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Due Diligence - ansRequirements that tax professionals must follow when preparing income tax returns. Estimated Tax - ansThe amount of tax a taxpayer expects to owe for the year after subtracting expected amounts withheld and certain refundable credits. Estimated Tax Voucher - ansA statement by an individual of (1) the amount of income tax he estimates he will incur during the current taxable year on income that is not subject to withholding, (2) the excess amount over that withheld on income which is subject to withholding, and (3) his estimated self-employment tax. Exemption from Withholding - ansStatus claimed on Form W-4 directing the employer not to withhold federal income taxes from the employee. Underpayment Penalty - ansIf a taxpayer did not pay enough tax on a timely basis during the year, he may be required to pay an underpayment penalty. Two Ways to Pay as You Go - ansWithholding and Estimated Tax Payments Form W- 4 - ansEmployee's Withholding Allowance Certificate Form 4868 - ansApplication for Automatic Extension of Time To File U.S. Individual Income Tax Return Amended Return - ansA tax return filed on Form 1040X after the original return has been filed. Closed Year - ansA tax year for which the statute of limitations has expired. Open Year - ansA taxable year for which the statute of limitations has not yet expired. Failure-to-File Penalty - ansGenerally 5% for each month or part of a month the return is late, but not more than 25% of the tax not paid. Failure to File - ansTaxpayer fails to file the return by the due date, and there is a balance due. Form 1040X - ansAmended U.S. Individual Income Tax Return When can an amended return be filed? - ansWithin three years of the date the original return was filed, or within two years of the date the tax was paid, whichever is later. Can the 1040X be e-filed? - ansNo. Portfolio Income and Losses - ansThose from such sources as dividends, interest, capital gains and losses, and royalties. Schedule E - ansSupplemental Income and Loss Royalty - ansPayments received for the right to extract natural resources from the taxpayer's property or to use a taxpayer's literary, musical, or artistic creation. Annuity - ansA series of payments under a contract made at regular intervals over a period of more than one year. Beneficiary - ansThe owner or recipient of funds in an account, such as an IRA, or from an insurance policy or will. Contribution - ansWhen a person puts money into a retirement plan.
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Defined Benefit Plan - ansAn employee benefit plan that provides determinable benefits not based on employer profits. Defined Contribution Plan - ansAn employee benefit plan that provides a separate account for each person covered and pays benefits based on account earnings. Disability Pension - ansA taxable pension from an employer-funded disability plan or a disability provision of a retirement plan. Distribution - ansWhen a person takes or receives money from a retirement plan. Pension - ansGenerally a series of definitely determinable payments made to a taxpayer after retirement from work. Rollover - ansA qualified transfer of funds from one tax-favored account to another, usually of the same type. Roth IRA - ansA type of individual retirement arrangement in which contributions are not tax deductible, earnings grow tax deferred, and qualified withdrawals are tax free. Traditional IRA - ansAn individual retirement arrangement, contributions to which may or may not be deductible depending on the taxpayer's AGI and whether or not he is covered under an employer-sponsored retirement plan. What is the full retirement age? - ansFor workers born before 1938, it is 65. For those born after it is gradually being increased to 67. How much of a client's social security and equivalent tier 1 RR benefits may be taxable? - ansUp to 85%. Form SSA- 1099 - ansSocial Security Benefits Form RRB- 1099 - ansRailroad Retirement Benefits None of Social Security Benefits Taxable - ansSingle, Head of Household, Qualified Widow
- $0-$25,000; Married Filing Jointly - $0-$32, Up to 50% of Social Security Benefits Taxable - ansSingle, Head of Household, Qualified Widow - $25,001-$34,000; Married Filing Jointly - $32,001-$44, Up to 85% of Social Security Benefits Taxable - ansSingle, Head of Household, Qualified Widow - $34,001+; Married Filing Jointly - $44,001+; Married Filing Single - $1+ Fully Taxable Pension - ansPensions to which the taxpayer did not make after-tax contributions or from which all pre-tax amounts have been recovered in previous years. Partly Taxable Pensions - ansThose pensions funded through employer plans to which the employee contributed some after-tax money. Form 1099-R - ansDistributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc. Exceptions to the Early Withdrawal Penalty - ans01 - The distribution was made to an employee who separated from service during or after the year in which they reached age 55. 02 - The distribution is part of a series of substantially equal periodic payments, made at least annually for the life of the participant or the life expenctancy of the participant.
