Part 1 Flashcards
Individual
DO I HAVE TO FILE A RETURN?
If you are a citizen or resident of the United States or a resident of Puerto Rico and meet the filing requirements.
WHAT ARE THE CATEGORIES OF PEOPLE WHO NEED TO FILE A RETURN IF THEY MEET THE FILING REQUIREMENTS?
- Individuals in general (Special rule for individuals whose spouse has died, executors, administrators, legal representatives, U.S. citizens, and resident living outside the United States, residents of Puerto Rico, and individuals with income from U.S. territories)
- Decendents
- Certain children under age 19 or full-time students
- Self-employed persons
- Aliens
FILING REQUIREMENTS FOR INDIVIDUALS
If you are a U.S. citizen or resident, filing a return depends on your gross income, your filing status, and your age.
GROSS INCOME
Includes all income you receive in the form of money, goods, property, and services that isn’t exempt from tax. Also includes income from sources outside the U.S. or the sale of your main home (even if you can exclude all or part of it).
Include part of your social security benefits if:
1. You were married, filing a separate return, and you lived with your spouse at any time during 2023; or
2. Half your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly)
COMMUNITY PROPERTY STATES
Includes Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Must follow state law to determine what is community property and what is separate income.
A registered domestic partner in Nevada, Washington, or California must generally report half the combined community income of the individual and their domestic partner.
FILING STATUS
Your filing status depends on whether you are single or married and on your family situation. It is determined on the last day of your tax year, which is December 31 for most taxpayers.
AGE
If you are 65 or older at the end of the year, you can generally have a higher amount of gross income than other taxpayers before you must file.
TABLE 1.1: 2023 FILING REQUIREMENTS FOR MOST TAXPAYERS (GROSS INCOME TABLE)
***If you didn’t live with your spouse at the end of 2023 (or on the date your spouse died) and your gross income was at least $5, you must file a return regardless of your age.
SURVIVING SPOUSE, EXECUTORS, ADMINISTRATORS, AND LEGAL REPRESENTATIVES
You must file a return for a decedent if both of the following are true:
- Your spouse died in 2023 or you are executor, administrator, or legal representative.
- The decedent met the filing requirements at the date of death
US CITIZENS AND RESIDENT ALIENS LIVING ABROAD
To determine whether you must file a return, include in your gross income, any income you received abroad, including any income you can exclude under the foreign earned income exclusion.
INDIVIDUALS WITH INCOME FROM US TERRITORIES
If you had income from Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U.S. Virgin Islands, special rules may apply when determining whether you must file a U.S. federal income tax return. In addition, you may have to file a return with the individual island government.
RESIDENTS OF PUERTO RICO
If you are a U.S. citizen and also a bona fide resident of Puerto Rico, you must generally file a U.S. income tax return for any year in which you meet the income requirements. This is in addition to any legal requirement you may have to file an income tax return with Puerto Rico.
If you are a bona fide resident of Puerto Rico for the entire year, your U.S. gross income doesn’t include income from sources within
Puerto Rico. It does, however, include any income you received for your services as an employee of the United States or a U.S. agency. If you receive income from Puerto Rican sources that isn’t subject to U.S. tax, you must reduce your standard deduction. As a result, the amount of income you must have before you are required to file a U.S. income tax return is lower than the applicable amount in Table 1-1 or Table 1-2.
DEPENDENTS
RESPONSIBILITY OF A PARENT
- Generally, a child is responsible for filing their own tax return and for paying any tax on the return. If a dependent child must file an income tax return but can’t file due to age or any other reason, then a parent, guardian, or other legally responsible person must file it for the child. If the child can’t sign the return, the parent or guardian must sign the child’s name followed by the words “By (your signature), parent for minor child.”
CHILD’S EARNINGS
- Amounts a child earns by performing services are included in the child’s gross income and not the gross income of the parent. This is true even if under local law the child’s parent has the right to the earnings and may actually have received them. But if the child doesn’t pay the tax due on this income, the parent is liable for the tax.
CERTAIN CHILDREN UNDER AGE 19 OR FULL-TIME STUDENTS
If a child’s only income is interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends), the child was under age 19 at the end of 2023 or was a full-time student under age 24 at the end of 2023, and certain other conditions are met, a parent can elect to include the child’s income on the parent’s return. If this election is made, the child doesn’t have to file a return.
SELF-EMPLOYED PERSONS
You are self-employed if you:
- Carry on a trade or business as a sole proprietor,
- Are an independent contractor,
- Are a member of a partnership, or
- Are in business for yourself in any other way.
