EA glossary

Plain-English EA exam glossary.

Key terms students must understand before moving into deeper lessons and question practice.

Glossary standard

Every glossary term must define the concept in plain English and explain why it matters on the SEE. Terms should connect back to lessons, questions, flashcards, and IRS source references.

Last reviewed: May 30, 2026. Current IRS SEE cycle; students must verify current-year limits before testing.

Part 1

Adjusted gross income

Gross income reduced by specific above-the-line adjustments allowed by tax law.

Exam relevance: AGI often controls deduction limits, credit eligibility, and phaseouts.

All Parts

Basis

A taxpayer's tax investment in property, an entity interest, or another asset before adjustments.

Exam relevance: Basis controls gain, loss, depreciation, distributions, and loss limitations.

Part 3

Circular 230

Treasury rules governing practice before the IRS.

Exam relevance: Part 3 frequently tests competence, diligence, conflicts, sanctions, and practitioner duties.

Part 2

Distributive share

A partner's allocated share of partnership income, deduction, gain, loss, credit, or other tax items.

Exam relevance: Partnership questions often separate entity reporting from partner-level reporting.

Part 1

Head of household

A filing status for qualifying taxpayers who meet unmarried or considered-unmarried, household-cost, and qualifying-person rules.

Exam relevance: Part 1 questions commonly test a failed household or qualifying-person fact.

Part 2

Ordinary and necessary

A standard used to determine whether a business expense is common, accepted, helpful, and appropriate for the trade or business.

Exam relevance: Part 2 deduction questions often turn on business purpose, capitalization, substantiation, or limitation rules.

Part 3

Power of attorney

Authorization for an eligible representative to act for a taxpayer in specified IRS matters, commonly using Form 2848.

Exam relevance: Part 3 questions often distinguish representation authority from information-only authorization.

Part 3

Reasonable cause

A facts-and-circumstances basis that may support relief from certain penalties when the taxpayer acted with ordinary business care and prudence.

Exam relevance: Penalty questions often test whether facts support relief, not whether the taxpayer simply asks for it.

Part 1

Self-employment tax

Social Security and Medicare tax imposed on net earnings from self-employment.

Exam relevance: Low-income filing questions may still require a return because of self-employment tax.

Part 3

Tax information authorization

Authorization that allows an appointee to receive or inspect specified tax information, commonly using Form 8821.

Exam relevance: The exam expects students to know that information access is not the same as representation authority.