Tax Prep Basic
Married Filing Jointly means that the spouses _____.
Combine their income and deductions on the same return
All interest income is taxable.
False
Form 1099-INT may be used to report tax-exempt interest income.
True
It is February 4 and Charles has not received his Form W-2. What is the first thing Charles should do?
Contact his employer
Under the substantial presence test, the term "United States" includes which of the following areas?
District of Columbia
A Form W-4 is used to report wage and tax information to employees.
False
A driver's license can be used to verify a taxpayer's Social Security number and correct name spelling.
False
Only volunteers who prepare and review tax returns are required to complete the Volunteer Standards of Conduct Training and certification.
False
Bob holds a promissory note for a cash loan that he made to his brother-in-law, Stan. Stan pays Bob principal and interest each month. Bob received $2,000 in interest, but did not receive a Form 1099-INT. How should he report this income?
He enters the amount on Schedule B and files it with his tax return
Dick's spouse died in 2016 and he has not remarried. Dick has provided all the support for his two dependent children. Which filing status should Dick use for 2019?
Head of Household
Jane's husband moved out of their home in February of the tax year and has not returned. Jane provides all the cost of keeping up the home for herself and her two dependent children. Jane refuses to file a joint return with her husband. What filing status should she use?
Head of Household
Martin and Regina were married until their divorce in November of the tax year. Can they take an exemption for each other since they were married most of the year?
No
Randy's son, Paul, is not a qualifying child. Paul earned $6,800 from a part-time job. Does he meet the gross income test for a qualifying relative?
No
Wally claimed the standard deduction on last year's tax return for a state refund. Does he have to include the refund in his taxable income?
No
Wendy holds a traditional IRA to which she makes contributions each year. Throughout the year, Wendy gets statements listing the interest earned. Is she supposed to pay taxes on any of this interest income?
No
When Edward Chambers and his wife Lucia got married in January, Lucia was a nonresident alien. In June, Lucia obtained her green card and became a resident alien. She remained a resident for the rest of the year. Lucia wants to be treated as a resident alien for the entire year for tax purposes. Can she use the Married Filing Separately status?
No
Which of the following types of income are taxable?
Stock and credit union dividends
Individuals who are not required to file a tax return should file a return if they can claim the earned income credit.
True
Mike holds a traditional IRA to which he makes contributions each year. Throughout the year, he gets statements listing the interest earned. He does not have to report any of the interest income on his traditional IRA on his tax return.
True
Cassandra has received a Form W-2 for her part-time job and another Form W-2 for a college scholarship she won last year. What is the correct treatment of these income amounts?
Both Forms W-2 should be included in income on Cassandra's tax return
Larry and Zelda are married but will not file a joint return. Both are under 65. Larry's gross income from wages is $30,150, and Zelda's is $4,100. Which of the following is true?
Both Larry and Zelda are required to file- Chart A shows that taxpayers of any age who use the Married Filing Separately status must file a return if they had gross income over $5.
Capital gain distributions are also called _____.:
Capital gain dividends
You: Did Cherie live with you for more than half the year? Latricia: Cherie lived with me all year until September, when she moved in with her dad. How would you respond? Okay, then you should file as Head
Did you provide more than half the cost of keeping up the home for the year?
Taxpayers age 65 or older must use Form 1040-SR instead of Form 1040 to file their return.
False
Tip income is not subject to federal income tax.
False
You are trying to determine whether John can claim his mother as a dependent on his tax return. Follow along in the conversation, then select the correct question to ask. Click here to listen to the conversation. John: I am supporting my mother, who is a widow. Can I claim her as a dependent? How would you respond?
Is your mother a U.S. citizen?
Jessica has been raising her son, Jim, alone since her husband died 5 years ago. This year, Jessica earned $25,000. Jim, who lives with Jessica, is single, and does not provide more than half of his own support. He was 19 years old on September 17. Jim is not a full-time student and is not disabled. He worked for a short time at a fast food restaurant and made about $1,800. Jessica and Jim are both U.S. citizens and have SSNs. Is Jim the qualifying child or qualifying relative of Jessica?
