Unit 1: Preliminary Work w/ Taxpayer Data

Question 1

Why do tax professionals utilizes Prior Year Returns?

Answer 1

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.

Question 2

Are Tax professional obligated to correct an error or omission of prior year tax returns if discovered?

Answer 2

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.

Question 3

When reviewing prior year tax returns. What items can affect the current year’s return?

Answer 3

Carry overs
Net Operating Losses
Credit for prior year minimum tax (Form 8801)
Prior-year depreciation and asset basis

Question 4

Taxpayer Biographical Information

Answer 4

Legal Name, DoB, and Marital Status
Residency status and/or citizenship
Dependents
Taxpayer Identification number (SSN, ITIN or ATIN)

Question 5

Identity Protection Personal Identity Number (IP PIN)

Answer 5

An identification number that must be entered into tax software for the IRS to accept an electronically filed tax return.

Question 6

Form W-7

Answer 6

A form utilized to request an Individual Taxpayer Identification Number (ITIN).

Question 7

Form W-7A

Answer 7

A form utilized to request an Adopted Taxpayer Identification Number (ATIN).

Question 8

Special Rules for Deceased Child

Answer 8

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.

Question 9

“Burden of Proof”

Answer 9

The responsibility to prove entries, deductions, and statements made on a taxpayer’s tax return.

Question 10

Form 1040

Answer 10

Basic tax form for individuals

Question 11

Form 1040SR

Answer 11

Basic tax form for individuals specifically designed for seniors by enlarged text.

Question 12

Form 1040-NR

Answer 12

Form filed by nonresident aliens to report their U.S source income.

Question 13

Form 1040X

Answer 13

Amended U.S. individual income tax return: This form is used to correct errors in a previously file tax returns.

Question 14

What is the normal due date for individual tax returns?

Answer 14

April 15. If April 15 falls on a Saturday, Sunday, or legal holiday, the due date is extended until the next business day.

Question 15

Form 4868

Answer 15

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.

Question 16

The Consolidation Appropriations Act

Answer 16

Passed on December 20, 2019, provides for a mandatory 60-day extension in federally declared disaster areas.

Question 17

Innocent Spouse Relief

Answer 17

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.

Question 18

Form 843

Answer 18

Taxpayers may request abatement of interest by filing this form.

Question 19

Separation of Liability Relief

Answer 19

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.

Question 20

Equitable Relief

Answer 20

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.

Question 21

Form 8857

Answer 21

This form is utilized to Request all three types of Innocent Spouse Relief from Joint tax liability.

Question 22

Form 8379

Answer 22

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.

Question 23

Form 1040-ES

Answer 23

Estimated Tax for Individuals
Payment Dates:
April 15th
June 15th
September 15
Januar 15 ( of the following year)