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participants, including joint filers whose spouses are not active participants; joint filers who are not active participants, but whose spouses are active participants. American Opportunity Credit (AOC) - ansCredit for qualifying education expenses available for tax years 2009 through 2012. The AOC may be partially refundable. Credits - ansReductions of tax liability allowed for various purposes to taxpayers who meet the qualifications. Some credits are refundable; that is, the IRS will send the taxpayer a refund for any amount in excess of the tax liability. Some credits are nonrefundable; that is, they can only reduce tax liability to zero. Some credits may be carried to other tax years. Lifetime Learning Credit - ansA nonrefundable credit equal to 20% of the first $10,000 of qualified higher education tuition and fees paid during the year on behalf of the taxpayer, his spouse, or his dependents. Nonrefundable Credit - ansA credit which cannot exceed the taxpayer's tax liability. Refundable Credit - ansA credit for which the IRS will send the taxpayer a refund for any amount in excess of the taxpayer's tax liability. Tuition and Fees Deduction - ansAn above-the-line deduction of up to $4,000 per tax return for qualified tuition and course-related expenses. Requirements to Claim the AOC - ansThe taxpayer pays qualified education expenses of higher education; the qualified education expenses are paid for an eligible student; the eligible student is the taxpayer, spouse, or dependent for whom the taxpayer actually claims an exemption. Modified Adjusted Gross Income (MAGI) - ansAGI plus foreign earned income exclusion, foreign housing exclusion, foreign housing deduction, income excluded by residents of Puerto Rico and American Samoa. Eligible Educational Institution - ansAny college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the US Department of Education. Reduction of Qualified Educational Expenses - ansQualified expenses must be reduced by any nontaxable: scholarships; grants; veteran's or military educational benefits; any other nontaxable benefits. Eligible Student - ansThe student has not claimed an AOC in any four earlier tax years; the student had not completed the first four years of postsecondary education before 2011; the student was enrolled at least half-time in a program leading to a degree for at least one academic period beginning in 2011; the student had not been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2011. Calculating the AOC - ansThe amount of the AOC is the sum of: 100% of the first $2,000 of qualified education expenses paid for the eligible student; 25% of the next $2,000 of qualified education expenses. Form 1098-T - ansTuition Statement
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Amount of the Lifetime Learning Credit - ans20% of the total qualified expenses for all eligible students on the tax return. Adoption Credit - ansA nonrefundable credit for qualified adoption expenses incurred for each eligible child. The credit cannot exceed $13,360 per child. The limit is a per-child limit, not an annual limit, and can be carried forward for up to five years or until used. Child and Dependent Care Credit - ansA nonrefundable tax credit of 20- 3 5% of employment- related child and dependent care expenses for amounts of up to $6,000, available to individuals who are employed and have a qualifying child or disabled spouse or dependent. Deductions - ansThese lower the tax by reducing the amount of income that would otherwise be taxable. Requirements to Claim the Child and Dependent Care Credit - ansMarried taxpayers must file a joint return; the care must have been provided so the taxpayer could work or look for work; the taxpayer must have some earned income; the taxpayer and the person for whom the care was provided must have lived in the same home; the person who provided the care must not be someone the taxpayer can claim as a dependent. Qualified Child or Dependent Care Expenses - ansThose incurred for the primary purpose of assuring the well-being and protection of a qualifying person while the taxpayer works or looks for work. Computing the Child Care Credit - ansA percentage of the smallest of the following: the amount of qualified expenses incurred and paid during the year; $3,000 for one qualifying individual or $6,000 for two or more; the taxpayer's earned income for the year. Form 2441 - ansChild and Dependent Care Expenses Amount of Adoption Credit - ansUp to $13,360 per eligible child. Eligible Child - ansFor purposes of the adoption credit or exclusion must be under age 18 or physically or mentally incapable of self-care. Special-Needs Child - ansA child who the state has determined should not be returned to his parents' home and who probably will not be adopted unless special assistance is provided to the adopting family. Nonbusiness Energy Property Credit - ansApplies to improvements such as adding insulation, energy-efficient exterior windows and doors, and energy-efficient heating and air conditioning systems. FICA - ansThe law that provides for social security and medicare benefits. This program is financed by payroll taxes imposed equally on the employer and employee. Schedule C - ansProfit or Loss From Business Schedule SE - ansSelf-Employment Tax When are education expenses not deductible? - ansIf the education is required to meet the minimum educational requirements in effect when the taxpayer first obtained the job or if it qualifies him for a new trade or business.
