Unit 1: Preliminary Work w/ Taxpayer Data Flashcards
Why do tax professionals utilizes Prior Year Returns?
Enrolled Agents or other tax professionals are expected to perform due diligence in collecting, verifying, and gathering taxpayer date. This is done by reviewing prior year tax returns for compliance, accuracy and completeness.
Are Tax professional obligated to correct an error or omission of prior year tax returns if discovered?
No. Tax professionals are not required to correct the mistake. However, they are required by law to inform the taxpayer if an error or omission is discovered.
When reviewing prior year tax returns. What items can affect the current year’s return?
Carry overs
Net Operating Losses
Credit for prior year minimum tax (Form 8801)
Prior-year depreciation and asset basis
Taxpayer Biographical Information
Legal Name, DoB, and Marital Status
Residency status and/or citizenship
Dependents
Taxpayer Identification number (SSN, ITIN or ATIN)
Identity Protection Personal Identity Number (IP PIN)
An identification number that must be entered into tax software for the IRS to accept an electronically filed tax return.
Form W-7
A form utilized to request an Individual Taxpayer Identification Number (ITIN).
Form W-7A
A form utilized to request an Adopted Taxpayer Identification Number (ATIN).
Special Rules for Deceased Child
If a Child is born and dies within the same tax year and is not granted a SSN, the Taxpayer may still claim that child as a Dependent.
“Burden of Proof”
The responsibility to prove entries, deductions, and statements made on a taxpayer’s tax return.
Form 1040
Basic tax form for individuals
Form 1040SR
Basic tax form for individuals specifically designed for seniors by enlarged text.
Form 1040-NR
Form filed by nonresident aliens to report their U.S source income.
Form 1040X
Amended U.S. individual income tax return: This form is used to correct errors in a previously file tax returns.
What is the normal due date for individual tax returns?
April 15. If April 15 falls on a Saturday, Sunday, or legal holiday, the due date is extended until the next business day.
Form 4868
Application for automatic extension of time to file. This extension can also be filed electronically. An extension grants an additional 6 months to file a tax return.
The Consolidation Appropriations Act
Passed on December 20, 2019, provides for a mandatory 60-day extension in federally declared disaster areas.
Innocent Spouse Relief
When a Joint tax return has understated tax liability due to “erroneous items” attributable to a taxpayer’s spouse or former spouse. The taxpayer must establish that he or she did not know (or have reason to know) that there was an understated tax liability.
Form 843
Taxpayers may request abatement of interest by filing this form.
Separation of Liability Relief
A taxpayer must no longer be married to or must be legally separated, widowed or have lived apart of 12 months from the spouse with whom the join return was filed in order to be eligible for relief from joint tax liability.
Equitable Relief
Unlike the other two forms fo relief, this type of relief may also be granted for an underpaid tax, meaning it was properly reported on a tax return but not paid. If the Tax was paid, the taxpayer has until the expiration of the refund statute of limitations to request relief. If the tax was unpaid, the taxpayer has until the expiration of the collection statute of limitations (ten years) to seek relief.
Form 8857
This form is utilized to Request all three types of Innocent Spouse Relief from Joint tax liability.
Form 8379
Injured Spouse allocation
A Taxpayer who meets all of the following Criteria:
-have filed a joint return
-have paid federal income tax or claimed a refundable tax credit
-all or part of taxpayer’s refund was applied to his or her spouse’s past financial obligations
-not be responsible for the debt.
Form 1040-ES
Estimated Tax for Individuals Payment Dates: April 15th June 15th September 15 Januar 15 ( of the following year)