Filing Requirements - Preliminary Work

Question 1

3 Reasons to Compare Prior returns to Current Year Returns

Answer 1

Prevents errors

Identify significant changes

Identify uncommon items

Question 2

4 Typical Uncommon Items to look for on new returns

Answer 2

Sale of principal residence
Retirement Pay
Itemized Deductions
Applicable Taxes

Question 3

6 Items Needed from Prior Return to Complete Current Return - GASSFC

Answer 3

Gain or loss carry over, 
AMT for credit, 
State Income tax refund, 
Schedule D, 
Form 8801. 
Charitable gift carry over, 

8801 taxpayer not required to pay the alternative minimum tax but did will have a credit.

Question 4

Taxpayers correspondence with the IRS will show issues that will affect the current year return.

3 reasons to review?

AJA

Answer 4

Compliance with prior audits, adjustments and judgements.

Question 5

4 items of taxpayer personal information that needs to be reviewed to verify the identity of individuals to process the tax return.

Answer 5

DOB, age, marital status and dependents.

Question 6

3 reasons the age of individual is important to review

Answer 6

Additional deductions, retirement distributions, dependency.

Question 7

What affect does Married filing jointly have on deductions?

Answer 7

Increases beneficial dollar limit for deductions and credits

Question 8

What should you obtain to verify the identity of an individual?

Answer 8

State issued ID.

Question 9

What are the types of taxes that can belong to an individual..

Answer 9

Income tax, withholding estimated tax, FICA self employment tax, FUTA, AMT, Estate tax, gift tax, GST

Question 10

What are the 2 classifications of a non US citizen called for tax purposes?

Answer 10

Non-resident alien, resident alien

Question 11

2 types of tests to determine if an individual is a non-resident alien or a resident alien

Answer 11

Green card test and substantial presence test.

Question 12

What is the difference between a non resident alien and a resident alien?

Answer 12

A non-resident alien FAILS the green card test AND the substantial presence test.

A resident alien PASSES the green card test OR the substantial presence test.

Need to pass in the calendar year.

Question 13

When does a dual status alien occur?

Answer 13

Occurs when a person first comes to the United States or leaves the United States and they had residency in two jurisdictions.

Question 14

What can a dual status alien choose for tax purposes?

Answer 14

Whether to be taxed as resident alien or a non-resident alien.

Question 15

Determine if a tax payers needs to file a return, gross income includes..

Answer 15

Any income that can be excluded as foreign income or a foreign housing amount.

Question 16

T/F: Income, estate and gift tax returns, paying estimated tax are generally the same for U.S. and resident aliens.

Answer 16

True: whether they are living in the United States or abroad.

Question 17

T/F: Income, filing status and age generally determine whether a U.S. citizen or resident alien needs to file a tax return.

Answer 17

True

Question 18

T/F: Generally, U.S. citizens and residents aliens are taxed on domestic income.

Answer 18

False, they are generally taxed on world wide income.

Question 19

T/F: Non-resident aliens are generally taxed on domestic income only.

Answer 19

True, unless they elect to be treated as a U.S. resident. To file a joint return with a spouse who is a U.S. citizen or resident alien.

Question 20

Any U.S. citizen, resident or person doing business in the United States, who has an ownership interest, signatory authority, or other authority of financial account in excess of $10k at any time during the calendar year must file…

Answer 20

FINCEN report 114 report of foreign bank and financial accounts, commonly referred to as a FBAR

Question 21

When does a FBAR need to be filed by?

Answer 21

April 15th or October 15th if an extension is filed.

Question 22

What penalties if you fail to file an FBAR?

Answer 22

Civil and criminal penalties.

Question 23

What does form 8938 report on?

Answer 23

Reports specified foreign financial assets.

Question 24

Living in the United States, what is the threshold for individuals/MFS that need to file form 8938?

Answer 24

$50k at the last day of the year

More than $75k at any time during the year.

Question 25

Living outside the United States, what is the threshold for individuals/MFS that need to file form 8938?

Answer 25

$200k at the last day of the year

More than $300k at any time during the year.

Question 26

Living in the United States, what is the threshold for join returns that need to file form 8938?

Answer 26

$100k at the last day of the year

More than $150k at any time during the year.

Question 27

Living outside the United States, what is the threshold for joint returns that need to file form 8938?

Answer 27

$400k at the last day of the year

More than $600k at any time during the year.

Question 28

When must Form 8938 be filed?

Answer 28

It must be filed with any individual annual return.

Question 29

Do you need to file Form 8938 if you’re not required to file an annual individual income tax return?

Answer 29

No

Question 30

Do you need to file a FBAR if you file form 8938?

Answer 30

Yes

Question 31

Difference between filing dates between FBAR and Form 8938?

Answer 31

FBAR 4/15 or 10/15
8938 - With any annual return including income tax return 1040/1040NR/1040 SR, 1041N or information return 1065, 1120, 1120S

Question 32

Which type isn’t limited to Bank and Financial accounts? FBAR or Form 8938

Answer 32

Form 8938.

Question 33

Do you report FBAR or 8938 on FCEN?

Answer 33

FBAR

Question 34

Who must file Form 5471?

Answer 34

officers, directors or shareholders of foreign corporations.

Question 35

Form 5471 is used to satisfy the reporting requirements of these 3 sections

Answer 35

Section 1638 1646 and amounts related to sec. 965 and the related regulations with the tax return.

Question 36

What form is required for U.S. persons and executors of estate of U.S. decedents file to report certain transactions with foreign trusts, ownership of foreign trusts of rules 671-679 and receipts of large gifts and bequests from certain foreign persons.

Answer 36

Form 3520

Question 37

If you have interest in a foreign partnership what are the 4 categories that would require you to report form 8865.

Answer 37

50% or greater ownership
10% or greater of U.S. controlled corporation
Contributed property exceeding $100k or results in 10% ownership interest
Had a reportable event such as aquisitions, dispositions, or changes in proportinal interest.

Question 38

What is the normal due date of Form 1040?

Answer 38

15th day of the 4th months (4/15/2021).

This includes with respect to decendent or filed by the estate.

Question 39

What is the automatic extension of form 1040?

Answer 39

You have until the 15th day of the 6 month following year end if you live outside the U.S. or Puerto Rico due to main place of business or on-duty military service.

Question 40

What is a PTP?

Answer 40

A publicly trade partnership, an interest is traded on an established securities market, regardless of the # of partners.

Question 41

Withholding tax for PTP’s of foreign partners..

Answer 41

Any distribution to income to a foreign partner must pay withholding tax.

Question 42

What is form 1042?

Answer 42

Annual withholding tax return of U.S. source income of foreign persons of publicly traded partnerships.

Question 43

What is 1042 S?

Answer 43

Foreign persons U.S. source income subject to withholding to report withholding from distributions.

Question 44

Can you deduct losses to offset income from a PTP?

Answer 44

No, you can’t deduct the loss from income or other passive income activity. You must carry the loss forward when the PTP is profitable or when the taxpayer disposes their entire interest in the PTP.