Jim meets the requirements for being Jessica's qualifying relative.
For a relative to qualify a taxpayer to be Head of Household, how long must the taxpayer's home be the main home of the relative?
More than half the year
Allen can be claimed as a dependent on his mother's tax return, but his mother is not claiming him as a dependent. Can Allen claim his personal exemption on his own tax return?
No
Base your answer on the previous case study facts regarding Todd and Eva except that Eva's gross income is $25,000 and she is required to file a return. In this situation, are the children Todd's qualifying relatives?
No
Can a married taxpayer claim their spouse as a dependent?
No
Is income produced by investments, such as interest on savings or dividends on stock, considered earned income?
No
Steve provides $4,000 toward his mother's support during the year. His mother has earned income of $600, nontaxable Social Security benefit payments of $4,800, and tax-exempt interest of $200. She uses all of these for her support. Can Steve claim his mother as a dependent if she meets all other tests?
No
The scenario continues with Ray Jackson. Based on this information, can Ray claim a personal exemption for himself?
No
William Burke's wife is a Greek citizen. Her sister, Athena, who is also a Greek citizen, lived in the Burkes' home in Greece for the entire tax year. William provided more than 50 percent of Athena's total support. Can William claim his sister-in-law as a dependent?
No
Diane and her brother each provide 20% of their grandmother's support for the year. Two persons who are not related to Diane's grandmother, and who do not live with her, provide the remaining 60% of her support equally. Who is entitled to claim the grandmother as a dependent?
No one
Tim Jenkins has a question about whether he can claim his son as a dependent on his tax return. Follow this conversation and think about how you would respond. Click here to listen to the conversation and read a transcript. Press the Play Audio button to hear the audio. Based on this information, what would you tell Tim?
No, he cannot claim his son as a dependent
Trudy, 66, qualifies for Head of Household filing status and had $10,900 in gross income. Is she required to file a return?
No- Chart A shows that a Head of Household who is 65 or older does not have to file unless she had at least $20,000 in gross income.
Melvin is 20 years old, single, and a U.S. citizen with a valid Social Security number. During the interview with Melvin, you learn that: Melvin's only income was $6,400 in wages He lived with his parents all year, but they told him they will not claim him on their 2019 return Is Melvin required to file a tax return?
No- Chart B For Children and Other Dependents says that people younger than 65 who earn over $12,200 must file a return.
If a taxpayer cannot obtain a valid Social Security number and has not yet applied for an taxpayer identification number, can you use the taxpayer's driver's license or passport instead?
No- Taxpayers must have a valid Social Security number or taxpayer identification number before you can assist them.
1. To determine if a taxpayer must file a tax return, do you need to know their income for the year, filing status, and place of birth?
No- You need to know their approximate income, likely filing status, and age.
Anne's husband died one year ago. Anne has not remarried during the current tax year, but she has a 18-year-old dependent son. Anne's filing status should be:
Qualifying Window(er)
The Jackson family would like to claim their daughter and son-in-law as dependents. Which of the following must be true in order for the daughter and son-in-law to meet the joint return test?
They must not have filed a joint return except to claim a refund of withheld income tax or estimated tax paid
Beth has three savings accounts in three different banks. The total amount of interest earned from the accounts is $2,800. Beth will receive three Forms 1099-INT. She will list each payer and amount on Schedule B and file it with her tax return.
True
Bob is 27 years old. No one can claim him as a dependent. His gross income was $17,000 during the tax year. Based only on this information, Bob is required to file a tax return.
True
The deduction for personal exemptions is suspended (reduced to $0) for tax years 2018 through 2025.
True
True or False? A resident of Mexico meets the requirements of the citizen or resident test.
True
True or False? The gross income test considers taxable income only, whereas the support test considers all of the dependent's income - both taxable and nontaxable.
True
Volunteers are not required to complete a return if they have concerns about the accuracy of information provided by the taxpayer or other concerns.
