Here are some tips and tricks on how to pass the EA Exam, or any government type test, the first time. I will cover three important sections for success; 1) Pre-Test Studying Tips and Tricks; 2) Tips and Tricks for test Day; and 3) How to Break Down the Questions.

Tips and Tricks for Pre-test Studying

Have a study plan! This test is one of the hardest ones I’ve ever taken.  But, with the possible exception of Part 2, there is nothing on here that a Tax pro with some experience under their belts can’t handle.  So don’t freak out about the difficulty of the test. It’s hard, but you can do this!

Use the study material available at the IRS Enrolled Agent website and Candidate Information Bulletin.

Use the test tutorial at the Prometric website and practice it often.

Find a good study reference guide. Several of the best include Gleim, FastForward Academy and Phoenix Tax. The IRS has a complete listing of all authorized test prep companies as well at their providers page.

Tips and Tricks For Test Day

Some things for you to do starting the day before the test date:

Stop studying 24 hours before your test! If you don’t have it down by then, cramming hurts more than it helps.

The night before the test, get a good nights sleep. No alcohol. If you do not take a sleep aid on a regular basis now is not the time to start! You will be groggy the next day.

Don’t try to “energize” yourself the morning of the test by taking energy boost type products or having extra coffee that you don’t normally consume. All this will do is make you jittery.

If you exercise regularly, go have a good workout several hours before testing.

About two hours before the test have a good meal. Not a lot of carbs or sugar as you will crash about halfway through the test. A meal with a lot of protein will keep you at an even keel.

Don’t drink a lot of fluids right before the test. You will be able to go to the bathroom during the test, but your timer does not stop while you are doing so.

Right before going into the testing center take a few minutes to have a moment in your car to calm down, say a quick prayer if you are inclined, and do some deep breathing.

Two minutes of “belly breathing” will calm you down and oxygenate your brain. Close your eyes, empty your lungs, put your hand on your belly. Now inhale slowly through your nose filling your lower belly first and then fill your lungs. Hold it for a beat and exhale slowly through your mouth. This takes some practice because it is the opposite of the way we normally breath. The concentration on correct breathing will calm you and fully oxygenate your brain and heart. If when you have done ten belly breaths you are starting to yawn, you have down it correctly.

Get out of your vehicle and stretch your arms high up over your head and wiggle you fingers and toes for a few seconds.

Be at least 30 minutes early for the test. Make sure you have current ID with your name (as it appears on your test registration) and a picture on it.

Don’t bring anything you don’t need into the test site as you will have to leave all exterior garments and everything in your pockets or handbags in a locker during the test.

If you tend to get cold easily wear a warm shirt. You will not be allowed to bring in a coat, sweater, shawl or any other outer garment.

There are ear plugs available at the test site. If you get distracted by other noise, use them, they work well.

If you have a computer problem or need the proctor simply raise your hand.

If you start getting frazzled or confused, take a minute or two and do the belly breathing again.

When you start the test go all the way through the test without using the reference material. Do not skip any questions, answer all of them even if you are not sure or have no clue as to the correct answer. We will cover the question breakdown in the next section.

As you go through the test and find a question that you are not sure about, use the marking tool in the program to mark the question.

On your scratch paper make two columns; one for questions you are not sure of and one for questions you don’t have a clue as to the answer.

On the questions that you don’t have a clue (and hopefully there won’t be many) mark all of them the same answer, either A or B. This will help if you don’t get a chance to go back and research them. The test is based on the number of correct answers versus the total number of answered questions, so it is important that you answer every question.

When you mark a question for review in the program. Write the question number in the appropriate column from above.

When you have completely finished the test and answered all the questions, use the remaining time to review the questions you marked

Start your review with the questions in the “Haven’t got a clue” column, hopefully this will be the shorter column. Do not spend too much time on any one question.

Lastly, review the items in your “Not Sure” column. Do not change the original answer unless you find positive reference that you are incorrect.

Breaking Down The Questions

There are several ways to breakdown the questions. Questions in the exam will be one of several styles. True/False, Multiple Choice (No calculations), Multiple Choice (with Calculations), and Qualifiers The methods below are to be used if you don’t know the answer to the question immediately. Once you read the question carefully, most of the time the correct answer will be obvious to you. Don’t forget, you know this stuff!!

True/False – These are the easiest of the bunch. Most of the questions on Circular 230 are True/False. The most important thing to remember in answering a True/False question is to know what the question is asking. Pay close attention to the specific verbiage of the question and look for qualifiers as discussed later.

Multiple Choice (No Calculation) – These questions are straightforward knowledge based. The easiest way to process these questions is by elimination. Usually there are at least two answers that can be thrown out immediately. Once you have thrown out the obvious wrong answers, re-read the question and them look at the remaining answers. Look for qualifiers discussed below. Make sure you understand what the question is looking for and narrow your focus. For example: If the question is about EITC, don’t get dependency qualification mixed in. This is one of the few times in taxes you will hear anyone say, use your tunnel vision not the big picture.

