Filing Requirements Study Unit One

Question 1

List nondeductible expenses.

Answer 1

1) rent and insurance premiums paid for the taxpayer’s own dwelling;
2) life insurance premiums paid by the insured;
3) upkeep of an autombile;
4) personal interest; and
5) payments for food, clothing or domestic help

Question 2

What information should you gather to help prepare current and future returns?

Answer 2

state income tax refund,

AMT for credit,

gain/loss carryover,

charitable gift carryover, etc.

Question 3

Taxes that must be filed

Answer 3

income tax,

estimated tax or taxes withheld

FICA (self-employment tax) and

FUTA,

AMT,

estate tax,

gift tax,

GST tax

Question 4

Foreign Income - Filing Requirements

Answer 4

Gross income includes any income that can be excluded as foreign earned income or as a foreign housing amount

What? do not understand this?

Question 5

Taxpayers US Citizen or Resident Alien - Filing Requirements

Answer 5

The rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether the tax payer is in the US or aboard.

A taxpayer’s income, filing status, and age generally determine whether a taxpayer’s income tax return must be filed

Question 6

What are the 5 filing status

Answer 6

MFJ, MFS, S, HOH, QW

Question 7

What are the requirements for two individuals treated as legally married?

Answer 7

1) legally married and cohabitating; or
2) legally married and living apart, but not no valid divorce decree or separate maintenance agreement

Question 8

MFJ allowed if one spouse is NRA?

Answer 8

A joint return is not allowed if one spouse was a nonresident alien (NRA) at any time during the tax year,

unless the US citizen and the NRA spouse so elect and agree to be taxed on their worldwide income.

Question 9

If one spouse files MFS can the other file MFJ?

Answer 9

If one spouse files separately, so must the other

Question 10

Can you amend an MFJ after the filing date to MFS?

Answer 10

Once a joint return has been filed and the time for filing the return of either spouse has expired, the spouses may not amend the return to file separate returns.

Question 11

Can you amend MFS to MFJ?

Answer 11

Married individuals who file separate returns may later file a joint (amended) return.

Payment of the entire joint tax liability is not required at the time the amended return is filed.

Question 12

MFJ and annulment

Answer 12

If an individual obtains a marriage annulment (no valid married ever existed), the individual must file amended returns claiming a filing status of single or HOH, whichever applies

Question 13

Innocent Spouse

Answer 13

One spouse may be relieved of joint and several liability under this provision in very limited circumstances.

Question 14

MFJ accounting

Answer 14

1) MFJ account for their items of income, deduction, and credit in the aggregate. 2) a joint return is allowed when spouses use different accounting methods. 3) Spouses with different tax years may not file a joint return.

Question 15

Injured Spouse

Answer 15

When a joint return is filed and only one spouse owes a past-due amount, the other spouse can be considered an injured spouse. An injured spouse can get a refund for their share of the overpayment that would otherwise be used to pay the past-due amount.

Question 16

Requirements to be considered an Injured Spouse

Answer 16

1) file a joint return 2) Have reported income (such as wages, interest, etc.) 3) have made and reported tax payments (such as federal income tax withheld from wages or estimated tax payments or cliaimed the EIC or other refundable credit; 4) not be required to pay a past-due amount. Use Form 8379

Question 17

MFS

Answer 17

Each spouse accounts separately for items of income, deduction and credit. A spouse who uses her own funds to pay expenses of jointly owned property is entitled to any deduction attributable to the payments

Question 18

QW

Answer 18

Status available for 2 years following the year of death and my be elected if (1) surviving spouse did not remarry during the tax years (2) surviving spouse qualified for MFJ (3) surviving spouse maintained a household for the taxable year. HOusehold maintenance means the spouse furnishes more than 50% of the costs to maintain the household for the tax year. (a) the household must be the principal place of abode of a dependent of the surviving spouse. The spouse must be entitled to clain a dependency exemption amount for the dependent. (b) The dependent must be a son/daughter, step child or adopted child. This does not include a foster child. (4) surviving spouse is entitled to a full personal exemption amount for the deceased spouse.

Question 19

Qualifications for Head of Household?

Answer 19

1. filing status - may not file as a surviving spouse
2. marital status - married person does not qualify for HoH unless she files separately, pays more than 50% toward maintaining the household, spouse has not been a member for the last 6 months, home if the principal residence of the QC for more than half the year and individual can claim a dependency exemption for the QC.
3. an individual is not treated as married for HoH status if the spouse is a NAR at any time during the tax year.

Question 20

What are the qualifying expenses for HoH maintenance?

Answer 20

Qualifying Expense
Property Tax
Mortgage Interest
Rent
Utilities
Upkeep
Repair
Property Insurance
Food consumed on premises

Question 21

What are nonqualified HoH maintenance expenses?

Answer 21

Nonqualifying Costs
Clothing
Education
Medical Treatment
Life Insurance
Transportation
Vacations
Services by the taxpayer
Services by the dependent

Question 22

Hoh

Answer 22

The TP must maintain a household that constitues the pricipal place of abode for more than half of the taxalbe year for at least one qualified individual who is a QC or QR

Question 23

What are the two special rules concerning a qualifying person?

Answer 23

First, the TP wiht a dependent parent qualifies even if the parent does not live with the TP

Second, if a qualifying child lives with the TP, the QC need not be the TP’s dependent.

Otherwise, the IRS maintains tha the qualifying individual must occupy the same household (except for temporary absences).

Question 24

What is taxable income?

Answer 24

Taxable income is AGI minus the deduction for personal lexemptions and either itemized deductions or the standard deduction.

The TP itemizes deductions if the total allowable itemized deductions, after all limites have been applied, is greater than the standard deduction. Otherwise she cliams the standard deduction. A person must elect to itemize, or no itemized deductions will be allowed.

1. election is made by filing Schedule A of Form 1040
2. Eleciton in any oher taxable year is not relevant
   3) . Election may be changed by filing an amended return (Form 1040X)
   4) A person who itemizes may not file either Form 1040EZ or Form 1040A

The standard deduction is the sum of the basic standard deduction and the additional standard deduction.

Question 25

Which persons are not allowed standard deductions?

Answer 25

1) persons who itemize deductions
2) NRA
3) Individuals who file a “short period” return
4) Married individuals who files a separate return and whose spouce itemizes
5) Partnerships, estates and trusts

Question 26

What is the basic standard deduction?

Answer 26

Depends on the filing status and the dependency status on another’s return

1) The basic standard deduction amount of a child under age 19 or a student under age 24 who can be claimed as a dependent on another individuals’s income tax return is limited to the greater of either
a) $950

or

b) Earned income for the year plus $300 up to the otherwise applicable standard deduction.
2) Earned income does not include either dividends or capital gains from the sale of stock.

Question 27

What are the basic and additional standard deduction amounts?

Answer 27

Filing Status Basic Additional
MFJ 11,600 1,150

QW 11,600 1,150

HoH 8,500 1,450

S 5,800 1,450

MFS 5,800 1,450

Question 28

Who is eligible for additional standard deductions?

Answer 28

1. Blind or vision no better than 20/200 - eligible for $1150 (MFJ, MFS or QW) or 1,450 (HoH or S) deduction
2. 65 and older eligible for $1150 (MFJ, MFS or QW) or 1,450 (HoH or S) deduction