True
True or False? Juanita can file as a Qualifying Widow(er). She is 47 years old. Her gross income was $27,000. Based only on this information, she is required to file a tax return.
True- Juanita is required to file.
Is a person who holds an alien registration card considered to be a lawful permanent resident of the United States?
Yes
Julio Isanti was a resident alien on December 31, of the tax year, and married to Mary, a nonresident alien. Can they choose to treat Mary as a resident alien and file a joint income tax return?
Yes
Kelly receives alimony payments made under a divorce decree executed in 2017. Are these alimony payments considered part of Kelly's taxable income?
Yes
Marie, 18, earned $5,000. Her father provided more than half of her support. If all other dependency tests are met, can her father claim her as a qualifying child dependent?
Yes
Todd has lived all year with his girlfriend, Eva, and her two children in his home. This cohabitation does not violate local laws. Eva is not required to file, and does not file, a tax return this year. Eva and her two children pass the "not a qualifying child test" to be Todd's qualifying relatives. Can Todd can claim them as dependents if he meets all the other tests?
Yes
If a taxpayer with an individual taxpayer identification number (ITIN) receives a Form W-2 with an erroneous Social Security number (SSN), is it acceptable to e-file the return as long as you enter the correct ITIN on the return and the mismatched SSN exactly as shown on the Form W-2 issued?
Yes- Taxpayers who file tax returns using their ITINs often have Forms W-2 showing erroneous SSNs, and it's acceptable to e-file the return if you enter the correct ITIN on the return and the mismatched SSN exactly as shown on the Form W-2 issued.
If the taxpayer with a valid Social Security number (SSN) receives a Form W-2 with an incorrect SSN, can you prepare the return using that W-2?
Yes- You can use the original W-2 to prepare the return, but the taxpayer needs to request a corrected Form W-2 from the employer before submitting the tax return.
Cindy's husband died on August 19 of the tax year. Cindy has no dependents and has not remarried. She should file as:
Married Filing Jointly
Who may choose to file under either the Married Filing Jointly or the Married Filing Separately status?
A married taxpayer whose spouse does not have income
Martin and Rita got divorced in December, and neither has remarried. Even though Martin supported Rita all year, is he still required to file as Single?
Yes
Tom Brown supports his wife's uncle Jim who lives in another city. The Browns file a joint return. Can the Browns claim Jim as a dependent if all other tests are met?
Yes
True or False? Jennifer Rawls, an eighteen-year-old single mother who can be claimed as a dependent by her parents, can claim her infant son as a dependent on her own tax return.
False
Volunteers are generally held liable for the tax returns they prepare at VITA/TCE sites.
False
Under what circumstances must a person report taxable income?
Always, unless the income is so small that a tax return is not required
If needed, refer to the Sources of taxable and non taxable income to answer this question. Which of the following is considered taxable income?
Annuities- You need to include annuities when calculating a taxpayer's taxable income.
Mandy worked two jobs. She was a quality inspector during the week and a bartender on the weekends. She reported all of her tip income ($3,000) to her employer. Her Forms W-2, box 1, showed income of $21,000 (quality inspector) and $8,250 (bartender). What amount will Mandy report as wages on her Form 1040?
29250
Which of the following individuals could use Chart A to determine if they must file a tax return?
Mrs. Fulton, 70, who is single and whose only sources of income are her pension and investments. Her income was less than $10,000.- Mrs. Harlan can be claimed as a dependent on her son's return, so she must use Chart B. Mr. Emmet must use Chart C.
Alexandra's younger brother, Sebastian, is seventeen years old. Sebastian lived with his grandparents for the first two months of the year. From March through July, he lived with Alexandra. On August 1, Sebastian moved in with some friends and stayed there for the rest of the year. Since Sebastian did not have a job, Alexandra gave him money every month. Assuming Alexandra had no other dependents, can she file as Head of Household?
No
Do you have enough information to determine if Robert and his wife can claim their son and daughter-in-law as dependents?
