1. Filing Requirement Flashcards
How can using a prior year’s return for comparison help a tax return preparer?
It can prevent gross mathematical errors and identify significant changes.
If there were no significant changes between the current and prior year’s return, then the current-year return should result in
A similar amount of tax liability or refund as the previous year.
A taxpayer’s personal information (e.g., date of birth, age, marital status, dependents) is used to verify the identity of
The taxpayer and related dependents.
How can an individual’s age be relevant to a tax return?
The age of an individual determines if (s)he qualifies for additional deductions (65 and over), retirement distributions, dependency, etc.
If a taxpayer is an alien (not a U.S. citizen), (s)he is considered a nonresident alien unless either of which two tests is met?
1.The green card test
2.The substantial presence test
Which expenses are not deductible on a tax return?
A personal, living, or family expense is not deductible unless the Code specifically provides otherwise. Nondeductible expenses include
1.Rent and insurance premiums paid for the taxpayer’s own dwelling;
2.Life insurance premiums paid by the insured;
3.Upkeep of an automobile;
4.Personal interest; and
5.Payments for food, clothing, or domestic help.
What are some items from the prior-year return that may be needed to complete the current-year return?
1.State income tax refund
2.AMT for credit
3.Gain or loss carryover
4.Charitable gift carryover
5.Schedule D
6.Form 8801
What are the reporting requirements for individuals who do business in the U.S. but have an ownership interest in a foreign account of over $10,000?
Generally, any U.S. citizen, resident, or person doing business in the United States who has an ownership interest in a financial account in a foreign country with an aggregate value in excess of $10,000 at any time during the calendar year must file a Form FinCEN Report 114, Report of Foreign Bank and Financial Accounts (FBAR), reporting certain information with respect to that account by April 15 of the subsequent year or the extension due date of October 15.
Individuals with specified foreign financial assets with an aggregate value greater than $50,000 at the last day of the year or more than $75,000 at any time during the tax year must file using
Form 8938.
Two individuals are treated as legally married for the entire year if, on the last day of the tax year, they are
1.Legally married and cohabiting as spouses,
2.Legally married and living apart but not separated pursuant to a valid divorce decree or separate maintenance agreement, or
3.Separated under a valid divorce decree that is not yet final.
If a spouse dies, when is the status for each spouse determined?
Unless the surviving spouse remarries before the end of the tax year (in which case the decedent files married filing separate) status is determined when the spouse dies.
Under what circumstance may a joint return be filed if one of the spouses is a nonresident alien at any time during the tax year?
A joint return is not allowed if one spouse was a nonresident alien (NRA) at any time during the tax year unless the U.S. citizen and the NRA spouse so elect and agree to be taxed on their worldwide income.
If one spouse files separately, can the other spouse file jointly?
No. If one spouse files separately, so must the other.
If a joint return has been filed for the year and the time for filing the return of either spouse has expired, may the spouses amend their returns to file separately?
No, they may not amend their returns to file separately.
May married individuals who filed separate returns later file a joint (amended) return?
Yes, and payment of the entire joint tax liability is not required at the time the amended return is filed.
If an individual obtains a marriage annulment (no valid marriage ever existed), what is required?
The individuals must file amended returns claiming a filing status of single or head of household, whichever applies. All prior tax years not closed by the statute of limitations must be amended.
When a joint return is signed by both spouses, is one spouse generally liable for the entire amount of the tax due and any interest and penalties?
Generally, the spouses are jointly and severally liable for the tax due and any interest and penalties. This means that each spouse is individually liable for the entire amount of the tax due and any interest and penalties. One spouse may be relieved of joint and several liability under the “innocent spouse” provisions in very limited circumstances.
What filing status should married individuals who account for their items of income, deduction, and credit in the aggregate use?
The married filing jointly status.
May spouses with different tax years file a joint return?
No. However, a joint return is allowed when spouses use different accounting methods.
To be considered an injured spouse, the taxpayer must
1.File a joint return,
2.Have reported income (e.g., wages, interest, etc.),
3.Have made and reported tax payments or claimed the Earned Income Credit or other refundable credit,
4.Not be required to pay a past-due amount, and
5.File Form 8379.
