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Flashcards in Filing Status Deck (10)
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1
Q

At the beginning of the current year, John Doe is single. However, during the year he marries Helen on January 23. The couple adopts two infant daughters from Russia on May 1 of that year. Unfortunately, during the year Helen dies in a car accident in November. John Doe does not remarry prior to the end of the year. The children do qualify as dependents. What tax status should John Doe use when filing his income tax return for this year?

  • Single
  • Head of household
  • Qualifying widow
  • Married filing jointly
A

Answer: Married Filing Jointly

EXPLANATION If a spouse dies during the tax year, the filing status at that time holds (unless a change occurs subsequently such as a remarriage). In this particular case, on the date that Helen died, the couple could file a joint return. Despite her death, that status still applies for that tax year.

2
Q

Bob Wilson died on October 1 of the current tax year. Bob was married to Rita. Bob’s two children (ages six and eight) lived with the couple full time. The children will continue to live with Rita. What filing status should Rita use in the year of death and subsequent years in which the unmarried children continue to live with her?

  • Rita should file single, head of household, or married filing separately in the year of death and then head of household for subsequent years
  • Rita should file as married filing jointly in the year of death and then as a qualifying widow (surviving spouse) for subsequent years
  • Rita should file married filing jointly in the year of death, then qualifying widow for two years, and then head of household for subsequent years
  • Rita should file head of household in the year of death and subsequent years
A

Answer: C - Rita should file married filing jointly in the year of death, then qualifying widow for two years, and then head of household for subsequent years

EXPLANATION

When a married taxpayer dies during the year, the filing status for that year is determined as of the date of death. Because the couple was married when he died, the surviving spouse can file a joint tax return for the year of death. For the next two years, the surviving spouse can file as a qualifying widow(er) as long as they meet all requirements. After those two years, Rita will qualify as head of household as long as she does not remarry and either an unmarried child or dependent relative lives with her.

3
Q

Which of the following statements is true with respect to filing status in connection with an individual tax return?

  • Taxpayers who meet the requirements for qualifying widow(er) status might want to choose to file as head of household.
  • Taxpayers who file as head of household get the same standard deduction as single filers but are taxed at a lower effective tax rate.
  • Taxpayers who file joint returns are taxed at the same effective tax rate as individuals who file as head of household, but the standard deduction is higher.
  • Single taxpayers pay a higher effective tax rate than individuals who file as head of household or joint filers. They also have the lowest standard deduction of the three.
A

EXPLANATION

Taxpayers who meet the requirements for qualifying widow(er) have no reason to file as head of household because that status has fewer tax breaks. However, head of household is taxed at a lower effective tax rate than single filers but at a higher effective tax rate than joint filers. Head of household also gets a higher standard deduction than single filers but lower than joint filers. Single taxpayers pay the highest effective tax rate of the three (single, head of household, or joint filers) and have the lowest standard deduction.

4
Q

Jon and Marlena were married several years ago and have lived together since that time. They have no children. On December 29 of the prior year, they were granted a decree of separate maintenance and they moved into two separate apartments. In January, Marlena came to you to advise her on filing her income tax return for the prior year. What filing status would you most likely advise her to take?

  • Single
  • Head of Household
  • Married Filing Jointly
  • Married Filing Separately
A

Answer: Single

EXPLANATION

If a couple has divorced or received a legal separation (decree of divorce or separate maintenance), as is the case here, by the end of the tax year, they cannot file as married. There is no information to indicate that Marlena would qualify as head of household. Therefore, you will probably advise her that she will need to file as a single taxpayer. However, it is possible that she might qualify as head of household, especially if she has maintained a home for a dependent parent.

5
Q

Gina and George, a married couple, visit their tax preparer Robert. Robert informs them that if they file separately, they will have a lower combined tax than if they file jointly. Gina and George have been married for 10 years and have always filed jointly. What options do they have?

  • They must continue to file jointly.
  • They can file separately this year and must continue to file separately in future years.
  • They can file separately this year and may file either jointly or separately in future years.
  • They must file separately.
A

Answer: C -They can file separately this year and may file either jointly or separately in future years.

EXPLANATION

Taxpayers can figure their tax both on a joint return and on separate returns (using the filing status of married filing separately) and choose the method that gives them the lower combined tax. Selecting a filing status for one year, either jointly or separately, does not affect the selection of a filing status for a future year.