No
Four years ago Barbara bought a U.S. Series EE savings bond and decided to report the interest it earns each year until maturity. This tax year Barbara bought another Series EE savings bond. Can she wait until the second bond matures to report all the interest it earns?
No
Kathy, divorced with no children, lived with her unemployed roommate, Sandra, for the entire year. Kathy had to pay more than half of the cost of keeping up their apartment. Can Kathy use the Head of Household filing status?
No
Ray and Brenda are not married but they lived together all year and have two children under 10 years of age. Ray paid all the rent, utilities, groceries, and other household expenses. They agreed that each would claim one child on their individual tax returns. What are the correct filing statuses for Ray and Brenda's returns?
Ray can file as Head of Household and Brenda must file as Single
For individuals who do not bring their original or a copy of their Social Security card, you may accept either of the following:
Both An SSA letter or a Form SSA-1099 statement AND An ITIN card or letter- For individuals without a valid SSN, explain that they must have a taxpayer identification number before you can assist them or a copy of an SSA letter or Form SSA-1099 statement.
You are helping a taxpayer who has given you two different Social Security numbers. Then, he tells you he has two children, but later corrects it to three. You are concerned about the truthfulness of this information. You should _____.
Decline to prepare the tax return- If you suspect an individual is not providing truthful information, you should refuse to prepare the tax return.
You: Okay, so you've lived apart from your husband for three years, you're not divorced or legally separated, and you file separate returns. Do you have any children you supported during the year? Latricia: Yes, I supported Cherie, our six-year-old daughter. How would you respond?
Did Cherie live with you for more than half of the year?
You are trying to determine whether John can claim his mother as a dependent on his tax return. Follow along in the conversation, then select the correct question to ask. Click here to listen to the conversation. You: Is your mother a U.S. citizen? John: Yes, my mother is a U.S. citizen. How would you respond?
Did your mother file a joint return with anyone else for this tax year?
You: Okay. Since you're still legally married you have the option of Married Filing Jointly or Married Filing Separately. Have you and your husband discussed whether to file a joint return? Becky: Oh, I'm definitely not going to file a return with him. I want to keep all my financial stuff separate from his. How would you respond?
Do you have any children you supported during the year? You may be able to file as Head of Household.
You are trying to determine whether John can claim his mother as a dependent on his tax return. Follow along in the conversation, then select the correct question to ask. Click here to listen to the conversation. You: Did your mother file a joint return with anyone else for this tax year? John: No, she is not filing a joint tax return this year. She only received Social Security benefits of $6,000 during the tax year. How would you respond?
Do you know what your mother's total support requirements were for the year, and how much of that you contributed?
In 2010, Claudia and her spouse Raymond adopted two-year-old Rachel. Although eligible to file jointly, Claudia and Raymond always filed separately. In October 2019, Claudia's spouse died. She continued to support Rachel and she did not remarry. Which filing status should Claudia use for 2019?
Either Married Filing Jointly or Married Filing Separately
To claim a personal exemption, the taxpayer must be able to answer "no" to the intake question, "Can anyone claim you or your spouse on their tax return?"
False
True or False? A taxpayer who does not receive a Form W-2 for taxable scholarship income does not have to report the income.
False
True or False? Taxpayers who receive tips worth $30 in one month but did not report them to their employer are not required to pay the Social Security and Medicare taxes on the unreported tips as additional tax on Form 1040.
False
True or False? It is perfectly acceptable to accept a taxpayer's invitation to lunch as a thank you for preparing his or her tax return.
False- Although lunch is not a monetary "payment" for services rendered, some may interpret it as such. It is best to politely decline such offers in order to maintain the integrity of the VITA/TCE programs.
True or False? Janet and Harry are married, file jointly, and lived together all year. During the tax year, Janet turned 66 and Harry turned 64. Their gross income was $18,000. Based only on this information, they are required to file a tax return.
False- Janet and Harry are not required to file.
Mark Gibson, a U.S. citizen, lives in Italy. His wife, Liliana, is an Italian citizen and has never lived in the U.S. She earned income in the tax year by working full time at her family's restaurant in Italy. She has an ITIN and no other taxpayer can claim her as a dependent. Which of the following statements is true?