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2 Requirements for Moving Expenses - ans(1) Distance (2) Work time Distance Requirement for Moving Expenses - ansThe new job location must be at least 50 miles farther from the old residence than the old job location was. Work Time Requirement for Moving Expenses - ansAn employee must work full time in the vicinity of the new job location for at least 39 weeks during the 12 months following the move. Deductible Moving Expenses - ansHousehold goods; personal possessions; vehicles; pets. Alimony Payments - ansPayments made by one spouse to the other spouse or former spouse under a written separation or divorce instrument. Child Support Payments - ansPayments pursuant to a court order, divorce decree, or other legal obligation. Scholarships and Fellowships - ansFinancial aid grants awarded to students for the purpose of attending a college or performing research. Form 1099-G - ansUnemployment Compensation Fully Taxable Scholarships and Fellowships - ansIf a taxpayer receives a Form W-2 for scholarship and fellowship income, the income is fully taxable. Are gambling winnings taxable? - ansYes Form W-2G - ansCertain Gambling Winnings How Long-Term Disability Income is Reported - ans(1) Until the taxpayer reaches minimum retirement age, the disability pension payments are reported as wage income. (2) Beginning on the day after the client reaches minimum retirement age, the disability pension payments are reported as pension income. When is social security disability income reported as wage income? - ansNever Is social security disability income considered earned income? - ansNo Other Income (Form 1040 Line 21) - ansPrizes and awards; jury duty; cancelled debts; reimbursements; rental of personal property; taxable distributions from HSA or MSA; credit card insurance; hobby income; medical trial income. Nontaxable Income - ansMost bequests and inheritances; certain foster care payments; child support payments; disaster relief payments; federal income tax refunds; insurance proceeds or court judgments; life insurance proceeds; medical insurance proceeds; rebates; most veterans' benefits; welfare benefits; workers' compensation. Qualifying Child - ansA child who meets the relationship, age, residency, support, joint return, and the special test tests with regard to a taxpayer to determine the taxpayer's eligibility to claim the dependency exemption, child tax credit, earned income credit, or child and dependent care credit with regard to the child, or to use the head of household filing status.
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Qualifying Relative - ansA person who bears a certain relationship to the taxpayer for whom the taxpayer provides more than one-half support for the year, whose gross income for the year is less than the exemption amount, and who is not claimed as a qualifying child of any taxpayer. Qualifications for the Child Tax Credit - ans(1) The taxpayer must have a qualifying child. (2) The qualifying child must be under the age of 17 at the end of the year. (3) The qualifying child must be a dependent on the taxpayer's return. (4) The qualifying child must be a US citizen. Is the child tax credit refundable? - ansNo Is the additional child tax credit refundable? - ansYes Qualifications for the Additional Child Tax Credit - ans(1) Earned income exceeding $3000. (2) Three or more qualifying children. Maximum Earned Income Credit - ans$ Qualifications for Earned Income Credit - ans(1) Have a valid SSN. (2) Not filing married filing separately. (3) Be a US citizen. (4) Not file Form 2555. (5) Investment income of $3150 or less. (6) Have earned income. Qualifications for EIC without QC - ans(1) Between 25 and 65 years old. (2) Cannot be claimed as a dependent by another taxpayer. (3) Not a QC of another person. (4) Live in US over half the year. (5) AGI of less than $13660 ($18740 if MFJ). Qualifications for EIC with QC - ans(1) Have a QC. (2) QC not claimed by more than one person. (3) Not a QC of another person. (4) AGI less than: $36052 ($41132 MFJ) w/ 1 QC; $40964 ($46044 MFJ) w/ 2 QC; $43998 ($49078 MFJ) w/ 3+ QC. Relationship Test for QC - ans(1) Son, daughter, stepchild, eligible foster child, adopted child, or descendant. (2) Brother, sister, half-brother, half-sister, stepbrother, stepsister, or descendant. Age Test for QC - ans(1) Under 19 and younger than taxpayer. (2) Full-time student under 24 and younger than taxpayer. (3) Permanently and totally disabled. Residency Test for QC - ansMust have lived with taxpayer for more than half the year. Joint Return Test for QC - ansThe QC cannot file a joint return, unless merely to claim a refund. Investment Income - ansTaxable and exempt interest; taxable dividends; net capital gain income; net nonbusiness rents and royalties; net passive income. EIC Due Diligence - ans(1) Compute and submit an eligibility checklist. (2) Compute the amount of credit. (3) Comply with the knowledge requirement. (4) Retain records. Form 8867 - ansPaid Preparer's EIC Checklist Basis - ansA measure of the taxpayer's investment in property for tax purposes. Cost - ansIncludes the cash paid, the fair market value of services rendered, and the fair market value of property traded in exchange for the property.
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Form 8938 - ansStatement of Specified Foreign Financial Assets. May have to file if you have any financial interest in or signature authority over a financial account located in a foreign country. Form 1099-INT - ansInterest Income Most Common Types of Distributions - ans(1) Ordinary dividends (including qualified dividends) (2) Capital gain distributions (3) Nontaxable distributions Form 1099-DIV - ansDividends and Distributions Interest-bearing checking account, credited to account this year. Taxable? - ansYes Credit union savings account, credited to account this year. Taxable? - ansYes City municipal bond, pro rata earnings for this year. Taxable? - ansNo A 1988 US Series EE Bond, cashed in this year. Election to report interest annually has not been made. Taxable? - ansYes Corporate bond. Taxable? - ansYes Exempt-interest dividends from a municipal bond mutual fund. Taxable? - ansNo Nonresident Alien - ansA person who is not a US citizen and does not live in the US, or lives in the US under a nonresident visa, or does not meet the substantial presence test. Requirements for Head of Household - ans(1) The taxpayer is unmarried or considered unmarried on the last day of the tax year. (2) The taxpayer paid more than half the cost of maintaining the household for the year. (3) The taxpayer maintains a household for either of the following: A qualifying child or relative who lived with the taxpayer for more than half the year; His mother or father for the entire year. Exceptions to the Head of Household Requirements - ans(1) Married Qualifying Child (2) Non-Relative Dependent (3) Multiple Support Agreements (4) Non-Resident Aliens Married Qualifying Child - ansThe child of a taxpayer for head of household purposes cannot be married unless the taxpayer can claim an exemption for that child. Non-Relative Dependent - ansA dependent who meets the relationship test because they live in the same household with the taxpayer for the entire year cannot qualify the taxpayer for head of household status. The dependent must actually be related to the taxpayer. Married - But Unmarried for Tax Purposes - ans(1) The person must file a separate return from their spouse. (2) The person must have provided more than half the cost of maintaining their home for the tax year. (3) The home must have been the principal place of abode of the taxpayer and their dependent son, daughter, or eligible foster child for more than half the tax year. (4) The person's spouse must not have lived in the home at any time during the last six months of the tax year.
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Disadvantages of Married Filing Separately - ans(1) The standard deduction is $0 if the other spouse itemizes. (2) The effective tax rates are higher. (3) Many deductions and credits are phased out at lower income levels or disallowed completely. Requirements for Qualifying Widow(er) - ans(1) The taxpayer's spouse died in either of the tax years immediately preceding the current tax year. (2) The taxpayer paid over half the cost of maintaining their household which is the home of their dependent son, stepson, daughter, or stepdaughter for the entire year. Form 8332 - ansRelease/Revocation of Release of Claim to Exemption for Child by Custodial Parent Tie-Breaker Rules for Dependents - ans(1) If only one person is the child's parent, the child is treated as the qualifying child of the parent. (2) If the parents do not file a joint return together but both parents claim the child, the IRS will treat the child as the QC of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent the same amount of time, the IRS will treat the child as the QC of the parent with the highest AGI for the year. (3) If no parent can claim the child as a QC, the child is treated as the QC of the person with the highest AGI for the year. (4) If a parent can claim the child but no parent does claim the child, the child is treated as the QC of the person who had the highest AGI for the year. Scott is single. His daughter, Rita, is his qualifying child. They lived together for all of 2011. Scott pays more than 50$ of the cost of maintaining their home. Can Scott file head of household? - ansYes Wanda is single. Her mother, Anita, is her qualifying relative. Anita lived in her own home apart from Wanda for all of 2011. Wanda pays more than 50% of the cost of maintaining Anita's home each year. Can Wanda file head of household? - ansYes Laura is married. Her husband, Alan, moved out in October of 2011. Her son, Edward, is her qualifying child. She lived together with Edward for all of 2011. Laura pays more than 50% of the cost of maintaining their home. Can Laura file head of household? - ansNo Kaitlyn is single. Her friend, Leah, is her qualifying relative. Kaitlyn and Leah lived together for all of 2011. Kaitlyn pays more than 50% of the cost of maintaining their home. Can Kaitlyn file head of household? - ansNo Julie is married. Her husband, Gary, moved out in February of 2011. Her daughter, Kelli, is her qualifying child. She lived together with Kelli for all of 2011. Julie pays more than 50% of the cost of maintaining their home. Can Julie file head of household? - ansYes Timothy and Francine were married for 10 years before Francine's passing in 2011. Timothy paid all of the cost of maintaining a home for himself and his dependent son, Quentin. Quentin lived with Timothy for all of 2011. Timothy has not remarried. Can Timothy file qualifying widow(er)? - ansNo
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Eligible Foster Child - ansA child who was placed with the taxpayer by an authorized placement agency or by a court order, decree, or judgement. Full-Time Student - ansAn individual who is enrolled in a school for the number of hours or courses considered by the school to be full time. Multiple Support Agreement - ansA written declaration stating that the taxpayer will not claim an exemption for the individual in question for that taxable year. Noncustodial Parent - ansThe person who is not the custodial parent of the child. Permanent and Total Disability - ansA disability that prevents an individual from engaging in any substantial gainful activity because of a medically determined physical or mental impairment. Physical Custody - ansThe taxpayer with whom a child lives. Principal Place of Abode - ansThe place that an individual considers to be his permanent home. Support - ansThe total amount provided on behalf of an individual. Exemption Amount for 2016 - ans$ Five Tests For A Qualifying Child - ans(1) Relationship (2) Age (3) Residency (4) Support (5) Joint Return Ways A Qualifying Child Can Be Related To A Taxpayer - ansSon or daughter; Brother or sister; Adopted child; Eligible foster child; A descendant of any of these. Age of a Qualifying Child - ansUnder 19 at the end of the year and younger than the taxpayer; A full-time student under 24 at the end of the year and younger than the taxpayer; Permanently and totally disabled. Four Tests For A Qualifying Relative - ans(1) Relationship or member of the household (2) Gross income (3) Support (4) Not a qualifying child Can a taxpayer who may be claimed by another person on their return claim a dependent? - ansNo Items Considered In Determining A Dependent's Support - ansFood; lodging; clothing; grooming and personal care items; most medical and dental expenses, including health insurance premiums; most education expenses; child and dependent care; transportation; recreational activities; capital items purchased for dependent's individual use. Amount of Child Tax Credit - ans$1,000 per child. Qualifications for Child Tax Credit - ans(1) The taxpayer must have a qualifying child. (2) The qualifying child must be under the age of 17 at the end of the year. (3) The qualifying
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child must be claimed on the taxpayer's return. (4) The qualifying child must be a US citizen, US national, or resident of the US. Child Tax Credit Income Phaseout Levels - ans$75,000 - Single, Head of Household, Qualifying Widow(er) $110,000 - Married Filing Jointly $55,000 - Married Filing Separately Michael and Darla are married and have a daughter, Kayla (14). They all lived together for all of 2011. Kayla had no income. Qualifying child or relative? - ansQualifying Child Dale (25) is single. His brother, Jeff (27), lived with him for all of 2011. Jeff earned $3,000, all from wages, and had no other income. Dale provided more than half of Jeff's support. Jeff is not permanently or totally disabled. No one else lived with Dale. Qualifying child or relative? - ansQualifying Relative Cassandra is single. Her son, William (3), lived with her for all of 2011. William had no income. Qualifying child or relative? - ansQualifying Child Harold and Helen are married and have a son, Hank (22). Hank is a full-time student. Hand earned $3,800, all from wages, and had no other income. Harold and Helen provided 80% of Hank's support. Hank lives on campus while school is in session. During the summer, Hank lives with Harold and Helen. Qualifying child or relative? - ansQualifying Child Megan (27) is single. Her cousin, Pam (29), moved in with her in February of 2011. Pam earned $3,300, all from wages, and had no other income. Megan provided 60% of Pam's support. Pam is not permanently or totally disabled. No one else lived with Megan. Qualifying child or relative? - ansNeither Martin is single. His mother, Agnes (61), came to live with him in August of 2011. Agnes earned $14,000, all from wages, and had no other income. Martin provided 25% of Agnes' support. Agnes is not permanently or totally disabled. No one else lived with Martin. Qualifying child or relative? - ansNeither Teresa is single. Her daughter, Roberta (21), lived with her for all of 2011. Roberta is not a full-time student. Roberta earned $1,700, all from wages, and had no other income. Teresa provided 75% of Roberta's support. Roberta is not permanently or totally disabled. No one else lived with Teresa. Qualifying child or relative? - ansQualifying Relative George and Amanda are married and adopted a daughter, Sue Linn (4). The adoption was finalized in February of 2011, and Sue Linn came to live with George and Amanda that same month. Sue Linn had no income. Qualifying child or relative? - ansQualifying Child Tameka is single. Victoria (5) was lawfully placed in her care by the court in November of
- Victoria had no income and did not provide more than half of her own support. Prior to living with Tameka, Victoria lived with her mother for 10 months. Tameka provided 20% of Victoria's support. No one else lived with Tameka. Qualifying child or relative? - ansNeither
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Joint Return - ansA return combining the income, exemptions, credits, and deductions of a husband and wife. Married Filing Jointly - ansThe filing status used by a man and a woman who are married at the end of the tax year and not legally separated under a final decree of divorce or separate maintenance and who record total income, exemptions, and deductions of both spouses on one tax return. Married Filing Separately - ansThe filing status used by a married couple who chooses to record their respective incomes, exemptions, and deductions on separate individual tax returns. Standard Deduction - ansA base amount of income not subject to tax. Three Factors That Determine The Filing Requirement For Nondependents - ans(1) Marital Status (2) Age (3) Gross Income What day is marital status determined? - ansThe last day of the tax year. Four Legal Standards Of A Common-Law Marriage - ans(1) The parties must have the legal capacity to marry. (2) Single parties must have the current intent to marry. (3) The couple must live together as husband and wife. (4) The parties must publicly present themselves as husband and wife. Two Aspects To Determining Gross Income - ans(1) Who owns the income? (2) What income should be reported on a tax return? Community Property States - ansArizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin Five Filing Statuses - ans(1) Single (2) Married Filing Jointly (3) Married Filing Separately (4) Head of Household (5) Qualifying Widow(er) Standard Deductions for 2016 - ans$6300 - Single or Married Filing Separately $12600 - Married Filing Jointly or Qualifying Widow(er) $9300 - Head of Household Exemption for 2016 - ans$ When married filing separately, a taxpayer may claim his spouse's personal exemption only if the spouse: - ansHas no gross income; Is not filing a return; Is not a dependent of another person. Dependent's Standard Deduction - ansEqual to the greater of $950 OR their earned income plus $300.
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Injured Spouse Allocation - ansFiled when the injured spouse wants his/her share of the refund shown on the return and both of the following apply: (1) The injured spouse is not legally obligated to pay the past-due debt. (2) The injured spouse made or reported tax payments (income tax withholding or estimated tax payments) or claimed a refundable tax credit. Married filing jointly (48 and 44), gross income $16,750. Required to file? - ansNo; gross income less than $19,000. Qualifying widow (48), gross income $16,750. Required to file? - ansYes; gross income over $15,300. Single (64), gross income $10,000. Required to file? - ansYes; gross income over $9,500. Single (65), gross income $9,000. Required to file? - ansNo; gross income less than $10,950. Head of household (58), gross income $11,750. Required to file? - ansNo; gross income less than $12,200. Married filing jointly (72 and 68), gross income $19,750. Required to file? - ansNo; gross income less than $21,300. Married filing jointly (72 and 63), gross income $21,800. Required to file? - ansYes; gross income over $20,150. Married filing separately (72), gross income $3,750. Required to file? - ansYes; gross income over $3,750. Unmarried dependent (18) of another taxpayer, gross income $4,500, all from wages. Required to file? - ansNo; gross income less than $5,800. Unmarried dependent (2) of another taxpayer, gross income $1,000, all from interest. Required to file? - ansYes; unearned income over $950. Unmarried dependent (16) of another taxpayer, gross income $975 ($800 wages plus $ interest). Required to file? - ansNo; wages less than dependent standard deduction. Unmarried dependent (16) of another taxpayer, gross income $975 ($600 wages plus $ interest). Required to file? - ansYes; wages more than dependent standard deduction. Joseph and Megan were married on October 8, 2011. They wish to file only one return. Filing status? - ansMarried Filing Jointly Sean and Cynthia were divorced on September 21, 2011. Filing status? - ansSingle Michael and Jenna entered into a common-law marriage in 2006. They have not divorced. michael does not know the whereabouts of Jenna and has not spoken with her in two years. Filing status? - ansMarried Filing Separately David and Lynette had been married for 53 years. David died on March 2, 2011. Lynette did not marry and wants to file only one return. Filing status? - ansMarried Filing Jointly William and Kathleen were married on June 7, 2011. They legally separated on December 15, 2011. Neither is willing to file a return with the other. Filing status? - ansMarried Filing Separately
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Gains derived from dealings in property included in gross income? - ansYes Interest included in gross income? - ansYes Rents included in gross income? - ansYes Royalties included in gross income? - ansYes Dividends included in gross income? - ansYes Alimony and separate maintenance payments included in gross income? - ansYes Income from life insurance and endowment contracts included in gross income? - ansYes Pensions included in gross income? - ansYes Certain income from the discharge of indebtedness included in gross income? - ansYes Distributive share of partnership gross income included in gross income? - ansYes Income in respect of a decedent included in gross income? - ansYes Income from an interest in an estate or trust included in gross income? - ansYes Life insurance payments, if paid by reason of the death of the insured, included in gross income? - ansNo Gifts and inheritances included in gross income? - ansNo Interest on state and local bonds included in gross income? - ansNo Compensation for personal injuries included in gross income? - ansNo Qualified clergy housing allowances included in gross income? - ansNo Federal income tax refunds included in gross income? - ansNo Qualified scholarships and fellowships included in gross income? - ansNo Meals or lodging furnished for the convenience of the employer included in gross income? - ansNo Certain foster care payments included in gross income? - ansNo Disaster relief payments included in gross income? - ansNo Statements - ansAttached to the return to explain various types of income, deductions, and credits reported either on a schedule or directly on forms 1040EZ, 1040A, 1040, 1040NR, or 1040PR. Worksheets - ansNot sent to the IRS with the return, but are useful in compiling information and are kept with the taxpayer's copy of the return. Form W- 2 - ansWage and Tax Statement Form 4852 - ansSubstitute W- 2 W-2 Box 12 Code DD - ansCost of employer-sponsored health coverage. ITIN - ansIndividual Taxpayer Identification Number; Issued to taxpayers who are ineligible to get social security numbers. Steps to Compute AGI - ans(1) Add up all the income items. (2) Total all income adjustments. (3) Subtract total adjustments from total income.
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Steps to Compute Taxable Income - ans(1) Determine the taxpayer's standard deduction. (2) Subtract this from AGI. (3) Subtract the exemption amount.
