Question

Zahra, a self-employed, single taxpayer, reports all her income on Schedule C. During the tax interview, her Tax Professional determines that Zahra may qualify for the Earned Income Credit. To confirm her eligibility for this credit, the Tax Professional should__________.

(A) Accept Zahra's statement of expenses with no additional questions asked.
(B) Explain to Zahra that she must report all her business income and expenses.
(C) Ignore items that might reduce Zahra's refund.
(D) Provide amounts for Zahra's business expenses typical for her line of work.

Answer 1

B

Step-by-step explanation:

Explain to Zahra that she must report all her business income and expenses.

To qualify for the Earned Income Credit you must have earned income from working for someone or from running or owning a business and meet basic rules.This is a reason for Zahra to report all her business income and expenses.