Section 1: Unit 2: Determining Filing Status and Residency

Question 1

HOH Requirements

Answer 1

The head of household status is available to taxpayers who meet all of the following requirements:
* The taxpayer must be single, divorced, legally separated, or “considered unmarried” on the last
day of the year.
* The taxpayer must have paid more than half the cost of keeping up a home for the year.
* The taxpayer must have had a qualifying person living in his home for more than half the year. There are exceptions for temporary absences, as well as for a qualifying parent, who does not
have to live with the taxpayer. This would include hospitalization and stays in a nursing home.

Question 2

For ____ years following the year of the spouse’s death, the surviving spouse can use the
qualifying surviving spouse filing status if the survivor has a qualifying dependent and does not
remarry. After ___ years, the taxpayer’s filing status converts to single or HOH, depending upon which
status applies.

Answer 2

Two Years

Question 3

HOH Valid HouseHold Expenses

Answer 3

Include: Rent, mortgage int, prop taxes, home insurance, repairs, utilities, food eaten in the home

NOT included: clothing, education, medical, etc

Question 3

Qualifying Person for HOH

Answer 3

Generally has to be blood related, adoption, or marriage. Foster child also qualifies if legally placed in the home.

• A qualifying child (or foster kid)
• A married child who can be claimed a dependent
• A dependent parent (does not have to live with the HOH)
• A qualifying relative that meets relationship tests
• Generally cousin does NOT qualify

Question 4

“Considered Unmarried” HOH

Answer 4

They are considered unmarried if:
- files separate return
- pay more than 1/2 of home upkeep and maintain home as tehe main residence of a qualifying child, stepchild, or foster child. NOT grandchild for ‘considered unmarried’
- not live with spouse for last 6 months of tax year
- be able to claim an exemption for the child

Question 5

Qualifying Surviving Spouse Status Requirements

Answer 5

• not have remarried by end of year
• have been eligible for a joint return with deceased spouse
• have a qualifying child for the year (child, adopted, stepchild) NOT A FOSTER. NOT A PARENT.
• Have furnished over half the cost of keeping up the qualifying child’s home for the year

Question 6

Income taxed for
- Resident alien
- Nonresident alien
- Dual-status alien

Answer 6

Income taxed for
- Resident alien: worldwide income (same as US citizens)
- Nonresident alien: only US-income and certain income connected w business in the US
- Dual-status alien: These are BOTH non-res and res aliens in the same tax year. Complex & cannot be e-filed.

Question 7

Two methods for an alien to be considered a US resident.

Answer 7

• Green card test: can elect to be a US resident for the entire tax year for tax purposes in the year they get the card.
• Substantial presence test: must spend 31 days in US in current tax year (2023) AND 183 days during the 3-yr period, which includes 2023, 2022, and 2021.
  > Of the 183 days, all the days in the present year (2023) are counted, along with 1/3 of the days present in previous year (2022) and 1/6 of the year before (2021).
  If they do not pass this test and do not have a greencard, they are NONresident alients for tax purposes and is subject to US income tax only on their US -source income (1040-NR).

Question 8

Exempt Individuals for substantial presence test

Answer 8

• Foreign gov’t officials under A or G visa (ex. diplomats)
• Teachers on temp visas (2 years exempt) and au pairs (J-1 visa)
• Students on temp visas (5 years exempt; does not need to be consecutive). Does not pay FICA or medicare tax.
• noncitizens who pass the substantial presence test who claim a ‘closer connection’ to their home country (ex. Canadian snowbirds)

Question 9

Tax residency thorough marriage

Answer 9

If married to a US citizen, you can be elected to be treated as a resident for tax purposes IF:
- at the end of the year, one spouse is a nonresident alien and other is a US citizen
AND
- Both spouses agree to MFJ and treat the nonresident as a resident alien for the entire tax year

Question 10

7. Madison and Franco are not married and do not live together, but they have a two-year-old daughter named Ivette. Madison and her daughter lived together all year, while Franco lived alone in his own apartment. Franco cares for his daughter two days a week. Madison earned $17,900 working as a
   grocery store bagger. Franco earned $48,000 managing a hardware store. Franco paid over half the cost of Madison’s apartment for rent and utilities, where his daughter Ivette lives. He also gave Madison
   child support and extra money for groceries. Franco does not support any other family member. Which
   of the following statements is correct?
   A. Franco can file as head of household.
   B. Madison can file as head of household.
   C. Franco and Madison can file jointly.
   D. Neither Franco nor Madison can claim head of household filing status.

