Pnw Tax School 1. Filing Requirements, The Standard Deduction, Decedents

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Five (5) Filing Statuses

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1) Single

2) Married Filing Jointly

3) Married Filing Singly

4) Head of Household

5) Qualifying Widow(er) with Dependent Child

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You are not allowed to claim the Standard Deduction if:

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1) You are married filing a separate return, and your spouse itemized his/her deductions.

2) You are filing a tax return for a short tax year because of a change in your accounting period.

3) You are a Nonresident or Dual-Status Alien during the year.

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Dual-Status Alien

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Both a Nonresident and Resident Alien during the year.

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If you are a dependent, your personal exemption will be claimed on the return of the filer who who is claiming you as a dependent, therefore you determine your filing requirement by determining your:

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Standard Deduction

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Earned Income includes:

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Salaries, wages, tips, and professional fees.

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Unearned Income includes:

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Income from taxable interest, dividends, capital gains, pensions, annuities, rentals, unemployment compensation, taxable social security benefits, and distributions from a trust.

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If you can be claimed as a dependent on another person's tax return, your Standard Deduction is limited to the greater of:

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1) $1,000, or

2) Your earned income for the year plus $350 (but not more than the regular Standard deduction amount, generally $6,200).

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If you are a dependent who is age 65 or older or blind, you may increase your standard deduction for each of these conditions by:

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$1,200 if married

$1,550 if single

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You must file a return is any of these five (5) special conditions apply for the year:

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1) You owe any special taxes.

2) You (or your spouse, if filing jointly) received HSA, Archer MSA or Medicare Advantage MSA distributions.

3) You had net earnings from self-employment of at least $400.

4) You had wages of $108.28 or more from a church or qualified church controlled organization that is exempt from employer Social Security and Medicare taxes.

5) Advance payments of the Premium Tax Credit were made to you, your spouse, or a dependent who in enrolled in coverage through the Health Insurance Marketplace.

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Nonresident Alien must file:

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Form 1040NR

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Dual-Status Taxpayer

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1) For the part of the year you were a Nonresident, you will report your U.S. source of income of Form 1040NR, and

2) For the part of the year you were a U.S. Resident, you will report your worldwide income on Form 1040.

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You are a Resident Alien of the United States for tax purposes if you meet either:

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1) The Green Card Test

2) The Substantial Presence Test for the calendar year

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"United States" does not include:

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1) U.S. Possessions & Territories, or

2) U.S. Airspace

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Four (4) Categories of Exempt Individuals

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1) Foreign Government Related Individuals

2) Teacher or Trainee

3) Student

4) Professional Athlete (Charitable)...temporarily present in the U.S.

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Only _____ income should be used to determine your filing requirement. _____ income does not affect your filing requirement.

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Taxable

Nontaxable

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Earned Income

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Money or property you receive for services you perform, ie. wages, commissions, tips, and farming or other business income.

Earned Income is taxable income that is used to determine your filing status.

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Unearned Income

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Income from investments such as taxable interest, dividends, capital gains, rental property, royalties, unemployment benefits, alimony, pensions and any other income you receive that is not compensation for performing a service.

Unearned taxable income is used to determine you filing requirements.

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Seven (7) Examples of Nontaxable Income

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1) Child Support

2) VA Benefits

3) Various Military Allowances

4) Workers' Compensation Benefits

5) Gifts

6) Life Insurance Proceeds

7) State & Municipal Bond Interest

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Form 4868

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Request for automatic six month extension.

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Individuals outside the U.S. are allowed an automatic two month extension if:

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1) Are a U.S. Citizen or Resident, and

2) On April 15th are living outside the U.S. and P.R., and your main place of business is outside the U.S. or P.R.

3) On April 15th are in military or naval service outside the U.S. and P.R.

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An extension of time to _____ is not an extension of time to _____.

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File

Pay

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The due date for taxes is always

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...the original filing deadline for the return.

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The usual Failure-to-File Penalty is:

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1) 5% for each month or part of a month that a return is late, but not more than 25%.

2) Based on the tax not paid by the due date.

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If you file your return more than 60 days after the due date (including extensions), the minimum penalty is the smaller of:

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1) $135, or
2) 100% of the unpaid tax.

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Failure-to-Pay Penalty

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0.5% is assessed for each month or part of a month after the due date that the tax is not paid.Cannot be more than 25% of your unpaid tax.

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Form 1040

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Long Form 1040

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Form 1040A

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Short Form 1040

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Form 1040EZ

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Short Form 1040

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Form 1040-PR

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Self-employment tax return for residents of Puerto Rico

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Form 1040NR

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Long Form for taxpayers who are not citizens/residents of the U.S.

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Form 1040NR-EZ

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Short Form for taxpayers who are not citizens/residents of the U.S.