You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 or 1040-SR and Schedule SE (Form 1040), Self-Employment Tax, if:
- Your net earnings from self-employment (excluding church employee income) were $400 or more, or
- You had church employee income of $108.28 or more. (See Table 1-3.)
Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and Medicare tax withheld from an employee’s wages.
SCHEDULE SE (FORM 1040)
Used to figure your self-employment tax.
EMPLOYEES OF FOREIGN GOVERNMENTS OR INTERNATIONAL ORGANIZATIONS
If you are a U.S. citizen who works in the United States for an international organization, a foreign government, or a wholly owned instrumentality of a foreign government, and your employer isn’t required to withhold social security and Medicare taxes from your wages, you must include your earnings from services performed in the United States when figuring your net earnings from self-employment.
MINISTERS
You must include income from services you performed as a minister when figuring your net earnings from self-employment, unless you have an exemption from self-employment tax. This also applies to Christian Science practitioners and members of a religious order who have not taken a vow of poverty.
TABLE 1-2: 2023 FILING REQUIREMENTS FOR DEPENDENTS
ALIENS
Your status as an alien (resident, nonresident, or dual-status) determines whether and how you must file an income tax return.
RESIDENT ALIEN
If you are a resident alien for the entire year, you must file a tax return following the same rules that apply to U.S. citizens.
NONRESIDENT ALIEN
If you are a nonresident alien, the rules and tax forms that apply to you are different from those that apply to U.S. citizens and resident aliens.
DUAL-STATUS TAXPAYER
If you are a resident alien for part of the tax year and a nonresident alien for the rest of the year, you are a dual-status taxpayer.
TABLE 1-3: OTHER SITUATIONS WHEN YOU MUST FILE A 2023 RETURN
REQUIREMENTS FOR AN ELECTRONIC RETURN
You must sign the return electronically using a personal identification number (PIN). If you were issued an identity protection PIN (IP PIN), all six digits of your IP PIN must appear for your electronic signature to be complete.
WHEN TO FILE YOUR 2023 RETURN
If you use a fiscal year, your income tax return is due by the 15th day of the 4th month after the close of your fiscal year.
FILING PAPER RETURNS ON TIME
The paper return is filed on time if it is mailed in an envelope that is
1. Properly addressed
2. Has enough postage
3. Postmarked by the due date
If you send your return by registered mail, the date of the registration is the postmark date. If you send a return by certified mail and have your receipt postmarked by a postal employee, the date on the receipt is the postmark date.
You can use private delivery services such as UPS, FedEx and DHL
FILING ELECTRONIC RETURNS ON TIME
If you use IRS e-file, your return is considered filed on time if the authorized electronic return transmitter postmarks the transmission by the due date. An authorized electronic return transmitter is a participant in the IRS e-file program that transmits electronic tax return information directly to the IRS.
The electronic postmark is a record of when the authorized electronic return transmitter received the transmission of your electronically filed return on its host system. The date and time in your time zone controls whether your electronically filed return is timely.
FILING LATE
If you don’t file your return by the due date, you may have to pay a failure-to-file penalty and interest.
If you were due a refund but you didn’t file a return, you must generally file within 3 years from the date the return was due (including extensions) to get that refund.
NONRESIDENT ALIEN (DOES NOT EARN WAGES SUBJECT TO U.S. INCOME TAX WITHHOLDING)
June 17, 2024, if you use a calendar year
OR
The 15th day of the 6th month after the end of your fiscal year, if you use a fiscal year
FILING FOR A DECEDENT ON TIME
If you must file a final income tax return for a taxpayer who died during the year (a decedent), the return is due by the 15th day of the 4th month after the end of the decedent’s normal tax year
QUALIFICATIONS FOR AN EXTENSION
- Automatic Extensions
- You are outside the United States
- You are serving in a combat zone
AUTOMATIC EXTENSION
You can get an automatic extension by:
1. Using IRS e-file, or
2. Filing a paper form
E-FILE AUTOMATIC EXTENSION
2 ways:
- E-File using your personal computer or a tax professional to file Form 4868 electronically.
- E-File and pay by credit or debit card or by direct transfer from your bank account. You don’t file Form 4868, but you can get an extension by paying part or all of your estimate of tax due.
FILING A PAPER FORM 4868
You can get an extension of time to file by filing a paper Form 4868. If you are a fiscal year taxpayer, you must file a paper Form 4868.
If you want to make a payment with the form, make your check or money order payable to “United States Treasury.” Write your SSN, daytime phone number, and “2023 Form 4868” on your check or money order.
