Filing Status & Exemptions

Question 0

State the basic tax formula

Answer 0

Gross Income
- deductions FOR AGI 
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
= Adjusted Gross Income
- Deductions FROM AGI
- Exemptions
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Taxable Income
x tax rate
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
= Gross Tax Liability
- Credits and Prepayments
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
= Tax Due or Refund

Question 1

When should a cash basis tax payer report income?

Answer 1

Report in the year in which income is either actually or constructively received, whether in cash or property.

Question 2

Identify the due date and extension available for individuals.

Answer 2

Due date: April 15th

Extension: 6 months or October 15th
File Form 4868

Question 3

Identify the various filing statuses.

Answer 3

Single
Married Filing Jointly
Married Filing Separately
Head of Household
Qualifying Widow(er) with dependent child

Question 4

What are the criteria for filing single?

Answer 4

• Unmarried or legally separated from spouse at the end of tax year.
• Does not qualify for another filing status.

Question 5

What are the criteria for filing Married Filing Jointly?

Answer 5

At year end of tax year:

• Married and living together as husband and wife; or
• Living together in a recognized common law marriage; or
• Married and living apart but not legally separated or divorced.

Question 6

What are the criteria for filing Married Filing Separately?

Answer 6

At year-end of tax year:

• Married; and
• If one spouse wants to be responsible only for own tax; or
• If both spouses do not agree to file a joint return.

Question 7

What are the criteria for filing head of household?

Answer 7

• individual is not married, legally separate. or is married and has lived apart from his/her spouse for the last 6 months of the year
• Individual is not a “qualifying widower” and is not a non-resident alien
• Individual maintained a home that, for more than half the taxable year, is the taxpayer’s principle residence of:
  1) Son or daughter who is a qualifying child or qualifies as the taxpayers dependent (qualifying relative)
  2) A dependent relative who resides with the taxpayer or
  3) a dependent father or mother regardless of whether they live with the tax payer.

Question 8

What are the criteria for filing Qualifying Widow(er)/Surviving Spouse ?

Answer 8

• Unmarried at end of tax year
• Surviving spouse must maintain a household, which for the ENTIRE taxable year was the principle place of abode of a son, stepson, daughter or stepdaughter; and
• The surviving spouse is entitled to a dependency exemption for the son, daughter, etc.

The taxpayer qualifies for this status for two years after year of death of spouse.

Question 9

Name the tests for claiming an exemption for a “Qualifying Child.”

Answer 9

Qualifying Child: (CARES Tests)

 Close Relative
 Age Limit (19/24) and younger than the taxpayer
 Residency and filing requirement
 Eliminates gross income test (exemption required)
 Support test changes

Question 10

Name the tests for claiming an exemption for a “Qualifying Relative.”

Answer 10

Qualifying Relative (SUPORT Tests)

Support (Taxpayer provides over 50%)
Under the personal exemption amount of (taxable) gross income.
Precludes dependent filing a joint tax return.
Only Citizens (residents of USA/Canada or Mexico)
Relative to Taxpayer
Taxpayer lives with individual for the whole year.

Question 11

What are the requirements for a multiple support agreement?

Answer 11

• Two or more people together provide more than 50% of support, but no one contributes more than 50%.
• To claim the exemption, must provide more than 10% of support, and meet the other dependency tests.
• A multiple support declaration, (Form 2120) must be filed.