To be considered an injured spouse, the taxpayer must
1.File a joint return,
2.Have reported income (e.g., wages, interest, etc.),
3.Have made and reported tax payments or claimed the Earned Income Credit or other refundable credit,
4.Not be required to pay a past-due amount, and
5.File Form 8379.
How long is the surviving spouse filing status available?
This status is available for 2 years following the year of death of the spouse and may be elected if
1.The surviving spouse did not remarry during the tax year,
2.The surviving spouse qualified for married filing a joint return status for the tax year of the death of the spouse, and
3.The surviving spouse maintained a household for a dependent child for the taxable year.
How long is the surviving spouse filing status available?
This status is available for 2 years following the year of death of the spouse and may be elected if
1.The surviving spouse did not remarry during the tax year,
2.The surviving spouse qualified for married filing a joint return status for the tax year of the death of the spouse, and
3.The surviving spouse maintained a household for a dependent child for the taxable year.
For the purposes of the qualifying widow(er) filing status, for whom must the surviving spouse maintain the household?
The household must be the principal place of abode of a qualifying dependent of the surviving spouse. The spouse must be entitled to claim a dependency exemption amount for the dependent who must be a son/daughter, stepson/stepdaughter, or adopted child. This does not include a foster child.
For the purposes of the qualifying widow(er) filing status, for whom must the surviving spouse maintain the household?
The household must be the principal place of abode of a qualifying dependent of the surviving spouse. The spouse must be entitled to claim a dependency exemption amount for the dependent who must be a son/daughter, stepson/stepdaughter, or adopted child. This does not include a foster child.
A surviving spouse can file what kind of return for the tax year of the death of the spouse?
The surviving spouse can file a joint return.
In order for an individual to qualify for head of household filing status, (s)he must
1.Not file as a surviving spouse,
2.Not be a married person, and
3.Maintain a household that is the principal place of abode for a qualifying individual.
In order for an individual to qualify for head of household filing status, (s)he must
1.Not file as a surviving spouse,
2.Not be a married person, and
3.Maintain a household that is the principal place of abode for a qualifying individual.
To maintain a household for federal filing status purposes, an individual must furnish
More than 50% of the mutual benefit costs of maintaining the household during the tax year.
Some expenses that qualify as household maintenance include
Property tax,
Mortgage interest,
Rent,
Utilities,
Upkeep,
Repairs,
Property insurance, and
Food consumed in-home.
Some expenses that do not qualify as household maintenance include
Clothing,
Education,
Medical treatment,
Life insurance,
Transportation,
Vacations,
Services by the taxpayer, and
Services by the dependent.
A married individual who lives with a dependent apart from the spouse will be considered unmarried and qualify for head of household status if, for the tax year,
1.(S)he files separately;
2.(S)he pays more than 50% toward maintaining the household;
3.The spouse is not a member of the household for the last 6 months;
4.The household is the principal home of the individual’s child, stepchild, or qualified foster child for more than half of the year; and
5.The individual can claim the child as a dependent.
When must an individual file as single?
An individual must file as single if (s)he neither is married nor qualifies for surviving spouse or head of household status.
Taxable income is adjusted gross income (AGI) minus
The greater of itemized deductions or the standard deduction.
When would a taxpayer elect to itemize deductions?
The taxpayer itemizes deductions if the total allowable itemized deductions, after all limits have been applied, is greater than the standard deduction.
When would a taxpayer choose to take the standard deduction?
The taxpayer takes the standard deduction if the standard deduction is greater than the total allowable itemized deductions (after all limits have been applied).
How does a taxpayer elect to itemize deductions?
Election to itemize deductions is made by filing Schedule A of Form 1040. Election in any other taxable year is not relevant.
The standard deduction may not be used by
1.Persons who itemize deductions
2.Nonresident alien individuals
3.Individuals who file a “short period” return
4.A married individual who files a separate return and whose spouse itemizes
5.Partnerships, estates, and trusts
