Flashcards in Study Unit One: Filing Requirements: Preliminary Work To Prepare Tax Returns Deck (26)
What does having the prior-year return help you do to when filing a current-year return?
-Prevent gross mathematical errors
-identify significant changes
-increase accuracy and efficiency
What items should you collect from the taxpayer in order to prepare their tax return correctly?
-Prior-year tax return
-Previous IRS Correspondence
-Information Returns - Providing potential sources of taxpayer gross income
-Determine if Individual or Business
-Items affecting Future Returns
-All Required Taxes Filed
-Special Filing Requirements
-Reporting Foreign Financial Accounts and Specified
Foreign Assets (FBAR)
-Global Intangible Low-Taxed Income (GILTI)
-Transactions with Foreign Trusts
-Interest in Foreign Partnerships
-Voluntary Disclosure Program
What Biographical information should you request from the taxpayer when preparing their tax return?
date of birth
If you are liable for Income Tax which Form(s) should you fill out and when is it due?
1040 and Schedule C
15th day of 4th month after end of tax year
If you are liable for Self-Employment Tax, which Form(s) would you fill out and when is it due?
Filed with Form 1040
(same deadline as 1040)
If you are liable for Estimated Tax, which Form(s) would you fill out and when is it due?
15th day of 4th, 6th, and 9th months of tax year, and 15th day of 1st month after the end of tax year
If you are liable for Social Security and Medicare Taxes and Income Tax Withholding, which Form(s) would you fill out and when is it due?
Form 941 or 944
April 30, July 31, October 31, and January 31
(See Pub. 15)
If you are liable for providing information on SS and Medicare taxes adn Income Tax WH, which Form(s) would you fill out and what are their due dates?
Form W-2 (to employee) - Jan. 31
Forms W-2 and W-3 (to the SS Administration) - Jan. 31
If you are liable for Federal Unemployment (FUTA) Tax, which Form(s) would you fill out and when are they due?
April 30, July 31, October 31, and January 31, but only if the liability for unpaid tax is more than $500
Why is it important to find out the age of the TP?
Determines if (s)he qualifies for additional deductions (65 and over), retirement distributions, dependency, etc.
Which filing status tends to increase beneficial dollar limits for deductions and credits?
Married Filing Jointly
What does would previous IRS correspondences (e.g., letters, notices) likely provide to you as a tax preparer?
Insight into issues still affecting the current return. IRS correspondences should be reviewed to ensure, among other things, compliance with prior audits, adjustments, and judgements.
What are the 3 nationality status for tax filing purposes?
Resident Alien (passed Green card and Substantial Presence Tests)
Nonresident Alient (not a U.S. Citizen)
What is a Dual-Status Alien?
Choose to be treated as a U.S. resident for part of the year. This usually occurs in the year of arrival in or departure from the United States.
What do information Returns Provide? List the top 3 information returns.
Information Returns Provide potential sources of taxpayer gross income.
Top 3 are:
W-2 - Wage and Tax Statement
W-2G - Certain Gambling Winnings
Forms 1099 (B, C, DIV, G, INT, K, MISC, OID, PATR, Q, R, S, SA) - Procedes from various financial situations.
Why is it important to determin if an individual and/or a business entity is involved?
Because businesses have certain deductible taxes that individual returns do not.
Personal, living, or family expenses are not deductible unless the Code specifically provides otherwise. Nondeductible expenses include:
1. Rent and insurance premiums paid for the TPs own dwelling
2. Life Insurance premiums paid by the insured.
3. Upkeep of a personal automobile
4. Personal interest; and
5. Payments for food, clothing, or domestic help.
Name certain items that can affect future returns that may be needed to file current-year returns?
State Income Tax Refund
AMT for credit
gain or loss carryover
charitable gift carryover
Under All Required Taxes filed, which taxes may a individual tax payer be required to file?
Withholding (estimated tax)
FICA (SE Tax)
Which Taxpayers responsible for their world wide income?
U.S. Citizens and Resident Aliens (or those choosing to be treated as U.S. resident like those who want to file a joint return and are married to a US citizen or resident alien).
When do you have to file Form FinCEN Report 114
If you are a U.S. Citizen, resident, or person doing business in the US who as an ownership interest in, or signatory authority or other authority over, a financial account (or several accounts) in a foreign country with an aggregate value in excess of $10,000 at any time during the calendar year.
When is FinCEN Report 114 Due and how do you submit it?
It is due on April 15th or October 15th with an extension.
FBAR is filed online with the Financial Crimes Enforcement Network each year.
What determines if a TP income tax return must be filed
TP's income, filing status, and age - generally.
What penalties are you subject to if you fail to file FBAR?
Subject to Civil and criminal penalties.
What are some differences between Form 8938 and FBAR?
Form 8938 is filed with your return, where FBAR is filed online with the Financial Crimes Enforcement Network (FCEN) by april 15th every year.
Form 8938 is filed with any annual return.
Filing thresholds for Form 8938 and FBAR are different, and the foreign financial assets that must be reported on Form 8938 are not limited to bank and financial accounts.
What if Form 5471?
Information Return of U.S. Persons With Respect
to Certain Foreign Corporations
used by certain US Citizens and residents who are officers, directors, or shareholders in certain foreign corporations.
This form is filed with the tax return.