Unit 1: Preliminary work with Taxpayer Data

Question 1

What are types of TINs?

Answer 1

SSN, ITIN, ATIN

Question 2

What can you do if you cannot obtain an SSN?

Answer 2

apply for ITIN or ATIN

Question 3

What form is used to request for an ITIN?

Answer 3

Form W-7, Application for IRS Individual Tax Identification Number

Question 4

What is the Adoption TAxpayer Identification Number designed for?

Answer 4

for adopted children who are

not yet eligible for a SSN

Question 5

What form is used to request an ATIN?

Answer 5

Form W-7A, Application for Taxpayer Identification for Pending US Adoptions

Question 6

How many years does the ATIN expire?

Answer 6

2 years from issuance

Question 7

What is the ATIN not used for?

Answer 7

claiming EITC, American Opportunity Credit, or Child Tax Credit

Question 8

What is Form 4868?

Answer 8

It is an application to extend the time to file a US individual tax return

Question 9

consolidation appropriations act

Answer 9

automatically gives 60-day extension to file and pay taxes in federally declared disaster areas

Question 10

Who gets an automatic 2-month extension to file and pay taxes?

Answer 10

NR aliens who have wage income not subject to US tax withholdings, US citizens or legal US residents living outside the US or PR who have businesses outside the US and PR, and active duty military serving outside the US

Question 11

What is the filing extension rule for taxpayers who live abroad?

Answer 11

They can file an additional 2-month extension beyond the 6 month extension

Question 12

What are the filing extension rules for people in combat zones?

Answer 12

their tax deadlines are suspended from the day they started serving the combat zone until 180 days after they leave the combat zone

Question 13

What is the penalty for filing returns late?

Answer 13

5% of unpaid taxes

Question 14

What is the 2019 penalty for being more than 60 days late to file a tax return?

Answer 14

$435 or 100% of unpaid tax (whichever is less)

Question 15

What is the failure to file penalty based on?

Answer 15

unpaid taxes by the due date, without regard to extensions

Question 16

What is the penalty for failing to pay by the due date?

Answer 16

0.5% for each month or part of a month taxes are unpaid after the due date

Question 17

What is the rate increase on failure to pay penalty?

Answer 17

1%

Question 18

When does the failure to pay penalty increase take into effect?

Answer 18

the day after a demand for immediate payment is issued or ten days after notice to levy certain assets is issued

Question 19

What is the interest charged in addition to filing penalties?

Answer 19

Federal ST rate +3% on the amount due

Question 20

3 types of spousal relief from joint tax liability

Answer 20

Innocent Spouse relief
Separation of Liability
Equitable Relief

Question 21

What form is used to get any form of spousal relief?

Answer 21

Form 8857, Request for Innocent Spousal Relief

Question 22

What is the timeline to request for innocent spousal relief?

Answer 22

within 2 years after the date of IRS collection activity

Question 23

Qualifications for separation of liability relief

Answer 23

you must no longer be married to, or must be legally separated from your spouse, or must be widowed or have lived apart for at least 12 months with whom the joint return was filed

Question 24

What is equitable relief?

Answer 24

IRS determines if it would be unfair for the TP to be liable for the understated or underpaid tax on a joint liability

Question 25

What is the statute of limitation for equitable relief if taxes were paid?

Answer 25

until the expiration of the refund statute

Question 26

What is the statute of limitations for equitable relief if taxes were unpaid?

Answer 26

10 years (Collection Statute Expiration Date)

Question 27

Criteria to be considered an Injured Spouse

Answer 27

The taxpayer must:

1. have filed a joint return
2. have paid federal income tax or claimed a refund
3. all or part of the refund was, or is expected to be applied to your spouse’s past financial obligations, and
4. not responsible for the debt

Question 28

Form used to Injured Spouse claim?

Answer 28

Form 8379, Injured Spouse Allocation

Question 29

What is the purpose of filing an Injured Spouse claim?

Answer 29

if you believe you are entitled to a portion of refund on a joint tax return

Question 30

How do you claim a refund?

Answer 30

File a 1040x manually within 3 years of filing due date or within 2 years of when taxes were paid (whichever is later)

Question 31

How do you claim refunds on tax withholding or estimated tax payments made?

Answer 31

File a 1040x within three years of due date

Question 32

What is the statute of limitations for the IRS to assess and audit filed taxes?

Answer 32

within three years after the return is filed or, if filed early, the due date of the return

Question 33

What is a “substantial understatement?”

Answer 33

it is when the IRS identified that gross income was understated by more than 25%

Question 34

What is the statute of limitations if the IRS identified a “substantial understatement?”

Answer 34

the IRS has six years to assess the tax

Question 35

What is the IRS collection statute?

Answer 35

The IRS has ten years to collect from the tax assessment date (bill date). Once it expires, the IRS loses its right to seize assets or make payment demands

Question 36

When are you required to make quarterly estimated taxes?

Answer 36

if you expect to owe at least $1,000 in taxes after subtracting withholdings and tax credits or if you expect the total amount of withholding and tax credits to be less than the smaller of: 100% of the tax liability on your prior year return or 90% of tax liability on your current year return

Question 37

How do you avoid an underpayment penalty from quarterly estimated taxes?

Answer 37

if your total tax liability minus withholdings and credits is under $1,000 or
if you pay estimated tax that is 100% of the tax liability on your prior year return

Question 38

when are you not required to make quarterly estimated taxes?

Answer 38

if you had zero tax liability in the prior year return

Question 39

What is the safe harbor rule for higher-income taxpayers to avoid estimated tax penalty?

Answer 39

If the AGI is more than $150,000 ($75,000 MFS), he must pay the smaller of 90% of expected tax liability for the current year or 110% of the tax shown on their prior year return to avoid an estimated tax penalty

Question 40

What is the process for paying estimated taxes?

Answer 40

complete form 1040 ES, Estimated Tax for Individuals and pay four payments for April 15, June 15, Sep 15, and Jan 15 (of the following year)

Question 41

What are the special rules regarding estimated taxes paid by qualified farmers and fishermen?

Answer 41

2/3 of gross income in the current year comes from (or came from in the prior year) farming and fishing activities, the following rules must apply:

you do not have to pay estimated tax if you file and pay taxes by the first day of the third month after the end of your tax year

you do not have to pay estimated tax if your current year income tax withholding is at least 2/3 of the total tax liability on your current year tax return or 100% of the total tax liability on your prior year return

if you are required to pay estimated tax, make only estimated tax payment by the 15th day after the end of your tax year

Question 42

What is the 2019 backup withholding rate?

Answer 42

24% for US citizens and legal residents 30% for nonresident aliens