REG 1 - Filing Requirements, Filing Status, and Exemptions

Question 1

What is the individual income tax formula?

Answer 1

Gross Income
Less: Adjustments (deductions to arrive at AGI)
= AGI
Less: Standard Deduction or Itemized Deduction
Less: Exemptions
= Taxable Income
= Federal Income Tax - > Regular Tax and AMT
Less: Tax credits
Add: Other taxes (self-employment tax)
Less: Payments (withholding, last year overpaid)
= Tax due or refund

Question 2

Does the standard deduction or itemized deduction get used for filing 1040 EZ?

Answer 2

Standard deduction

Question 3

Who must file individual tax return?

Answer 3

• Individuals whose incomes are greater than
  1) Personal exemption
  +
  2) Standard deduction
• Individuals whose net earnings from self-employment are $400 or more must file

Question 4

When do you file individual tax return?

Answer 4

• Due date is April 15th

- Extension of 6-month is granted to October 15th, but must pay tax by April 15th

Question 5

Define the filing status of Single?

Answer 5

• Use end-of-year test

- You are considered single for the whole year, if on the last day of the year you’re unmarried or legally separated.

Question 6

Define the filing status of Married Filing Joint?

Answer 6

• Use end-of-year test
• You are considered married for the whole year, if on the last day of the year you’re married.
• If one spouse dies during the year, a joint return may be filed.

Question 7

Define the filing status of Qualifying Widow(er) with Dependent Child?

Answer 7

• Can only use for two taxable years after spouse’s death
• Surviving spouse must pay over 1/2 of the cost of maintaining a household where the dependent child lives for the WHOLE taxable year.
• Think of W for whole taxable year as W for Widow(er)

Question 8

Define the filing status of Head of Houshold?

Answer 8

• Individual must have dependent
• To qualify:
  1) Individual is not married
  2) Not a qualifying widow(er) with dependent child
  3) Not an illegal alien
  4) Individual maintains a principle residence for more than HALF the taxable year for dependent and provides more than 50% of support.
• Think of H for half of taxable year as H for Head of Household

Question 9

How can a taxpayer file Head of Household with a parent as a dependent?

Answer 9

• Dependent parent is not required to live with taxpayer
• Taxpayer must maintain a home that was the principle residence of the parent for the entire year.
• Maintaining a home means contributing over half of the upkeep (repairs, rent, nursing home).

Question 10

How can a taxpayer file Head of Household with a relative as a dependent?

Answer 10

Dependent relative MUST LIVE with taxpayer.

• Cousins and foster parents are NOT considered relatives.