WHEN TO FILE EXTENSION
You must request the automatic extension by the due date for your return. You can file your return any time before the 6-month extension period ends.
WHEN YOU FILE YOUR RETURN (IF PAYMENT WAS MADE WITH EXTENSION)
Enter any payment you made related to the extension of time to file on Schedule 3 (Form 1040), line 10.
EXTENSIONS FOR INDIVIDUALS OUTSIDE THE US
- Allowed an automatic 2 month extension without filing Form 4868 (until June 17, 2024), to file your 2023 return and pay any federal income tax due:
1. You are a US citizen or resident
2. On the due date of your return:
a. You are living outside the US and PR and your main place of business or post of duty is outside the US or PR
b. You are in military or naval service on duty outside the US and PR
However if you pay the tax due after the regular due date (Apr 15), interest will be charged from that date until the date the tax is paid.
If you file a joint return, only one spouse has to qualify for this automatic extension. If you and your spouse file separate returns, the automatic extension applies only to the spouse who qualifies.
To use this automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension.
If you can’t file your return within the automatic 2-month extension period, you may be able to get an additional 4-month extension, for a total of 6 months. File Form 4868 and check the box on line 8.
An extension of more than 6 months will generally not be granted. However, if you are outside the United States and meet certain tests, you may be granted a longer extension.
EXTENSIONS FOR INDIVIDUALS SERVING IN A COMBAT ZONE
The deadline for filing your tax return, paying any tax you may owe, and filing a claim for refund is automatically extended if you serve in a combat zone.
The deadline for filing your return, paying any tax due, filing a claim for refund, and taking other actions with the IRS is extended in two steps. First, your deadline is extended for 180 days after the later of:
- The last day you are in a combat zone or the last day the area qualifies as a combat zone, or
- The last day of any continuous qualified hospitalization (defined later) for injury from service in the combat zone.
Second, in addition to the 180 days, your deadline is also extended by the number of days you had left to take action with the IRS when you entered the combat zone. For example, you have 3½ months (January 1–April 15) to file your tax return. Any days left in this period when you entered the combat zone (or the entire 3½ months if you entered it before the beginning of the year) are added to the 180 days.
The rules on the extension for filing your return also apply when you are deployed outside the United States (away from your permanent duty station) while participating in a designated contingency operation.
INDIVIDUALS SERVING IN A COMBAT ZONE
Applies to members of the Armed Forces, as well as merchant marines serving aboard vessels under the operational control of the Department of Defense, Red Cross personnel, accredited correspondents, and civilians under the direction of the Armed Forces in support of the Armed Forces.
COMBAT ZONE
A combat zone is any area the President of the United States designates by executive order as an area in which the U.S. Armed Forces are engaging or have engaged in combat. An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by executive order.
- The Arabian peninsula area, effective January 17, 1991.
- The Kosovo area, effective March 24, 1999.
- The Afghanistan area, effective September 19, 2001.
QUALIFIED HOSPITALIZATION
The hospitalization must be the result of an injury received while serving in a combat zone or a contingency operation.
- Any hospitalization outside the United States, and
- Up to 5 years of hospitalization in the United States.
SIX STEPS FOR PREPARING YOUR PAPER RETURN
1 — Get your records together for income and expenses.
2 — Get the forms, schedules, and publications you need.
3 — Fill in your return.
4 — Check your return to make sure it is correct.
5 — Sign and date your return.
6 — Attach all required forms and schedules.
You can’t use your own version of a tax form unless it meets the requirements explained in Pub. 1167.
FORM W-2
If you were an employee, you should receive Form W-2 from your employer.
Your employer is required to provide or send Form W-2 to you no later than January 31, 2024. If it is mailed, you should allow adequate time to receive it before contacting your employer. If you still don’t get the form by early February, the IRS can help you by requesting the form from your employer.
When you request IRS help, be prepared to provide the following information.
1. Your name
2. Address (including ZIP code)
3. Phone Number
4. Your SSN
5. Your dates of employment.
6. Your employer’s name, address (including ZIP code), and phone number.
FORM 1099
If you received certain types of income, you may receive a Form 1099. For example, if you received taxable interest of $10 or more, the payer is required to provide or send Form 1099 to you no later than January 31, 2024 (or by February 15, 2024, if furnished by a broker). If it is mailed, you should allow adequate time to receive it before contacting the payer. If you still don’t get the form by February 15 (or by March 1, 2024, if furnished by a broker), call the IRS for help.
