Class 03

Question 1

what are characteristics of a personal + dependency exemption?

Answer 1

(exempted till 2025)
1. reduce income by the dollar ($ x people on tax return)
2. on top of the standard deduction/itemization
3. cannot double dip

Question 2

what is a dependent?

Answer 2

a qualifying child or relative

Question 3

what qualifies a child as a dependent?

Answer 3

1. relationship—across/down the family tree
2. age—younger than taxpayer + 19/24 (student) OR disabled
3. abode—lived w/ taxpayer 6 months+
4. support—dependent can’t provide 50% of own support

Question 4

what if parents filing separately want to claim a dependent?

Answer 4

1. check RAAS test—then tie breakers
2. parents claim first
3. whoever lives w/ parent more
4. higher AGI (cuts slack to higher earner due to progressive tax rate)

Question 5

what qualifies a relative as a dependent?

Answer 5

1. relationship—child + up family tree (unrelated living with you exempt)
2. support—child
3. income—less than “exemption” ($4700)

Question 6

why does filing status matter?

Answer 6

it affects tax bracket + stand deduction

Question 7

what is a “single” status?

Answer 7

unmarried + not HoH

Question 8

what is a “MFJ” status?

Answer 8

1. married dec. 31 (inc. surviving spouse in the same yr)
2. must sign no joint & several liability (no ignorance defense)

Question 9

what is a “surviving spouse” status?

Answer 9

widow(er) w/ QC (applicable for 2yrs—exempt if remarried)

Question 10

what is a “HoH” status?

Answer 10

1. unmarried OR abandoned spouse (pay over 50% QC/QR cost)
2. pay 50% cost of mom/dad (even if not living together)
3. spouse not home 6 months + pays 50% for QC

Question 11

what is a “MFS” status?

Answer 11

1. married but file separately
2. joint & several liability exempt

Question 12

what are tax credit benefits?

Answer 12

reduce liability by the dollar

Question 13

what are refundable credits?

Answer 13

credits paid even if larger than tax liability

Question 14

what are non-refundable credits?

Answer 14

no credits paid even if larger than tax liability

Question 15

what is the child tax credit?

Answer 15

$2000/child + under 17

Question 16

what is the dependent tax credit?

Answer 16

$500/child (ie QC/QR 17 to 18 OR 23 if student)

Question 17

what are deductions?

Answer 17

reduce income by the dollar

Question 18

how to deduct for the “kiddie” tax?

Answer 18

SD for dependent is GREATER of 1250

OR

(the SMALLER of earned income + $400 OR basic SD for dependent’s filing status)

total = net under income (above $2500) + tax on taxable income less unearned income

Question 19

what is the “kiddie” tax?

Answer 19

unearned income taxed at parent’s rate + effort to prevent rich parents using their kids as slush funds

Question 20

what are filing requirements?

Answer 20

1. more/equal to the SD filing status
2. april 15th deadline
3. self employed must file over $400