Answer 10

7. The answer is D.
   Although Franco provided over half the cost of maintaining a home for Madison and Ivette, he cannot file as head of household since Ivette (his daughter) did not live with him for
   more than half the year. Madison cannot file as HOH either because she did not provide more than one- half the cost of keeping up the home for her daughter. However, either Franco or Madison may still
   claim Ivette as a dependent and file as “Single.” Generally, a child is the qualifying child of the custodial parent, so Madison would have the primary right to claim Ivette. But Madison may also choose to
   release the dependency exemption to Franco (who is the noncustodial parent) by using Form 8332.

Question 11

6. Elvira’s husband died on November 3, 2023. She has one dependent son, who is eight years old. She
   did not remarry during the year. What filing status should Elvira use in 2023?
   A. Married filing jointly or Married filing separately.
   B. Single.
   C. Qualifying surviving spouse.
   D. Head of household.

Answer 11

6. The answer is A. If a taxpayer’s spouse died during the year, the taxpayer is considered married for the whole year and can file as married filing jointly or married filing separately in 2023.

Question 12

8. Rosemarie, age 65, and Lionel, age 72, were married on December 26, 2023. They have no dependents. Rosemarie had wages of $2,000, and Lionel had Social Security income of $19,000 for the year. Lionel wants to file jointly, but Rosemarie wants to file separately. Which of the following statements is correct?
   A. Lionel must file a tax return using the MFS status. Rosemarie is not required to file a return.
   B. Lionel may claim Rosemarie as a dependent, as long as she does not file her own separate return.
   C. Lionel and Rosemarie are both required to file tax returns, and they must both file MFS.
   D. Lionel and Rosemarie may both file as single since they were married for less than one month during
   the taxable year.

Answer 12

8. The answer is C. Since Lionel and Rosemarie are married, they can file either jointly or separately.
   If Rosemarie does not agree to file jointly with Lionel, both taxpayers must file MFS. The filing requirement threshold for married filing separately in 2023 is $5, so both spouses have a filing requirement.

Question 13

12. Liza and Stuart were married for many years. Stuart died on May 3, 2021. Liza and Stuart qualified to file MFJ in the year he died, with Liza signing the tax return as a surviving spouse. Liza did not remarry after her husband’s death. Liza has one dependent son, age 14. Which filing status should Liza
    use for her 2023 tax return?
    A. Single.
    B. Married filing jointly.
    C. Head of household.
    D. Qualifying surviving spouse.

Answer 13

12. The answer is D. In 2023, Liza is eligible for “qualifying surviving spouse” filing status. The year of death is the last year for which a taxpayer can file MFJ. For each of the two tax years following the year of the spouse’s death, the surviving spouse can use the “qualifying surviving spouse” status, if she has a qualifying dependent and does not remarry.

Question 14

15. Camille is 26 years old and an international student at Tulane University. She first came to the U.S. in 2013 from France in F-2 student immigration status with her father while he was completing his doctorate. They remained in the U.S. in the same status until he completed his doctorate in 2015, and then returned home to France. Camille reentered the U.S. as a J-1 student immigration status in 2021, and has not left the U.S. nor changed her immigration status. Camille works on-campus as a part-time tutor and earns $15,700 in wages during the year. For federal income tax purposes, what is Camille’s residency status in 2023?
    A. Camille is a nonresident alien.
    B. Camille is a resident alien.
    C. Camille is an undocumented alien.
    D. Camille is a dual-status alien.

Answer 14

15. The answer is B. Camille is classified as a U.S. resident alien for tax purposes in 2023 because she has already been in the U.S. during five previous calendar years in exempt student immigration status
    (three years with her father in F-2 status from 2013-2015, and two years as a student herself in 2021 and 2022). Camille should file Form 1040 in 2023, not Form 1040-NR (this question is based on a case
    study in the IRS’ VITA tax training program).

Question 15

16. All of the following individuals are required to file an income tax return except:
    A. A taxpayer who owes household employment tax for a nanny.
    B. A church employee who is exempt from FICA taxes, who earned $101 of wages in 2023.
    C. A 66-year-old unmarried taxpayer who is blind and earned $19,200 in 2023.
    D. A 26-year-old taxpayer with $8,500 in wages in 2023 who owes a 10% penalty on withdrawals from
    a traditional IRA account.

Answer 15

16. The answer is B. Church employees who are exempt from Social Security and Medicare taxes and have wages of $108.28 or more for the year are required to file a tax return. In answer “B,” the church
    employee’s wages are below that threshold. In all of the other answers, the taxpayer would be required to file a return.