ACCOUNTING PERIODS
Most individual tax returns cover a calendar year—the 12 months from January 1 through December 31. If you don’t use a calendar year, your accounting period is a fiscal year. A regular fiscal year is a 12-month period that ends on the last day of any month except December. A 52-53-week fiscal year varies from 52 to 53 weeks and always ends on the same day of the week.
You choose your accounting period (tax year) when you file your first income tax return. It can’t be longer than 12 months.
ACCOUNTING METHODS
Your accounting method is the way you account for your income and expenses. Most taxpayers use either the cash method or an accrual method. You choose a method when you file your first income tax return. If you want to change your accounting method after that, you must generally get IRS approval. Use Form 3115 to request an accounting method change.
ACCOUNTING METHOD - CASH METHOD
Report all items of income in the year in which you actually or constructively receive them. Generally, you deduct all expenses in the year you actually pay them. This is the method most individual taxpayers use.
ACCOUNTING METHOD - CONSTRUCTIVE RECEIPT
You constructively receive income when it is credited to your account or set apart in any way that makes it available to you. You don’t need to have physical possession of it.
For example, interest credited to your bank account on December 31, 2023, is taxable income to you in 2023 if you could have withdrawn it in 2023 (even if the amount isn’t entered in your records or withdrawn until 2024).
ACCOUNTING METHOD - GARNISHED WAGES
If your employer uses your wages to pay your debts, or if your wages are attached or garnished, the full amount is constructively received by you. You must include these wages in income for the year you would have received them.
ACCOUNTING METHOD - DEBTS PAID TO YOU
If another person cancels or pays your debts (but not as a gift or loan), you have constructively received the amount and must generally include it in your gross income for the year.
ACCOUNTING METHOD - PAYMENT TO THIRD PARTY
If a third party is paid income from property you own, you have constructively received the income. It is the same as if you had actually received the income and paid it to the third party.
ACCOUNTING METHOD - PAYMENT TO AN AGENT
Income an agent receives for you is income you constructively received in the year the agent receives it. If you indicate in a contract that your income is to be paid to another person, you must include the amount in your gross income when the other person receives it.
ACCOUNTING METHOD - CHECK RECEIVED OR AVAILABLE
A valid check that was made available to you before the end of the tax year is constructively received by you in that year. A check that was “made available to you” includes a check you have already received, but not cashed or deposited. It also includes, for example, your last paycheck of the year that your employer made available for you to pick up at the office before the end of the year. It is constructively received by you in that year whether or not you pick it up before the end of the year or wait to receive it by mail after the end of the year.
ACCOUNTING METHOD - NO CONSTRUCTIVE RECEIPT
There may be facts to show that you didn’t constructively receive income.
Example. Lennon, a teacher, agreed to the school board’s condition that, in Lennon’s absence, Lennon would receive only the difference between Lennon’s regular salary and the salary of a substitute teacher hired by the school board. Therefore, Lennon didn’t constructively receive the amount by which Lennon’s salary was reduced to pay the substitute teacher.
ACCOUNTING METHOD - ACCRUAL METHOD
You generally report income when you earn it, rather than when you receive it. You generally deduct your expenses when you incur them, rather than when you pay them.
ACCOUNTING METHOD - INCOME PAID IN ADVANCE
An advance payment of income is generally included in gross income in the year you receive it. Your method of accounting doesn’t matter as long as the income is available to you. An advance payment may include rent or interest you receive in advance and pay for services you will perform later.
A limited deferral until the next tax year may be allowed for certain advance payments.
SOCIAL SECURITY NUMBER (SSN)
You must enter your SSN on your return. If you are married, enter the SSNs for both you and your spouse, whether you file jointly or separately.
If you are filing a joint return, include the SSNs in the same order as the names. Use this same order in submitting other forms and documents to the IRS.
Once you are issued an SSN, use it to file your tax return. Use your SSN to file your tax return even if your SSN does not authorize employment or if you have been issued an SSN that authorizes employment and you lose your employment authorization. An ITIN will not be issued to you once you have been issued an SSN. If you received your SSN after previously using an ITIN, stop using your ITIN. Use your SSN instead.
Check that both the name and SSN on your Form 1040 or 1040-SR, W-2, and 1099 agree with your social security card. If they don’t, certain deductions and credits on your Form 1040 or 1040-SR may be reduced or disallowed and you may not receive credit for your social security earnings. If your Form W-2 shows an incorrect SSN or name, notify your employer or the form-issuing agent as soon as possible to make sure your earnings are credited to your social security record. If the name or SSN on your social security card is incorrect, call the Social Security Administration (SSA) at 800-772-1213.
