Community Q&A
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EA Updated
What should an EA do when a client finds a K-1 after filing?
A late K-1 or tax document should be reviewed and may require an amended federal and state return...
How should an EA evaluate an unusual business expense?
Unusual business expenses should be tested for business connection, ordinary and necessary character, limits, and substantiation...
What should an EA do when a client asks for a false certification?
An EA must refuse to make a false or misleading client certification, even outside the tax return itself...
Why are comfort letters risky for tax practitioners?
Comfort letters are risky when they ask a tax practitioner to certify facts or future events outside the engagement...
How should an EA explain why charitable gifts did not reduce tax?
Charitable gifts may be entered and considered but not reduce tax if the standard deduction is larger...
What is first-time penalty abatement?
First-time penalty abatement may remove certain penalties for taxpayers with a clean compliance history...
Why can married filing jointly help when spouses have unequal income?
Married filing jointly can help unequal-income spouses because progressive bracket space is shared on a joint return...
Why can a taxpayer owe on April 15 even if an extension was filed?
An extension generally extends the time to file, not the time to pay the expected federal balance...
How can a taxpayer identify an unexpected direct deposit from the Treasury?
Unexpected Treasury deposits should be matched to account transcripts, notices, payments, credits, and return history...
Is cash income taxable if no Form 1099 is issued?
Cash income remains taxable even without a Form W-2 or 1099; missing forms do not erase reporting obligations...
Why can gambling create tax even when the taxpayer broke even overall?
Gambling winnings can increase income while losses are limited, often creating tax even when cash results break even...
Can a self-employed taxpayer receive EITC even if they made no estimated payments?
Self-employment can produce earned income for EITC, but self-employment tax may offset or exceed the credit...
What should a taxpayer do after intentionally leaving a W-2 off a return?
A taxpayer who omitted a W-2 should correct the return promptly because wage matching often discovers the income...
Where is the line between business-owned assets and tax evasion?
Business ownership alone is not enough; use, purpose, substantiation, and personal benefit treatment control...
Why do independent contractors often owe more than W-2 employees?
Independent contractors often owe more visibly because income tax and self-employment tax are not withheld automatically...
What happens when a taxpayer voluntarily files several delinquent returns?
For multiple delinquent years, file accurate required returns first, then verify balances and evaluate collection options...
Can an employer demand that employees repay missed FICA withholding directly?
Payroll tax errors require records and verification; employees should not casually pay an informal demand...
Does a taxpayer need to file if they never created an IRS online account?
An IRS online account does not create the filing obligation; income, filing status, and tax law do...
What should a taxpayer do after using an unqualified ghost preparer?
A taxpayer who used a ghost preparer should obtain the filed return, verify every item, and correct false positions...
Can parents claim an adult child as a dependent?
Living at home is not enough to be claimed as a dependent; qualifying child and qualifying relative tests control...
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