6
Q

David and Diane were married on December 31, 20X1. Throughout 20X1, they each had their own personal residences and qualified dependents. They combined the two families and moved into a new residence on the day they married. What option do they have for 20X1 filing status?

  • They can both file head of household because they each maintained a home for qualified dependents during 20X1.
  • They can file as married filing jointly or they can file as married filing separately because they were married as of December 31, 20X1.
  • They can both file head of household because they were unmarried for a majority of the tax year.
  • They must file married filing jointly because they were married at the end of the year and the combined family now lives in the same residence.
A

Answer: B - They can file as married filing jointly or they can file as married filing separately because they were married as of December 31, 20X1.

EXPLANATION

Filing status is determined as of December 31 of the tax year in question. David and Diane are married as of the end of 20X1. Therefore, their choices are married filing jointly or married filing separate. They may not file as head of household. Head of household is for single filers who maintain a home for an unmarried child or dependent relative. David and Diane are married and lived together on the last day of the year.

7
Q

Mr. and Mrs. Morgenstern have been married for several years and have one child who lives at home and is their dependent. Mrs. Morgenstern died suddenly during February of 20X1. Mr. Morgenstern does not remarry prior to the end of 20X1. What filing status should he use when filing his income taxes for 20X1?

  • Single
  • Head of household
  • Qualifying widow(er)
  • Married filing jointly
A

Answer: D -Married filing jointly

EXPLANATION

In the year of death, a married couple may use the filing status that was appropriate on the day of death. When Mrs. Morgenstern died, they were married and, therefore, can still use that filing status for that year. Mr. Morgenstern can, if he remains unmarried, file as a qualifying widow(er) in the two years following his wife’s death.

8
Q

Mr. and Mrs. Valenca have been married since 20X1. His 30-year old brother lost his job and is living with them until he can find work. In 20X2, Mr. Valenca died in an accident. Mrs. Valenca does not remarry. Her brother-in-law continues to live with her all year and qualifies as her dependent. What filing status should she use when filing her income taxes for 20X3?

  • Single
  • Head of household
  • Qualifying widow(er)
  • Married filing jointly
A

Answer: B Head of Household

EXPLANATION

She can file using the head of household status in 20X3 because a dependent relative lived with her for the year. If she had a qualifying child, she could file as a qualifying widow in 20X3 and 20X4.

TIP: A joint return should have been filed for 20X2 since the couple was married at the date of death.

9
Q

In 20X1, Nancy’s husband died. They had three children, two of whom were still dependents. Nancy does not remarry and the two children remain as her dependents living with her until 20X5. What is her filing status for federal income tax purposes?

  • She is head of household for 20X1 through 20X4.
  • She is a qualifying widow (surviving spouse) for Years 20X1 through 20X4.
  • She is a qualifying widow (surviving spouse) for 20X2 and 20X3 and head of household for 20X4.
  • She is a qualifying widow (surviving spouse) for 20X1 and head of household for 20X2 through 20X4.
A

Answer: C - She is a qualifying widow (surviving spouse) for 20X2 and 20X3 and head of household for 20X4.

EXPLANATION

In the year of death, the couple files a joint return as long as they would have been able to file a joint return at the time of death. Because of the qualifying children, she can then file as a qualifying widow for the next two years. After that time, she can file as head of household as long as the children are dependents or unmarried and continue to live with her.

10
Q

Ann and Jim have been separated for two years as of December 31, 20X4 although they reconciled and lived together during the month of October, 20X4. They have never obtained a separate maintenance agreement or filed for divorce. They have two children who live full time with Ann and qualify as her dependents. What filing status must Ann use?

  • Head of household
  • Single
  • Married filing separately only
  • Married filing jointly or married filing separately at the taxpayers’ option
A

Answer: D - Married filing jointly or married filing separately at the taxpayers’ option

EXPLANATION

For individual income tax purposes, filing status is determined by examining the taxpayer’s marital status as of December 31 of the tax year. Taxpayers who are married as of the end of the year and do not have a separate maintenance agreement must file either a joint return or each file as married filing separately. However, Ann would be able to file as head of household if she and Jim had not lived together during the last six months of the year under the abandoned spouse rule.

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