© 2026 Arizent. All rights reserved.
p18jdo9qvf11fs16262lv12q81t9km.jpg
Duh! Road Sign with Dramatic Blue Sky.
Andy Dean - Fotolia
You don't have to be a tax protester to harbor mistaken ideas about the Tax Code -- many perfectly normal people do. According to an informal poll of Enrolled Agents by the National Association of Enrolled Agents, here are some of their clients' most common misconceptions.
p18jdntc2nre81r4f1abc1ooal8l6.jpg
Currency tug-of-war concept for business rivalry, relationship difficulties or divorce settlement between a man and woman
Brian Jackson - Fotolia

My Social Security benefits aren’t taxable.

Depending on the amount of other income that a taxpayer has to report, their benefits may be taxable – but the maximum amount of Social Security benefits that must be included is 85 percent.
p18jdntc2o1mu6jl81ejv18l71fj97.jpg
White woman with upset expression holding crumpled stock certificate. Hand on head. Isolated on white background. Investment failure theme.
James Pruitt/qingwa - Fotolia

I don’t need to report stock sales if I bought other stocks with the proceeds.

Many taxpayers think that if they reinvested the money from a stock sale, or otherwise didn’t see any cash, that it doesn’t need to be reported. But stock sales outside of retirement accounts must be reported.
p18jdntc2o1cjtcsuu0qlbp68.jpg
Andyaaaaaaaa - Fotolia

I’m a student and only work part-time, so I don’t have to file a return.

Filing requirements are based on filing status, dependency status, amount of income, and whether it is earned or unearned – not whether you’re a student.
p18jdntc2pbkf1gkq1rm515kqfp19.jpg
Boss pointing the finger to an employee
Minerva Studio - Fotolia

It’s my preparer’s fault.

No matter who prepares your tax return, the taxpayer is legally responsible for its contents.
p18jdntc2p1jdse8d1j7l15fq5ha.jpg
Dimitri Stangl/Hurstville - Fotolia

My deadbeat cousin lives in one of my rental properties. He doesn’t pay much, but I can still treat it as a rental.

There are limits on how far below fair market rental value you can go – including the fact that expenses cannot exceed income. There may be other limits as well: The Tax Court has suggested that a fair rent for a family member could be up to 20 percent below market.
p18jdntc2p1cpu9mf1a0j15tl25ab.jpg
One hundred dollar bill in a gold wedding ring
Alexander Kharchenko/doomu - Fotolia

My spouse and I separated last year and lived apart for most of the year – so I can file Single.

Unless you were legally divorced or separated as of the end of the year, you cannot file as single.
p18jdntc2pso71ujcpf5rvohkoc.jpg
businessman draw green arrow down and feel sadness
Photographer: Tom Wang/Tom Wang - Fotolia

If I take dividends instead of wages from the S corp I own, I can save on payroll taxes.

In terms of S corp shareholders and employees, reasonable compensation must be paid before any dividends or loan repayments are permitted – and failing to properly report wages could result in reclassification of the dividends or loan repayments as wages, with penalties.
p18jdntc2pttq3e7bpb1jme5nd.jpg
Closeup portrait of silent corrupt woman with twenty dollar bill taped to mouth and showing shhh sign, isolated on white background. Bribery concept in politics, business, and diplomacy.
pathdoc - Fotolia

I’m a signer on a foreign bank account, but not the owner – so I don’t need to disclose it.

This area is under particularly heavy scrutiny right now, according to the NAEA, and there are a number of factors that determine the need to disclose these accounts and/or the assets. Since the penalties for non-disclosure are pretty severe, clients will want to make absolutely sure that they don’t have a responsibility to report.
Tax tools