NAME CHANGE
If you changed your name because of marriage, divorce, etc., be sure to report the change to your local SSA office before filing your return. This prevents delays in processing your return and issuing refunds. It also safeguards your future social security benefits.
DEPENDENT’S SSN
You must provide the SSN of each dependent you claim, regardless of the dependent’s age. This requirement applies to all dependents (not just your children) claimed on your tax return.
Exception. If your child was born and died in 2023 and didn’t have an SSN, enter “DIED” in column (2) of the Dependents section of Form 1040 or 1040-SR and include a copy of the child’s birth certificate, death certificate, or hospital records. The document must show that the child was born alive.
NO SSN
File Form SS-5, Application for a Social Security Card, with your local SSA office to get an SSN for yourself or your dependent. It usually takes about 2 weeks to get an SSN. If you or your dependent isn’t eligible for an SSN, see ITIN.
If you are a U.S. citizen or resident alien, you must show proof of age, identity, and citizenship or alien status with your Form SS-5. If you are 12 or older and have never been assigned an SSN, you must appear in person with this proof at an SSA office.
If you don’t provide a required SSN or if you provide an incorrect SSN, your tax may be increased and any refund may be reduced.
ADOPTION TAXPAYER IDENTIFICATION NUMBER (ATIN)
If you are in the process of adopting a child who is a U.S. citizen or resident and can’t get an SSN for the child until the adoption is final, you can apply for an ATIN to use instead of an SSN. File Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS to get an ATIN if all of the following are true:
- You have a child living with you who was placed in your home for legal adoption.
- You can’t get the child’s existing SSN even though you have made a reasonable attempt to get it from the birth parents, the placement agency, and other persons.
- You can’t get an SSN for the child from the SSA because, for example, the adoption isn’t final.
- You are eligible to claim the child as a dependent on your tax return.
After the adoption is final, you must apply for an SSN for the child. You can’t continue using the ATIN.
NONRESIDENT ALIEN SPOUSE
If your spouse is a nonresident alien, your spouse must have either an SSN or an ITIN if:
- You file a joint return, or
- Your spouse is filing a separate return.
INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER (ITIN)
The IRS will issue you an ITIN if you are a nonresident or resident alien and you don’t have and aren’t eligible to get an SSN. This also applies to an alien spouse or dependent.
To apply for an ITIN, file Form W-7 with the IRS. It usually takes about 7 weeks to get an ITIN. Enter the ITIN on your tax return wherever an SSN is requested.
If you are applying for an ITIN for yourself, your spouse, or a dependent in order to file your tax return, attach your completed tax return to your Form W-7.
You can’t e-file a return using an ITIN in the calendar year the ITIN is issued; however, you can e-file returns in the following years.
An ITIN is for federal tax use only. It doesn’t entitle you to social security benefits or change your employment or immigration status under U.S. law
SSN FOR CORRESPONDENCE
If you write to the IRS about your tax account, be sure to include your SSN (and the name and SSN of your spouse, if you filed a joint return) in your correspondence. Because your SSN is used to identify your account, this helps the IRS respond to your correspondence promptly.
PENALTY FOR NOT PROVIDING SSN
If you don’t include your SSN or the SSN of your spouse or dependent as required, you may have to pay a penalty.
ROUNDING OFF DOLLARS
You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar.
If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.
If you are entering amounts that include cents, make sure to include the decimal point. There is no cents column on Form 1040 or 1040-SR.
NEGATIVE AMOUNTS
If you file a paper return and you need to enter a negative amount, put the amount in parentheses rather than using a minus sign. To combine positive and negative amounts, add all the positive amounts together and then subtract the negative amounts.
ATTACHMENTS - FORM W-2
Form W-2 is a statement from your employer of wages and other compensation paid to you and taxes withheld from your pay. You should have a Form W-2 from each employer. If you file a paper return, be sure to attach a copy of Form W-2 in the place indicated on your return.
ATTACHMENTS - FORM 1099-R
If you received a Form 1099-R showing federal income tax withheld, and you file a paper return, attach a copy of that form in the place indicated on your return.
ATTACHMENTS - FORM 1040 or 1040-SR
If you file a paper return, attach any forms and schedules behind Form 1040 or 1040-SR in order of the “Attachment Sequence No.” shown in the upper right corner of the form or schedule. Then, arrange all other statements or attachments in the same order as the forms and schedules they relate to and attach them last. Don’t attach items unless required to do so.