Mark can file a Married Filing Separate return
Ryan and Julie were married on December 29 of the tax year. They should file as:
Married Filing Jointly
yan and Julie were married on December 29 of the tax year. They should file as:
Married Filing Jointly
Gloria is a U.S. citizen. She is married to Dante, who meets the substantial presence test. They do not have any children and do not support anyone else. Gloria has an SSN and Dante is applying for an ITIN. They live together. Which filing statuses can Gloria and Dante use?
Married Filing Jointly or Married Filing Separately
Lily left her spouse in August of the tax year. She took all her children with her, supported them the entire year, and claims them as dependents. She will not file a joint return with her spouse.
Married Filing Separately
Jack has lived apart from his spouse for several years. Their children live with his spouse, but Jack pays more than half of the children's support. Which filing status can Jack use?
Married Filing Separately or Married Filing Jointly
Paul Stone, a U.S. citizen, is married to a Chinese citizen. Their daughter was born in China during the tax year. Does his daughter meet the citizen/resident test?
Yes
Peter works as a food server in an expensive restaurant. He tells you that he did not report his tip income of $18,100 to his employer. Must Peter file Form 4137?
Yes
Raul is a U.S. citizen who is serving in the U.S. Army in Japan. His wife and children live with him and he is able to claim the children as dependents. Raul's wife, a citizen of Japan, chooses not to be treated as a resident alien for tax purposes. She does not want to file a joint return with him. Raul meets all of the other qualifications for Head of Household. Even though he is married and living with his spouse, can he claim Head of Household status?
Yes
Robert Richmond comes into your site to find out if he and his wife can claim their son and new daughter-in-law as dependents. Click here to listen to the conversation and read a transcript. Press the Play Audio button to hear the audio. Do the Richmonds' son and daughter-in-law pass the joint return test?
Yes
Robert Richmond comes into your site to find out if he and his wife can claim their son and new daughter-in-law as dependents. Click here to listen to the conversation and read a transcript. Press the Play Audio button to hear the audio. Does Mr. Richmond and his wife pass the dependent taxpayer test?
Yes
Robert Richmond comes into your site to find out if he and his wife can claim their son and new daughter-in-law as dependents. Follow this conversation and think about how you would answer their questions. Click here to listen to the conversation and read a transcript. Press the Play Audio button to hear the audio. Do the Richmonds' son and daughter-in-law pass the citizenship or resident test?
Yes
Susan and Ted are married and file a joint return. They supported Ted's parents throughout the tax year. Ted's parents do not live with Ted and Susan. Do Ted's parents meet the member of household or relationship test?
Yes
Susan and Ted are married and will file a joint return. They have supported Ted's parents for the majority of the tax year. Ted's parents do not live with Ted and Susan. Do Ted's parents meet the member of household or relationship test?
Yes
A taxpayer cannot use a valid ITIN if it was not used on a federal tax return at least once in the last three years.
Yes- ITINs that have not been used on a federal tax return at least once in the last three consecutive years will no longer be valid for use on a tax return unless renewed by the taxpayer.
If needed, refer to the Chart A - For Most People Who Must File to answer this question. Lucy is 36 years old and single, and her gross income is $20,000. Is Lucy required to file a tax return?
Yes- That's right. Lucy must file a tax return since her income exceeds the amount for her age and filing status.
Mary and Ralph were divorced four years ago. They have one child together, Amy, who lives with Mary. All are U.S. citizens and have SSNs. Mary and Ralph provide more than half of Amy's support. Mary's AGI is $31,000 and Ralph's AGI is $39,000. Amy is 12 years old. The divorce decree does not state who can claim the child. Which of the following is true?
Mary can sign Form 8332 so Ralph can claim Amy as a dependent and he can claim the child tax credit. Mary can use the Head of Household filing status, and she can claim the earned income credit and the child and dependent care credit as long as she meets the requirements for those specific benefits.
