EA Exam Flashcards
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?
The green card test
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
Rent and insurance premiums paid for the taxpayer’s own dwelling;
Life insurance premiums paid by the insured;
Upkeep of an automobile;
Personal interest; and
Payments for food, clothing, or domestic help.
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.
What are the tests to determine a qualifying child?
Relationship
Age
Principle Residence
Not Self Supporting
What are the tests to determine a qualifying relative?
Residence & Relationship
Gross Income
Support
Not a Dependent
What is the Green Card test?
A taxpayer is a resident for tax purposes if they were a lawful permanent resident (immigrant) of the United States at any time during the year.
What is the Substantial Presence Test?
A taxpayer is considered a US resident if they were physically present in the US for at least:
a. 31 days during 2020
183 days during 2020, 2019, 2018, counting all days of physical presence in 2020 but only 1/3 the number of days of presence in 2019 and only 1/6 the number of days in 2018.
What qualifies an individual as Head of Household?
Must be Single
Pay more than half of household expenses
Have a qualifying Individual who you support more than 50%
Can a joint return is filed, can it be amended past the due date to filing separate?
No, But individuals who separate may later amend to Joint.
When must an individual required to file a return?
if gross income is above a threshold, net earnings from self-employment is $400 or more, or they are a dependent with more gross income than the standard deduction or with unearned income of over $1,100.
Does gross income include Social Security Benefits?
No, unless, 1. The taxpayers are married flinging a separate return and lived with the spouse at any time during the year
One-half of the Social Security Benefits plus other gross income and any tax exempt interest is more than $25,000 ($32,000 if filing jointly.)
When does interest start to be charged on due tax?
Interest will be charged from the original due date.
What is the Penalty for unpaid tax?
- A penalty of 5% per month up to 25% of unpaid liability is assessed for failure to file a return.
- In general, a failure to pay penalty is imposed from the due date for the taxes
What are businesses the penalty rates for not depositing on time?
- 2% for deposits made 1-5 days late
- 5% for deposits made 6-15 days late
- 10% for deposits made 16 or more days late
- 5% for deposits made 6-15 days late
What is the basic standard deduction for a child?
the greater of either:
• $1,100 or
Earned income for the year plus $350 up to $12,400
