Ch 2 - Terms (Filing Requirements)

Question 1

Community Income

Answer 1

Income of a married couple, living in a community property state, that is considered to belong equally to each spouse, regardless of which spouse receives the income.

Question 2

Community Property

Answer 2

Property considered to belong in equal shares to husband and wife. This concept of ownership for property acquired after marriage is followed in Arizona, California, Louisiana, New Mexiso, Nevada, Texas, Washington, and Wisconsin

Question 3

Dependent

Answer 3

An individual whose personal exemption may be claimed on another person’s income tax return. To be claimed as a dependent, a person must meet certain tests.

Question 4

Exemption

Answer 4

An amount ($4050 for 2017) allowed by law as a reduction of income that would otherwise be taxed.

Question 5

Gross Income

Answer 5

Total worldwide income received in the form of money, property, or services that is subject to tax

Question 6

Joint Return

Answer 6

A return combining the income, exemptions, credits, and deductions of a married couple, resulting in a joint tax liability.

Question 7

Married Filing Jointly

Answer 7

MFJ: The filing status used by a couple who are married at the end of the tax year and are not legally separated under a final decree of divorce or separate maintenance, and who record total income, exemptions, and deductions of both spouses on one tax return.

Question 8

Married Filing Separately

Answer 8

MFS: The filing status used by a married couple choosing to record their respective incomes, exemptions, and deductions on separate individual tax returns.

Question 9

Standard Deduction

Answer 9

A base amount of income not subject to tax. The regular standard deduction for 2017 is $6530 for single taxpayers and married persons filing separately; 9350 for HoH, $12700 for married couples filing a joint return and qualifying widow(er)s. Taxpayers who are blind or age 65+ may have higher standard deductions. Taxpayers who may be claimed as dependents on other taxpayers’ returns may have reduced standard deductions.

Question 10

Nondependent Taxpayers

Answer 10

Individuals who can’t be claimed as dependents on another taxpayer’s return. Three factors determine filing requirements for nondependents: Filing status, Age, Gross Income

Question 11

Gross Income Threshold Amount

Answer 11

Usually the sum of the taxpayer’s standard deduction and person exemption amount(s). Used to determine whether or not someone needs to file. Exception is MFS must file when GI is $4050.