Chapter 3 - Individual Taxation and Gross Income Flashcards
An individual must file as single if (s)he neither is married nor qualifies for widow)er) or head of household status.
Single
_____ file a ______ return account for their items of income, deduction, and credit in the aggregate.
Married individuals
Joint
Joint return is allowed when spouses use different ____.
Accounting methods.
Spouses with different tax years can/cannot?
Cannot file a joint return
Two individuals are treated as legally married for the entire tax year if, on the last day of the tax year, they are
- Legally married and cohabiting as husband and wife
- Legally married and living apart but not separated pursuant to a valid divorce decree or separate maintenance agreement, or
- Separated under a valid divorce decree that is not yet final.
If a spouse dies and the surviving spouse does not remarry before the end of the tax year what filing status may the surviving spouse file as?
MFJ
A joint return may be filed
If one spouse files separately what status is the other spouse?
MFS
How long may a qualifying widow(er) claim widow(er) status when filing?
2 years after the death of the spouse
To qualify for widow(er) the following conditions must be met
1) The taxpayer did not remarry during the tax year.
2) The widow(er) qualified (with the deceased spouse) for married filing joint return status for the tax year of the death of the spouse.
3) A qualifying widow(er) maintains a household for the entire taxable year. Maintenance means the widow(er) furnishes more than 50% of the costs to maintain the household for the tax year.
A widow(er) is entitled to the ____ ____ ___ amount for the deceased spouse.
full personal exemption
Head of household status
May not be a qualifying widow(er)
Not married (unless)
They live with a dependent apart from the spouse.
1. (s)he files separately
2. (s)he pays more than 50% toward maintaining the household; and for the last 6 months
a) the spouse is not a member of the household
b) the household is the principal home of a child of the individual
c) the individual can claim a dependency exemption for the child
Qualifying costs for maintaining a household for HOH status
Property tax Mortgage interest Rent Utilities Upkeep Repair Property insurance Food consumed on premises
Qualifying person and time. The taxpayer must maintain a household that constitutes the principal place of abode for more than half of the taxable year for at least one qualified individual who is:
a) An unmarried son or daughter, unmarried grandchild, or unmarried stepchild, or
b) Any other person eligible to be claimed as a dependent, except for those eligible under a multiple-support agreement.
There are two special rules concerning a qualifying person.
First, the taxpayer with a dependent parent qualifies even if the parent does not live with the taxpayer. Otherwise, the IRS maintains that the qualifying individual must occupy the same household (except for temporary absences).
Second, if a qualifying child lives with the taxpayer, that qualifying child need not be the taxpayer’s dependent.
The amount for personal exemptions for 2015 is
$4000.00
4 tests for a qualifying child
1) Relationship - son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, or any descendant of any such relative.
2) Age - Must be under 19 or a full-time student under the age of 24
3) Principal residence - the child must have the same principal place of abode as the taxpayer for more than half of the year.
4) not self-supporting - The child must not have provided over half of his or her own support
4 test for a qualifying relative
1) Relationship or residence
2) Gross taxable income
3) support
4) Must not be a qualifying child
Relationship or residence test
a) The residence requirement is satisfied for any individual who merely resides with the taxpayer for the entire tax year.
b) The relationship requirement is satisfied by existence of an extended (by blood) or immediate (by blood, adoption, or marriage) relationship.
Two types of relationships
1) Extended
2) Immediate
give examples
Extended - grandparents and ancestors, grandchildren and descendants, uncles or aunts, nephews or nieces.
Immediate relationships
1. Parent - natural, adoptive, stepparent; father or mother-in-law
2. Child; natural, adoptive, stepchild; son-or daughter-in-law foster child (who lives with claimant entire tax year)
3. Sibling: full or half brother or sister; adoptive brother or sister; stepbrother or sister; brother - or sister-in-law.
Gross taxable income of the relative must be less than the amount of the dependency exemption which is?
$4000.00 2015
The person who may claim and individual as a dependent must provide more than _____ of the support of the individual for the year.
50%
Support includes:
welfare benefits, social security benefits, and any support provided by the exemption claimant, the dependent, and any other person.
Only amounts provided during the calendar year qualify as support
Amounts paid in arrears (payment for child support for a previous year) are not considered support for the current year.
Support includes money and items, or amounts spent on items, such as
Food, clothing, shelter, utilities
Medical and dental care and insurance
Education
Child care, vacations etc.
