Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Enrolled Agent: Individuals > Unit 1 > Flashcards

Unit 1 Flashcards

1
Q

What 7 items need to be done as the preliminary work to prepare the current year’s tax return?

A
  1. Obtain prior year’s tax return
  2. Obtain taxpayer biographic information (DOB, age, marital status, dependents).
  3. Citizenship status
  4. If it’s an individual or a business
  5. Notes that will affect future returns
    - State income refund
    - Amount for credit
    - Gain/loss carryover
    - Charitable gift carryover
  6. Affirm all required taxes are filed
  7. Special filing requirements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What 2 tests must a resident alien meet?

A
  1. Green card test

OR

  1. Substantial Presence test
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What items are nondeductible expenses?

A

Personal/living/family expenses are not deductible.

Rent
Insurance premiums
Automobile upkeep
Personal interests
Food
Clothing
Domesti help
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What 2 forms must be filed for foreign assets?

A
  1. Report of Foreign Bank and Financial Accounts (FBAR)

2. Form 8938

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the requirement to file the FBAR?

A

Aggregate amount over $10K

File online with Financial Crimes Enforcement Network by 4/15

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the requirement to file Form 8938?

A

File when aggregate value is over $50K at the last day of the year

OR

More than $75K at any time during the year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the requirements to file as a Qualifying Widow(er)?

A

Available for 2 years after

  • Did not remarry
  • Qualified to file for MFJ
  • Maintained household by furnishing more than 50% of household costs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the requirements to file as Head of Household?

A
  • May not file as Qualifying Widower
  • Maintain household that is the principal residence of a qualifying individual
  • Must furnish more than 50% of maintaining household

Married individual living with nonspouse qualifies if:

  • File separately
  • Pays 50% toward maintaing household
  • Spouse is not a member of household for past 6 months
  • Home is the principal home of child/stepchild/qualified foster child for more than half of the year
  • Can claim child as dependent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Which 5 people are not allowed for standard deduction?

A
  1. Person who itemizes
  2. Nonresident alien
  3. Filing “short period” return
  4. MFS if spouse itemizes
  5. Partnerships, estates, trusts
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the additional standard deductions?

A
  1. Age 65 or older
  2. Legally blind

If both, they are entitled twice the amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the basic standard deduction for a child under 19 or student under 24?

A

The greater of
$1,050

OR

Earned income for the year PLUS $350 (up to $12K)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the 3 requirements to file a tax return?

A
  1. Gross income above certain threshold
  2. Net earnings from self-employment is more than $400
  3. Depends with GI > standard deduction/unearned income >$1,050
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the gross income threshold?

A

Standard deduction less amount for being blind

MFS cannot include standard deduction

Exception for MFS $5 threshold

Include in gross income - gain on personal residence, foreign earned income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What form is filed for an automatic 6-month extension?

A

Form 4868

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the automatic extension for military personnel on duty outside US/Puerto Rico?

A

Automatic 2-month extension without filing Form 4868.

If Form 4868 is filed - it’s another 4 month extension.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

When are nonresident alien’s tax returns due?

A

Due June 15

It’s due on April 15 if wages are subject to withholding

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the penalty of failure to pay tax liability and failure to file?

A

Failure to file - 5% per month, up to 25%

Failure to pay - 0.5% per month, up to 25%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are the 2018 standard deduction amounts for each tax filing status?

A 
MFJ - $24K basic, $1.3K additional
Widower - $24K basic, $1.3K additional
HOH - $18K basic, $1.6 additional
Single - $12K basic, $1.6K additional
MFS - $12K basic, $1.3K additional
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the requirements for a qualifying child?

A
  1. Relationship test
  2. Age - under 19 or under 24 FT student
  3. Principal residence - same for more than half the year
  4. Not self-supporting - cannot provide more than 50% of own support
20
Q

What are the requirements for a qualifying relative?

A
  1. Relationship/residence
    - by blood, adoption, or marriage
    - resides with claimant for entire year
  2. GI is less than $4,150
  3. Claimants provides 50% of economic support
  4. Not qualifying child
21
Q

What is the standard deduction for dependent with unearned income?

