriction. The designer had the check on December 30th, so the income belongs to the current tax year, even though it was deposited on January 2nd.

• A is wrong because the taxpayer chooses when to deposit. If the deposit date set the tax year, anyone could push income into a later year.
• B is wrong because no rule lets you split a single payment across two years.
• D is wrong because the date the work was commissioned doesn't matter for a cash-method taxpayer. What matters is when the payment became available.

Rule to remember: cash-method taxpayers report income when it is actually or constructively received, not when it is banked.

Example 2

Question: A taxpayer purchases a rental property for $250,000. They pay $20,000 in closing costs, including legal fees and transfer taxes. What is the taxpayer's cost basis in the property?

1. $250,000
2. $230,000
3. $270,000
4. $20,000

Answer: C. $270,000

Explanation:

C, $270,000, is correct. The basis of purchased property starts with the price paid. Settlement costs of buying it, such as legal fees and transfer taxes, are added to that price. So $250,000 plus $20,000 gives $270,000.

• A leaves out the closing costs. That understates basis, which later means too little depreciation and too much gain on a sale.
• B subtracts the closing costs instead of adding them, which is the reverse of the rule.
• D uses the closing costs alone as the basis and ignores the purchase price.

Rule to remember: costs of acquiring property are added to its basis, not deducted right away. For rental property, basis is later split between land and building, because only the building can be depreciated.

Example 3

Question: Which of the following entities is subject to the accumulated earnings tax?

1. S corporations
2. Partnerships
3. C corporations that accumulate earnings beyond reasonable business needs
4. Sole proprietorships

Answer: C. C corporations that accumulate earnings beyond reasonable business needs

Explanation:

C is correct. The accumulated earnings tax is a penalty tax on C corporations that keep profits beyond the reasonable needs of the business. Keeping those profits lets shareholders avoid the dividend tax they would owe if the money were paid out.

• A is wrong because S corporations pass their income through. Shareholders are taxed on it whether or not it is paid out, so holding earnings saves nothing.
• B is wrong for the same reason, since partnership income flows through to the partners each year.
• D is wrong because a sole proprietor already reports business income on their individual return.

Rule to remember: this tax only applies where there is a second layer of tax to avoid, which means C corporations. A corporation can defend its retained earnings by documenting specific, definite plans for the money.

How to use these practice tests

Choose an order. You can take the parts in any order. Many candidates start with the part closest to their daily work. Each part is scheduled and paid for separately, so you can space them out. Just remember that a passed part only counts for 3 years.

Start with a baseline. Before studying, take the practice set for that part, such as Taxation for Individuals, Business Taxation or Representation Before the IRS. Write down every topic you missed or guessed.

Study from the source. For each weak topic, read the relevant IRS publication or instructions, not just a summary. For Part 3, read the Treasury rules governing practice before the IRS directly.

Drill the narrow sets. Use Deductions and Credits, Income and Assets and Ethics and Practice Procedures to work on specific weak areas. For every miss, explain why each wrong option is wrong, as in the worked examples above.

Book when steady. Schedule once you get consistent results on mixed sets. Book at least 24 hours ahead, and avoid March and April, when there is no testing.

Tax Preparer Qualifications and Competency Requirements

Understanding the IRS (Internal Revenue Service Certified) Test

For those wanting to be tax preparers, the IRS certification exam is key. It checks if you know how to prepare tax returns right and follow federal tax rules.

To take the IRS exam, you need to know a lot about tax laws and how to file tax returns. The test makes sure you can do these things well.You also have to meet certain rules, like getting an IRS e-file provider certification. This shows you’re ready to give good tax services.

Scope and Structure of the IRS Certification Exam

The IRS exam tests your taxation knowledge and how you use it. It covers many topics, like personal income tax and business taxes. You’ll also learn about tax representation.Passing the exam means you get a special registered tax return preparer credential. This is a big deal for tax preparers in the U.S.

Sources & last verified

1. test-takers.psigov.us — number of questions, exam fee, passing score, retake policy (official source). “The examination contains three parts. Each part contains 100 multiple-choice questions including 85 scored questions and 15 unscored questions,” Verified Oct 29, 2026.
2. Internal Revenue Service (IRS), Return Preparer Office / Office of Enrollment — Enrolled Agent Special Enrollment Examin — exam fee (official source). “You may electronically apply for enrollment and make secure payment of the $140 enrollment fee at Pay.” Verified Oct 24, 2026 · source checked Oct 24, 2026.
3. Internal Revenue Service (IRS), Return Preparer Office / Office of Enrollment — Enrolled Agent Special Enrollment Examin — registration opens, other (official source). “Registration and scheduling for the 2026 EA-SEE test cycle are now open. Candidates can register and schedule appointments through PSI Services.” Verified Oct 24, 2026 · source checked Oct 24, 2026.

How we verify: editorial & fact-checking policy. Report an error: contact us.