Question 16

21. Which of the following dependency relationships would not qualify a taxpayer to claim “qualifying surviving spouse” as their filing status after the death of a spouse?
    A. A biological child.
    B. A foster child.
    C. An adopted child.
    D. A stepchild.

Answer 16

21. The answer is B. To be eligible for the qualifying surviving spouse filing status, the taxpayer normally must have a dependent child. For the purposes of the “qualifying surviving spouse” filing status, a qualifying child can be an adopted child, biological child, or stepchild, but does not include a foster child. This special rule for dependents that excludes foster children only pertains to the qualifying surviving spouse filing status.43 Answer “C” is incorrect because legally adopted children are always treated the same as biological children for federal tax law purposes.

Question 16

17. Adrienne and Troy are married and lived together all year. Adrienne earned $1,900 in wages during the year, and Troy earned $72,000. Adrienne wants to file a joint return, but Troy refuses to file with Adrienne and instead files a separate return on his own. Which of the following statements is correct?
    A. Adrienne can file a joint tax return and e-file it if Troy refuses to provide his signature.
    B. Adrienne can file as single because Troy refuses to sign a joint return.
    C. Adrienne does not have a filing requirement because her income is below the filing threshold.
    D. Adrienne and Troy must both file separate returns.

Answer 16

17. The answer is D. Married couples must agree to file jointly. If one spouse does not agree to file jointly, they are individually subject to the MFS filing threshold. In this case, Adrienne and Troy are both required to file separate tax returns because both are above the applicable earnings threshold for MFS.

Question 17

2. Question ID: 94816023 (Topic: Taxpayer Filing Status)
   Manny is recently divorced. He provided all the costs of keeping up his home for the year. Manny’s son, Franklin, lived with him the entire year. Franklin is 23 years old and was not a full-time student during the tax year. Franklin earned $5,600 from a part-time job during the year. Based on these facts, what is the BEST filing status for Manny?

A. Married Filing Jointly.
B. Married Filing Separately.
C. Head of Household.
D. Single.

Answer 17

Correct Answer Explanation for D:

Manny must file “Single”. He cannot file as Head of Household and claim his son, Franklin, as a dependent, because Franklin is 23 and was not a full-time student during the tax year, so he cannot be Manny’s qualifying child. Although Franklin only worked part-time, he earned too much for his father to claim him as a “qualifying relative” dependent. Therefore, Manny cannot file Head of Household because he does not have a qualifying person. (Question modified from an example in Publication 4491).

Question 18

9. Question ID: 94816044 (Topic: Taxpayer Filing Status)
   Ginny is age 48 and legally divorced. Ginny’s unmarried 21-year-old son, Denny, lived with her all year. Denny is not a student and worked a part time job, earning $5,400 in wages, but he did not provide more than one half of his own support. What is Ginny’s most favorable filing status?

A. Married Filing Separately
B. Single
C. Head of Household
D. Married Filing Jointly

Answer 18

Correct Answer Explanation for B:

Ginny can only file Single. Denny is 21 and was not a full-time student during the tax year, so he cannot be his mother’s qualifying child. Although Denny only worked part-time, he earned too much for Ginny to claim him as a qualifying relative dependent. Therefore, Ginny must file Single. She cannot file Head of Household because she does not have a qualifying dependent

Question 19

25. Question ID: 94815996 (Topic: Taxpayer Filing Status)
    Josephine is single and has no children. Her elderly step-father, Harold, is widowed and has no income. Harold does not live with her, but she pays 100% of his living expenses. What filing status is available to Josephine?

A. She may choose to file either Single or Head of Household.
B. Single.
C. Head of Household.
D. Qualifying surviving spouse (QSS)

Answer 19

Correct Answer Explanation for A:

Josephine can file either as Head of Household or as Single. A step-father is a “qualifying person” for Head of Household status, if all the other requirements are met. (Note: Although in-laws and step-parents are qualifying persons for HOH purposes, a “foster parent” is NOT.)

Question 20

31. Question ID: 94815954 (Topic: Taxpayer Filing Status)
    Elise’s husband died on May 1, 2023. She has one dependent son, aged 18. What is the most beneficial filing status for Elise in 2023, assuming she does not remarry before year-end?

