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Flashcards in Taxes: Filing Status Deck (8)
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1

Taxes:
Filing Status
Married Filing Jointly

Married Filing Jointly
- marital status is determined on last day of the year
- innocent spouse: had no reason to know of other income not reported
- abandoned spouse: married but filing as head of house if:
- spouse has not lived at home for last 6 months
- taxpayer provides more than 1/2 cost of dependent child
- there is an election for nonresident alien spouses to still elect married filing jointly

2

Taxes:
Filing Status
Married Filing Separate

Married Filing Separate
- divide income and expenses according to ownership
- special rules for benefit of filing separately:
- if one itemizes, both must
- neither gets earned income credit
- neither child and dependent care credit
- neither get education credit
- expense or credit not allowed for adoption expenses
- deduction for Net Capital Loss limited to $1,500

3

Taxes:
Filing Status
Surviving Spouse

Surviving Spouse
- aka qualifying widower
- may used married filing jointly rates for 2 years
- must provide more than 1/2 cost of maintaining household for a dependent child (child lives with taxpayer)

4

Taxes:
Filing Status
Head of Household

Head of Household
- must provide more than 1/2 cost of maintaining household for a qualifying child (child lives with taxpayer) or relative (non-relatives don't qualify)
Exceptions
- qualifying child: unmarried child, even if do not qualify as dependent if custodial parent.
- qualifying relative = parent. Parent need not live with taxpayer but taxpayer must provide 50% support

5

Taxes:
Filing Status
Single

Single
- everyone else
- Key: a taxpayer who resides with a dependent child will get some sort of tax benefit

6

Taxes:
Filing Status
Standard Deduction

Standard Deduction
- automatic deduction of standard amount
- Key: for taxpayer filing married separately, divide by 2
Special Adjustments
- if taxpayer is blind or age 65
1. increase by $1250 if married or surviving spouse. $1,550 if not married. (1 deduction for blind and 1 for over age 65)
- not applied to dependents

7

Taxes:
Filing Status
Special Rules for Dependents on Another Return

Special Rules for Dependents on Another Return
- taxpayer claimed as dependent on another return gets a 'mini' standard deduction of $1,050
Deduction = greater of:
1. mini standard deduction $1,050 or
2. earned income + $350

8

Taxes:
Filing Status
Kiddie Tax

Kiddie Tax
- discourage taxpayers from giving income generating assets to children in order to have it taxed at childs low rates
- all children under 18, + 19-23 if full time student if EI does not exceed 50% of total support for the year
- TI divided into net unearned income (parent's rate) and OI (child's rate)
- parent can elect to report child's income if:
- age test
- only from interest, dividends, or capital gains
- gross income

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