A

Limited to the greater of:
$1,050
or
Earned income + $350

22
Q

What is Kiddie Tax?

A

When a dependent’s net unearned income is taxed at ordinary, capital gain rates of estates, trusts

Does not apply if dependent has earned income exceeding half of the support

23
Q

What are examples of earned income?

A

Salaries
Wages
Tips
Taxable scholarships

24
Q

What is the minimum allowed reduction in unearned income that a dependent is allowed?

A

At least $2,100 reduction in unearned income.

25
Q

Calculation of Net Unearned Income

A

Unearned Income

LESS (the sum of $1,050 + $1,050 or allowable deduction with production of unearned income)

26
Q

What is the tax rate for most types of US source income received by a foreign taxpayer?

A

30% tax rate

27
Q

What items are excluded from gross income?

A

Nontaxable scholarships
Tax-exempt bond interest
Nontaxable social security benefits

28
Q

What amount is the gross income threshold for married filing separately?

A

$5

29
Q

How long is the extension if a taxpayer filed Form 4868?

A

Automatic 6-month extension

30
Q

How long is the extension for military personnel on duty outside US/Puerto Rico without filing Form 4868?

A

Automatic 2-month extension.

If Form 4868 is filed - it allows another 4 months extension.

31
Q

When is a nonresident alien’s tax return due?

A

Due June 15

It’s due April 15 if wages are subject to withholding

32
Q

What is the penalty for failure to file penalty?

A

5% per month, up to 25%

33
Q

What is the penalty for failure to pay?

A

0.5% per month, up to 25%

34
Q

How long must employment taxes be kept?

A

At least 4 years from due date of return

35
Q

What are the 2018 standard deduction amounts?

A 
MFJ  $24K - additional $1.3K
Widow(er) $24K - additional $1.3K
Head of Household $18K - additional 1.6K
Single $12K - additional 1.6K
MFS $12K - additional $1.3K
36
Q

What 3 items are excluded from gross income?

A

Nontaxable scholarships
Tax-exempt bond interest
Non-taxable social security benefits

37
Q

4 test for a qualifying child

A
  1. Relationship
  2. Age - under 19 or FT student under 24
  3. Principal residence - same for more than 50% of the year
  4. Not self-supporting - cannot provide over half of own support
38
Q

4 tests for a qualifying relative

A
  1. Relationship/residence
    Relationship - by blood or adoption/marriage
    Resides with claimant for entire year
  2. Gross income of potential dependent must be < $4,150
  3. Not self-supporting
  4. Dependents not a qualifying child of any taxpayer
39
Q

What are the 4 special rules for qualifying dependent?

A
  1. Treated as having NO dependents.
  2. If MFJ - do not qualify as dependent of another
    files jointly to claim refund without regard to citizenship test
  3. US citizen/resident/national Canadian resident/Mexican resident
  4. Correct tax ID
40
Q

What is the standard deduction for a dependent with unearned income?

A

Limited to the greater of:
$1,050

OR

Earned income +$350

A dependent is allowed at least $2,100 reduction in unearned income

41
Q

What is “Kiddie Tax”?

A

When unearned income from a dependent under 19 or FT student under 24 - is taxed at ordinary, capital gain rates of estates, trusts.

The Kiddie Tax does not apply if dependent has earned income exceeding half of support

42
Q

What are examples of earned income?

A
  1. Salaries
  2. Wages
  3. Tips
  4. Taxable scholarships
43
Q

What are examples of unearned income?

A 
Interest
Dividends
Capital gains
Trust distributions
Debt cancellation
Pensions/Annuities
Social security
Royalties
44
Q

The calculation for net unearned income

A

Unearned income

LESS ($1,050 + ($1,050 or allowable deduction with production to income))

45
Q

What is the substantial presence test?

A

Must be in the US more than 31 days during the current year

Enrolled Agent: Individuals (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions