R1 module 1

Question 1

Who must file a return?

Answer 1

if taxpayer’s income is > or = to sum of:
1) standard deduction amt (except MFS) AND
2) added standard deduction for ages 65 and older or blind (except MFS)

Question 2

Single status

Answer 2

-who are single or legally separated and living apart for the whole year
-not qualify for other filing statuses

Question 3

Married filing jointly status

Answer 3

-parties must have been married at end of year
-living together in common law marriage
-married and living apart (Not MFS)
-status available even if spouse dies during the year
-if divorced during the year; cannot qualify for MFJ status

Question 4

Qualifying widower/Surviving spouse

Answer 4

-may use MFJ tax rates and standard deduction for two years after year in which spouse dies
-taxpayer must maintain principal residence for dependent child for whole year

Question 5

Married filing separately

Answer 5

-can file even if one spouse generated income for the year
-must live in separate property states
-separately report incomes, deductions, and credits
-community property standards; 50/50 split

Question 6

Head of Household

Answer 6

-must not be married, legally separated, or living apart from spouse for last six months of tax year
-not a qualifying widower or nonresident alien
-maintain household for more than half a year for qualifying person (live with taxpayer unless father or mother)

Question 7

Qualifying child (CARES)

Answer 7

-close relative: son, daughter, stepchild, brother, sister, stepbrother/sister, or descendant, foster child
-age limit: child ages < 19 OR is 24 if full-time student and younger than taxpayer
-residency: same principal abode for > 1/2 tax year (unless foster child, full year)
-eliminate gross income does not apply
-support test: child does not contribute more than 1/2 of their own support
-child cannot file joint return unless for refund claim

Note: scholarships are exempt as income

Question 8

Father or mother

Answer 8

-not required to live with taxpayer provided taxpayer maintained principal residence for whole year for parent

Question 9

Maintaining a Home

Answer 9

-contributing over half costs to upkeep
-rent, mortgage, food, utilities, insurance, repairs etc.

Question 10

Qualifying relative (SUPORT)

Answer 10

-taxpayer provide > 50%; in multiple support situations, one must provide > 10%
-under specific amount of taxable gross income ($4,700)
-only U.S. citizens or U.S. residents, Canada, or Mexico
-Relative
-Taxpayer lives with individual for whole year
-must be a relative
-does not count if relative files for joint return unless no tax liability

Question 11

Taxable income definition

Answer 11

income that is taxable for gross income limitation

Nontaxable income
-social security (at low income levels)
-tax-exempt interest income (municipal and state bond interest)
-tax-exempt scholarships

Question 12

Multiple support agreements

Answer 12

-when both provide more than 50% support for person, but not more than 50% individually
1) claim dependent if contribute more than 10% support
2) joint contributors must file Form 2120
3) must be qualifying relative

Question 13

Children of divorced parents

Answer 13

-custody of child for greater part of the year qualifies as a dependent based on time test not divorce decree
-if parents have equal custody during year, parent with higher adjusted gross income claim tax benefits