Multiple Choice (With Calculation) – These questions are similar to the questions above, however, they will include a listing of numbers and the answer will be a dollar amount. The easiest way to simplify these questions is to immediately read the last part of the question where is tells you exactly what they are looking for as an answer This will again eliminate several answers. Also look for the qualifiers discussed below.

Qualifiers – This is actually not a separate type of question, but can and is included in all of the other types. A qualifier in a question are those test words we all know to look out for; Not, except, only, never, always, etc. When reading the questions and the answers look for these types words. Also look for the dreaded double negative. The question says what is NOT this and one of the answers also has a negative in the answer.

Sample Questions

True/False

For the purposes of Circular 230, the definition of a tax return includes an amended return and a claim for refund. True False

We can narrow this question down to the fact they are asking us what Circular 230 says about the definition of a tax return. There are no qualifiers. So we have three things that all need to be true or the answer is false, correct? We are looking to see if Circular 230 defines a tax return, an amendment and a claim for refund all as tax returns. This question is true.

Multiple Choice (without Calculations)

Which of the following is not a condition for the deduction of points in the year of the payment:

A. The taxpayers AGI cannot exceed a set amount

B. The proceeds of the loan must be used to buy, build, or substantially improve the taxpayers principal residence

C. The charging of points must be an established business practice in the area in which the mortgage is obtained

D. The amount of points cannot exceed those generally charged in the area and are computed as a percentage of the mortgage.

The first thing you notice in this question is that there is a qualifier “not” in the main question. So we know that we are looking for the “wrong” answer here. Three of the answers are correct and one is wrong. We are also focusing on points for an initial purchase of a home. The question does not mention a refinance, so do not read that into the question. Focus. When you look through the answers you will see that most of them deal with the practice of using points, except the first answer. That is you clue that the first answer is the correct one for this question. A taxpayers AGI has no bearing on the ability to deduct points.

Multiple Choice (With Calculations)

George had the following income and expenses:

Interest and dividend income of $8000

Gross wages of $100000

Margin Interest of $10000

Mortgage interest of $6000

Interest on mobile vacation home of $3000

Credit card interest of $2000

How much interest may George deduct on Schedule A?

A. $21,000

B. $18,000

C. $17,000

D. $19,000

So the first thing we do on this question is to look at the actual question “How much interest may George deduct on Schedule A?” We start our process of elimination by deleting the credit card interest, we all know that is not deducible. We know that George CAN deduct the mortgage interest of $6000 and vacation home interest of $3000. We know his gross wages don’t matter in this problem. So we are left with two items. One is Interest and dividend income, well we know income doesn’t go on the Schedule A. That leaves us with margin interest. The whole point of this question is how much of the margin interest can George deduct on the Schedule A. You can only deduct investment interest expenses (margin interest) up to the amount of investment income (interest and dividend income), so George has $10000 in expenses and $8000 in income, he can deduct $8000 in investment expenses in addition to the mortgage and vacation home interest. $6000 + $3000 + $8000 = $17000.

Qualifiers

Ethel received a Notice of Tax Due and Demand for Payment of $25000 as a result of an audit of her 2010 Form 1040. She cannot pay the entire amount at this time and wants to set up an installment agreement. Which of the following statements with respect to installment agreements is not correct?

A. An installment agreement generally requires equal monthly payments.

B. Ethel must file all her required returns.

C. Generally, Ethel can have up to 72 months to pay the amount owed.

D. The IRS can levy against Ethel’s property while her request for an installment agreement is being considered.

The first thing we notice with this question is it has a qualifier in the question and it has a focus item. The focus is that we are dealing with rules for installment agreements and the qualifier is NOT. So once again we are looking for the wrong answer. Three of them are correct and one is not. Lets start with logic. If you are making payments on something are the payments usually equal over the life of the agreement? So the first answer is probably correct. Doesn’t it make sense that the IRS would not agree to an installment agreement unless she was all caught up with her filings? So the second answer is probably correct. Does it make sense that the IRS could levy her property while she was trying to set up payments? No it doesn’t. So even if you didn’t know that installments can go for 72 months (which they can) you can narrow down the incorrect answer to number 4.

My last piece of advice is to use the test bank of whichever study program you choose and go over the questions again and again. You will get a different test each time you take the practice test. Once you are scoring 85% in all domains regularly you are ready to take the exam. You can do this! Don’t wait! If you wait until after the tax season there will be a whole new test based on the changes to the tax laws, whatever those will be, instead of the 2012 rules the test is based on now. Good Luck!