Tax Law Changes 2018 on the Enrolled Agent Exam

tax law changes 2018

Brace yourself. The newest tax law changes are coming to the Special Enrollment Exam (SEE), also known as the Enrolled Agent (EA) exam. The Tax Cuts and Jobs Act (TCJA) signed into law in December 2017 will trigger some changes to the EA exam that you should be aware of when sitting for the exam. Though one of the bill’s stated goals was to make taxes simpler for taxpayers, the bill is actually making things a little more difficult for EA candidates. There will be new information you have to know for the upcoming testing window (May 1, 2019–February 28, 2020).

Don’t stress! We’re going to go over all the tax law changes you need to know about for the EA exam.

How Do the 2018 Tax Law Changes Affect the Enrolled Agent Exam?

The EA exam only tests the previous year’s tax laws. This rule holds true in this case, despite the law including several retroactive measures that affected how people filed their 2017 taxes. According to the Candidate Information Bulletin, the entirety of the new law won’t be testable until the 2019 testing window, which opens May 1, 2019. EA candidates sitting during the current testing window (May 1, 2018–February 28, 2019) have nothing to worry about, as the changes won’t be testable until 2019.

Just because you need to know about the changes now doesn’t mean you need to stress over them. Gleim will make sure you get all of the information you need to succeed. We’ve got you covered.

The scale of these tax law changes should not be underplayed; we haven’t seen an overhaul like this since the Tax Reform Act of 1986, 32 years ago. The TCJA makes some significant changes to the U.S. tax code. These changes will be reflected in testable content on the EA exam, which requires you to understand current tax law. The largest changes are discussed below.

  1. The TCJA eliminates personal exemptions. This is a huge change for the individual taxpayer. Before the TCJA, you could claim a $4,050 deduction from your taxable income. That essentially meant, for example, if you made $30,000 in 2017, you could claim a $4,050 deduction and only be taxed on $25,950. The new law does away with the personal exemption altogether. Now, without considering other deductions, that $30,000 you made is taxed at the full amount.
  2. The TCJA raises the standard deduction substantially. For example, the standard deduction for single taxpayers went from $6,350 in 2017 to $12,000 under the new law.
  3. The new law shifts individual income tax brackets around. Most people are getting tax breaks, the biggest of which go to households in the top 5% for income.

Filing Single Tax Bracket

2017 2018
$0-$9,325 10% $0-$9,525 10%
$9,326-$37,950 15% $9,526-$38,700 12%
$37,951-$91,900 25% $38,701-$82,500 22%
$91,901-$191,650 28% $82,501-$157,500 24%
$191,651-$416,700 33% $157,501-$200,000 32%
$416,701-$418,400 35% $200,001-$500,000 35%
Over $418,401 40% Over $500,000 37%

 

  1. The new law also introduces a flat 21 percent corporate tax rate. This constitutes a tax cut for any business with income greater than $50,000, and a tax increase for businesses with income less than $50,000.
  2. The TCJA increases the 50% first-year bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. The deduction for Section 179 is taken before any bonus depreciation, and any deduction for bonus depreciation is taken before the regular depreciation is recalculated.
  3. Very few people will pay the Alternative Minimum Tax (AMT) under the TCJA due to a few major changes: higher exemption levels, higher exemption phaseout levels, and fewer tax breaks that would trigger the AMT. These changes expire after 2025, so the AMT will simply return to the way it behaves now after that.

There are also changes coming to

  • Alimony
  • Several major tax credits
  • Depreciation and amortization
  • Estate tax
  • Gift tax
  • Nonrecognition transactions
  • Entertainment expenses
  • Net Operating Loss
  • Maximum deduction for Sec. 179 property
  • Taxable year of inclusion
  • Cash method of accounting
  • Inventory accounting
  • Many other areas that affect the EA exam

As one of the many who were thrown off by the extent of the tax law changes, you might find this information frustrating, and we understand. As the EA exam experts, we are constantly working to ensure that you have the information you need to pass the EA exam. The 2018 edition of our EA review covers everything you need to know for the current testing window and, when all the measures of the TCJA law become testable May 1, we will make sure you are covered.

When Will the Rest of the Law Be Testable?

The tax law changes will become testable on the EA exam beginning May 1, 2019. The particulars of the law and explanations of its affects are rather detailed; reviewing all of it would make this post into a book all of its own and, to be frank, that’s what the Gleim EA Review Course is for. We will update our material before the law become testable with plenty of time for you to prepare for the changes.

Along with including the 2018 tax law changes, we’ll modify our EA Review Course with all of the other tax law changes that will be testable during the upcoming testing window and incorporate feedback from candidates. We update our courses every year so you’re always equipped for EA exam success.

2018 Tax Law Changes on the EA Exam
Testing Window May 1, 2019 – February 29, 2020
What will be testable? All tax laws that applied to 2018, including the entirety of the Tax Cuts and Jobs Act

Should I Take All 3 Parts Before the Entire Law Becomes Testable?

This is a tricky question. First and foremost, we don’t want you to rush to finish every part of the exam if you don’t have enough time to be well prepared. Studying enough is the most important factor in your success.

That said, you can and should pass all three parts within the year. Plan carefully and start studying with Gleim now and you can be done before the testing window closes next February and the tax laws become testable.

We recommend that you take Part 3 last. The candidate feedback we’ve received indicates that the topics covered in Parts 1 and 2 relate to the topics that Part 3 tests, so you need to be knowledgeable about the topics in Part 1 and Part 2 in order to pass Part 3. Consequently, you’ll have an easier time studying for Part 3 once you already are familiar with the topics in Parts 1 and 2.

Gleim Prepares You for It All

A lot of tax rules are changing due to this new law. When the 2019–2020 testing window comes, the whole law will become testable, so EA candidates will have to learn new content for all 3 exam parts. If you stick with Gleim through it all, we’ll provide you with everything you need to know exactly when you need to know it.

Our Enrolled Agent Review Course features the most comprehensive coverage and the largest test bank of exam-emulating questions on the market. If something is on the Enrolled Agent exam, you’ll review it with Gleim. See how well Gleim will prepare you by trying our free EA exam questions now. They include detailed answer explanations, a score broken down by topic, and authentic exam emulation. You’ll be well on your way to passing the EA exam when you get started with Gleim today!