Ian Dawson was a nonresident alien when he married Judy Miller on December 31, 2017. They chose to treat Ian as a resident alien and filed joint tax returns for tax years 2017 and 2018. To their 2017 return, they attached the required signed declaration stating that they both choose to be treated as resident aliens. In January 2019, Ian returned home to Scotland to take care of his father who was gravely ill. For part of the 2019 tax year he was a nonresident alien. Was Ian and Judy's choice to treat Ian as a resident alien suspended for this reason?
No
Jane and Todd are not married. They have one daughter together, Amanda. Jane and Amanda lived together all year in an apartment. Todd lived alone. Todd earns a lot more than Jane, and helps her out with living expenses. He paid over half the cost of Jane's rent and utilities. He also gave Jane extra money for groceries. Todd does not pay any expenses or support for any other family member. Can Todd file Head of Household?
No
Jay is in the U.S. Army in Germany. His wife and children live with him and he is able to claim the children as dependents. Jay's wife (a citizen of Germany) chooses to be treated as a resident alien for tax purposes.Jay meets all of the qualifications for Head of Household. Even though he is married, can he claim Head of Household status (assuming he meets the other requirements for filing as Head of Household)?
No
Joe is 65 years old and lives with his son and daughter-in-law. Joe's taxable pension income for the year was $10,000. Can Joe's son and daughter-in-law claim him as a dependent?
No
Juan is a citizen of the Philippines and does not have a green card. He came to the United States for the first time on November 1, 2017, and was here for 30 days. In 2018, Juan was in the United States for 60 days. Juan returned to the Philippines and came back to the United States on September 1, 2019. He stayed in the United States for the rest of the year. Does Juan meet the substantial presence test?
No
Laura has always filed a joint return with her spouse, who died in September of the tax year. Laura, who did not remarry, provides all the support for her two dependent children, ages 7 and 9. Should Laura file as a Qualifying Widow(er)
No
Michael provided all the cost of keeping up his home for the year. Michael's son Justin lived with him the entire year. Justin is 22 and was not a full-time student during the tax year, so he cannot be Michael's qualifying child. Although Justin only worked part-time, he earned too much for Michael to claim him as a qualifying relative dependent. Can Michael file Head of Household?
No
Sally has been supporting her friend, Ann, and Ann's young son, Bobby. Ann and Bobby lived with Sally the entire year and meet all the tests to be Sally's qualifying relatives. Ann worked part-time and made $3,100 in wages. Ann files a return and claims her son for the earned income credit. Can Sally claim Bobby as a dependent?
No
Steve provided $4,000 toward his mother's support during the year. His mother had nontaxable Social Security benefit payments of $4,800, and tax-exempt interest of $800. She used all of these for her support. Can Steve claim his mother as a dependent?
No
William Burke's wife is a Greek citizen. Her sister, Athena, who is also a Greek citizen, lived in the Burkes' home in Greece for the entire tax year. William provided more than 50 percent of Athena's total support. Can William claim his sister-in-law as a dependent?
No
Becky and Frank were divorced on December 29 of the tax year. They have no children or other dependents and have not remarried. Their filing status should be:
Single
Mrs. Calvin is divorced and lived with her 21-year-old unmarried son, Drew, all year. She paid for all their rent and food, and provided more than half of Drew's total support. She cannot claim Drew as a dependent because he earned $5,000 and is not a student. Which filing status should Mrs. Calvin use?
Single
Ronald was widowed before the first day of the tax year and did not remarry during the tax year. He has no children. For the purpose of determining filing status, Ronald is considered _____.
Single
Which of the following can be used to verify a taxpayer's Social Security number and correct name spelling?
Social Security card- Only valid SSA documents such as Social Security cards or other SSA proof of taxpayer identification number for all persons listed in the tax return should be used to confirm the validity of a taxpayer's Social Security number and name spelling. A driver's license or passport should not be used in lieu of SSA records.
True or False? If a taxpayer wants to know about the Presidential Election Campaign Fund they can find that information in Publication 17.
