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SEE PT 1 > Unit 1 Prelim Work & Taxpayer Data > Flashcards

Unit 1 Prelim Work & Taxpayer Data Flashcards

1
Q

What should tax preparers do if they find errors and/or omissions from a taxpayers PY tx forms?

A

Inform tax payer of errors but taxpayer must decide to amend the mistake

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2
Q

What should tax preparer check for PY tax forms?

A

NOLs
Prior depreciation
Asset basis
TC carryover

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3
Q

What are the taxpayers biographical info to be gathered?

A

Legal name, Birthday, Marital Status
Dependents
Applicable TINs

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4
Q

Why is gathering bio info important?

A

To avoid fraud
Trust but verify

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5
Q

What is a Identity Protection Personal Identification Number (IP PIN)?

A

Alternate ITIN that IRS will accept on tax returns to protect taxpayer from using SSN.

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6
Q

What happens if a taxpayer does not have a SSN?

A

Must apply for ITIN

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7
Q

Is a non resident authorized to work in US if they have a ITIN?

A

No

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8
Q

Is SS benefits and EITC available for a taxpayer that has a ITIN?

A

No

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9
Q

How to obtain ITIN?

A

Fill W7
Help from IRS-authorized Cert Acceptance Agent (CAA)
In person at IRS Taxpayer Assistance Center

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10
Q

What form is used for ATIN?

A

W-7A

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11
Q

What happens to a baby that didn’t live within a year?

A

The Child can still be claimed as a dependent for that year; Stillborns do not count

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12
Q

How long should a taxpayer keep their Tax forms and supporting documentation?

A

3 year from the filing date or due date; whichever is later

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13
Q

What are some of the support docs to keep?

A

W-2, 1099, Bank Statements, pay stubs, brokerage statements, Schedule K-1 for income
Expenses such as 1098 forms, sales slip, CC statements
HUD statements for home purchases and sales
Investments: Forms 1099-DIV

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14
Q

Who else uses 1040 tax form besides US Citizens?

A

US Residence; different from Nonresident Aliens.

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15
Q

What is 1040-SR for?

A

Form for Taxpayers that are 65 or older

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16
Q

What is 1040-NR?

A

Form for Nonresident Aliens

17
Q

What form is used to make an amendment on tax returns current and/or prior?

A

1040-X

18
Q

What form does a Taxpayer need to file to request extension on filing for taxes?

A

Form 4868, App for Auto Extension of Time to File

19
Q

Who qualifies for Auto 2 month Extension (6/15)?

A

NR Aliens w/ no income subject to US withholding
US Citizen/Resident living outside US or PR
Active military outside US

20
Q

Who can request their filing extension to Dec 15th and why?

A

US Citizens/Residents living abroad

21
Q

How many days after leaving combat zone is a military personnel tax deadline suspended til?

A

180 days

22
Q

What is the Failure to file Penalty?

A

5% a month from deadline until 25% of unpaid taxes

23
Q

If failure to file is fraudulent, how much?

A

15% a month from deadline until 75% of unpaid taxes

24
Q

What is the amount if filing was 60 days late?

A

Penalty must be no less than $485 or 100% of the taxes due on return

25
Q

How much is penalty for failure to pay?

A

0.5% per month of unpaid taxes until 25%; penalty can increase to 1% the day after demand for repay or 10 after levying certain assets

26
Q

How much if both failure to pay and file?

A

Penalties are charge the same way as failure to pay.

27
Q

Will there be a penalty to taxpayer that fails to pay or file if they receive a refund?

A

No

28
Q

Is interest added to the unpaid taxes in addition to penalties?

A

Yes

29
Q

What is the interest rate for amount due?

A

Federal short-term interest rate determined quarterly plus 3% compound daily

30
Q

What is the least a Taxpayer must owe to not be penalized?

A

$1k

31
Q

What is safe harbor rule?

A

Taxpayer should pay 100% of PY tax in estimated payments for CY or 90% of CY.

32
Q

What is the Safe Harbor rule for High-income earners?

A

110% of PY in estimated payments or 90% of CY

33
Q

When are the days for estimated payments?

A

4/15, 6/15, 9/15 & 1/15/FY

34
Q

When is Statute of limitations?

A

3 years

35
Q

Why would the Statute of Limitations be 6 year?

A

If Gross Income is understated by more than 25%

36
Q

How long is the Collection Statute Expiration Date (CSED) and when does it start?

A

10 years, starting from date of tax assessment

SEE PT 1 (2 decks)

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