A. Married Filing Separate
B. Qualifying surviving spouse (QSS)
C. Married Filing Jointly
D. Head of Household

Answer 20

Correct Answer Explanation for C:

In this scenario, Elise’s best filing status would be “Married Filing Jointly”. Elise may file as a surviving spouse with her deceased husband in the year that he actually died. Then, in the following year, her filing status would be “Qualifying Surviving Spouse” if her child was still her dependent. If a spouse dies during the year, the couple is still considered married for the whole year. The surviving spouse can choose either married filing jointly or married filing separately as her filing status, assuming she has not remarried. The executor or administrator must sign the return for the deceased spouse. If no one has been appointed as executor or administrator, the surviving spouse signs the joint return and enters “filing as surviving spouse” on the signature line of Form 1040.

Question 21

38. Question ID: 94850106 (Topic: Taxpayer Filing Status)
    Which of the following is a correct description of “joint and several” liability?

A. Each spouse is legally responsible for the entire liability of a tax return.
B. Both spouses attest to the truthfulness and accuracy of the return, upon penalty of perjury.
C. Either spouse can sign a joint return. It is not necessary for both spouses to do so.
D. The spouse with the higher income will be held legally responsible for any understatement of income or other penalties.

Answer 21

Correct Answer Explanation for A:

Filing a joint return offers certain tax benefits. However, it also means that each spouse is jointly and severally liable for the tax and any interest or penalties that arise as a result of the joint return. Each spouse is legally responsible for the entire liability related to a tax return, even in the case of a later divorce or if one spouse earned all the income or claimed improper deductions or credits. Taxpayers can apply for relief from joint and several liability. Three types of relief may be available: innocent spouse relief, separation of liability relief, and equitable relief.

Question 22

8. Question ID: 94816027 (Topic: Taxpayer Filing Status)
   Edgar’s wife moved out of their home on November 1, 2023. She has not returned to the marital home. Edgar provides all the cost of keeping up the home for himself, and his dependent child, who is 6 years old. Edgar’s wife is noncommunicative and does not respond to his calls. He cannot obtain a signature from her or any of her income information. He has not filed for divorce. What filing status should Edgar use?

A. Head of household
B. Married filing separately
C. Married filing jointly (with a disclosure)
D. Single

Answer 22

Correct Answer Explanation for B:

Edgar does not qualify for Head of Household status because he did not live apart from his wife for the last 6 months of the year. And he cannot file jointly with her, because she refuses to communicate or sign a joint return with him. So Edgar is forced to file “Married filing separately” in order to report his income for the year.

Question 23

11. Question ID: 94816005 (Topic: Taxpayer Filing Status)
    Anabelle’s husband moved out of their home on January 30, 2023 and has not returned to the marital home. Anabelle provides all the cost of keeping up the home for herself and her son, who is 11 years old and her dependent. Anabelle refuses to file a joint return with her estranged husband. What filing status should she use?

A. Head of household.
B. Single.
C. Married filing jointly.
D. Married filing separate.

Answer 23

Correct Answer Explanation for A:

Anabelle has a qualifying dependent, and qualifies for Head of Household filing status. Her husband moved out of the home in January, so she lived apart from her spouse for at least the last six months of the year. For tax law purposes, she is “considered unmarried”. The HOH filing status applies to unmarried individuals (or married individuals considered unmarried) who provide a home for a qualified dependent.

Question 24

16. Question ID: 94815938 (Topic: Taxpayer Filing Status)
    For the purpose of determining filing status, which of the following taxpayers would be treated as an unmarried individual for the entire tax year?

A. Paula, who got married to Danny on December 31 of the current tax year.
B. Opal, whose marriage was annulled, but not until January 1 of the following tax year.
C. Thomas, whose spouse died in March of the tax year.
D. Halle, who is married and lives apart from her spouse.

Answer 24

Correct Answer Explanation for B:

Marital status is typically determined as of the last day of the tax year. However, in the case of an annulment, the marriage is considered to never have happened. An annulment legally nullifies the marriage and return the parties to their prior single status, as if they never married. A taxpayer is considered unmarried (for tax purposes) for the entire Tax Year if, on December 31, any of the following applies:

-The taxpayer has never been married.
-A taxpayer is legally separated (but not under an interlocutory decree of divorce).
-A taxpayer is divorced and the divorce decree was finalized before December 31.
-The taxpayer’s marriage was annulled with an official court decree of annulment.
-The taxpayer is still legally married, but was “considered unmarried” for the purpose of qualifying for the Head of Household filing status.

Question 25

29. Question ID: 94816017 (Topic: Taxpayer Filing Status)
    Which of the following is not a requirement a taxpayer must meet in order to claim head of household filing status?

A. The taxpayer’s spouse did not live in the home during the last 6 months of the tax year.
B. The taxpayer is unmarried or considered unmarried on the last day of the year.
C. The taxpayer’s home was the main home of a foster child for more than half the year.
D. The taxpayer paid more than half of the cost of keeping up the home for the entire year.

Answer 25

Correct Answer Explanation for C:

In order to claim head of household, the taxpayer must have a qualifying dependent, but it does not have to be a foster child. It can be a child, step-child, or other qualifying dependent. All of the other choices are true.

Question 26

10. Question ID: 94815937 (Topic: Residency Status and/or Citizenship)
    With regards to determining residency for tax purposes under the Substantial Presence Test, which of the following days would be counted as an “official day” within the United States?

A. Any day that an individual is in the United States as an official crew member of a foreign vessel.
B. Any day that an individual is in transit between two places outside the United States, such as waiting in an airport for a connecting flight.
C. Any day that an individual regularly commutes from Canada or Mexico to work in the United States from a residence in Canada or Mexico.
D. Presence in the territorial waters of the United States.

Answer 26

Correct Answer Explanation for D:

Presence in the territorial waters of the United States would count as “physical presence” in the U.S. for the purposes of determining tax residency. A taxpayer is treated as “physically present” in the U.S. on any day you are physically present in the country, at any time during the day. This includes the following:

-Days present in all 50 states and the District of Columbia (Washington, DC).
-Presence in the territorial waters of the United States.
-The seabed and subsoil of those submarine areas that are adjacent to U.S. territorial waters and over which the United States has exclusive rights under international law to explore and exploit natural resources.

However, there are exceptions to this rule. Do not count the following as days of presence in the U.S. for the substantial presence test.

-Days you commute to work in the U.S. from a residence in Canada or Mexico, if you regularly commute from Canada or Mexico.
-Days you are in the U.S. for less than 24 hours, when you are in transit between two places outside the United States.
-Days you are in the U.S. as a crew member of a foreign vessel.
-Days you are unable to leave the U.S. because of a medical condition that develops while you are in the United States.
For details on days excluded from the substantial presence test, see the dedicated IRS page about the Substantial Presence Test.

Question 27

16. Question ID: 94816012 (Topic: Residency Status and/or Citizenship)
    A taxpayer is considered a “resident”, for U.S. federal tax purposes, if the taxpayer is a Lawful Permanent Resident of the United States at any time during the calendar year. This is known as the ____________ test.

A. The “substantial presence” test.
B. The “green card” test.
C. The “bona-fide resident” test.
D. The “U.S. residency” test.

Answer 27

Correct Answer Explanation for B:

A taxpayer is considered a “resident”, for U.S. federal tax purposes, if the taxpayer is a Lawful Permanent Resident of the United States at any time during the calendar year. This is known as the “green card” test. To learn more about this topic, see the dedicated IRS page about the Green Card Test.

Question 28

18. Question ID: 94815988 (Topic: Residency Status and/or Citizenship)
    Which filing status is NOT available to nonresident aliens on Form 1040-NR in 2023?

A. Qualifying surviving spouse (QSS)
B. Single
C. Married filing separately (MFS)
D. Married Filing Jointly

Answer 28

Correct Answer Explanation for D:

The only filing statuses available to nonresident aliens are Single, Married Filing Separately, and Qualifying surviving spouse (QSS).

Question 29

22. Question ID: 94815936 (Topic: Residency Status and/or Citizenship)
    If a taxpayer is not a U.S. citizen or a legal resident alien (i.e. a green card holder), a tax preparer must determine how the taxpayer should be treated for tax purposes. In order to meet the “substantial presence” test, the taxpayer must be physically present in the United States for at least ______ days over a three-year period, assuming that the days are counted according to the requirements of the test.

A. 365
B. 60
C. 180
D. 183

Answer 29

Correct Answer Explanation for D:

Individuals who have been physically present in the U.S. for at least 31 days in the current year and for at least 183 days over a three-year period, including the current year, meet the requirements of the substantial presence test.

The 183 days over a three-year period are counted as follows: all days present in the current year; 1/3 of the days present in the first year before the current year; and 1/6 of the days present in the second year before the current year. An individual who meets the requirements of the substantial presence test is, for tax purposes, a resident alien of the United States. This status applies even though the person may be an undocumented alien. To learn more about this topic, see the dedicated IRS page about the Substantial Presence Test.