R1 Filing Status & Exemptions

Question 0

State the basic tax formula.

Answer 0

gross income
- adjustments/deductions for AGI
= adjusted gross income
- deductions from AGI (greater of itemized or standard)
- exemptions
= taxable income
x tax rate
= tax liability
- credits and payments
= tax due or refund

Question 1

When should a cash basis taxpayer report income?

Answer 1

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

Question 2

What is the due date and extension available for individuals?

Answer 2

Due date: April 15

Extension: 6 months by filing form 4868

Question 3

Identify the various filing statuses.

Answer 3

Single
Married filing jointly
Married filing separately
Qualifying widow(er) with dependent child
Head of household

Question 4

What are the criteria for filing single?

Answer 4

• Unmarried or legally separated by year end

* Does not qualify for another filing status

Question 5

What are the criteria for married filing jointly?

Answer 5

By year end:
*Married and living together
*Living together in a recognized common law marriage
*Married and living apart but not legally separated or divorced
If one spouse dies during the year a joint return may be file for that year

Question 6

What are the criteria for married filing separately?

Answer 6

*Married by year end and one spouse wants to be responsible only for their own tax or
*If both spouses do not agree to file a joint return
Separate property state only report your items
Common property state split 50/50

Question 7

What are the criteria for filing head of household?

Answer 7

• Individual is not married, legally separated or is married but lived apart for the last six months of the year
• It is not a qualifying widow(er)
• It is not a nonresident alien
• Individual maintained a home that for more than HALF of the year is the principal residence of:
  1) Child or descendent who is a qualifying relative (dependent)
  2) Father or mother not required to live with the taxpayer
  3) Dependent relative that must live with the taxpayer

Question 8

What are the criteria for filing qualifying widow or surviving spouse?

Answer 8

• Unmarried by year end
• Must maintain a house for the WHOLE year as the principal residence of a dependent child
• And the surviving spouse is entitle for a dependency exemption for the child
• The status is good for 2 years after death of spouse after that is either single or head of household

Question 9

Name the test for claiming an exemption for qualifying child

Answer 9

C - close relative
A - age limit 19 or 24 if going to school full time and younger than taxpayer
R - residency for half the year and filing requirement cannot file joint return unless for refund
E - eliminate gross income test but must be able to claim as exemption
S - support test the child did not contribute for more than half of his own support

Question 10

Name the tests for claiming an exemption for a qualifying relative

Answer 10

S - support test must supplied over 50% of the support of the person
U - under exemption amount of taxable gross income
P - prohibits the person to file joint return unless for refund
O - only citizens if US, Mexico or Canada
R - relative does not have to live with taxpayer OR
T - taxpayer must live with individual if non relative for whole year (cousins and foster parents)

Question 11

What are the requirements for a multiple support agreement?

Answer 11

• Two or more people together provide for more than 50% of support, but not one contributes more than 50%
• To claim the exemption, must provide more than 10% of support and meet the other CARES or SUPORT requirements
• Form 2120 must be filed (multiple support declaration)