True- The index in Publication 17 links to a paragraph in the chapter on Filing Information.
True or False? It is your responsibility as a volunteer tax preparer to enter each Social Security number correctly on the tax return.
True- Verifying the accuracy of each name and Social Security number you enter on the return prevents delays.
Sgt. Betty Zavala is a U.S. citizen who has been in the U.S. Army for 8 years. She is stationed in Italy and is married to an Italian citizen who has never lived in the United States. Their 3-year-old daughter was born in Italy. Sgt. Zavala has also adopted her husband's son, who lives with them. The Zavalas provide total support for the two children. How many dependents can Sgt. Zavala claim on a joint return?
Two
Carol and Roger were married three years ago and have no children. Although they lived apart during the entire tax year, they are neither divorced nor legally separated. Can Carol and Roger use either of the married filing statuses?
Yes
Doris, a U.S. citizen, is 8 years old and had a small role in a television series. She made $60,000 during the tax year, but her parents put all the money in a trust fund to pay for college. She lived with her parents all year. Does she meet the support test?
Yes
Gloria's husband, Dante, has neither a green card nor a visa, and he does not have a tax home in another country. He was physically present in the United States for 150 days in each of the years 2017, 2018, and 2019. Is Dante a resident alien under the substantial presence test for 2019?
Yes
In addition to taxable distributions, Form 1099-DIV also shows nondividend distributions, such as the return of the taxpayer's cost or other basis in a stock or security. Do taxpayers need to keep the information with their tax records in order to calculate the adjusted basis of the stock when it is sold?
Yes
Keith has received Form W-2 for his part time job, but did not receive Form W-2 for a taxable college scholarship he won last year. Does Keith need to report the scholarship as income on his tax return?
Yes
Lilith, a U.S. citizen, lives in Japan. She is married to Kenji, a Japanese citizen who has never been in the United States, and the couple has never elected to treat Kenji as a resident alien for tax purposes. They have two children, for whom they provide total support. Lilith has decided that using the Head of Household filing status on her tax return would result in a lower tax. Can Lilith file as Head of Household?
Yes
Nancy is single and lives alone. Nancy's mother, Maxine, lives alone in another city. Maxine receives social security payments, but has no other income. Nancy pays all of the costs of keeping up the home her mother lives in, and provides over half her support. Nancy can claim a dependency exemption for her mother. Can Nancy file Head of Household?
Yes
On their intake sheet, Gloria indicated that her husband, Dante, is not a U.S. citizen. During the interview, you learn that Dante does not have a tax home in another country. He was physically present in the United States for 150 days in each of the years 2017, 2018, and 2019. Is Dante a resident alien under the substantial presence test for 2019?
Yes
Which of the following tip income is exempt from federal income tax?
None of the above
Marie and her husband Arturo have three Forms 1099-INT: State of Washington Bond interest $300 Epping Credit Union, $600 Brenton Savings and Loan, $960 How much interest income should they report on Form 1040, Schedule B, Part I?
$1,560
Toni received the following income: tip income, interest, alimony from her 2015 divorce, inheritance, and IRA distributions. Which income is exempt from federal taxes?
Inheritance
A taxpayer cannot claim a qualifying child dependent if that child provides more than how much of their own support?
50%
Depending on specific tax situations, taxpayers can file using ____.
Form 1040-SR or Form 1040- Most taxpayers must use Form 1040, but Form 1040-SR may be used by taxpayers who are age 65 or older at the end of the tax year.
For the purpose of determining filing status, which of the following taxpayers would be considered unmarried for the tax year?
Hal, who was married until his divorce in November of the tax year
You are helping Anita fill out her tax return. She has questions about how her divorce effects her tax situation. To provide answers for her, you decide to ask a more experienced volunteer for help. Which of the following should you say to the more experienced volunteer?
I am helping a taxpayer who divorced her husband last year. She has some questions about her filing status for last year.- You should never use a taxpayer's name in front of other taxpayers or volunteers. However, you may discuss specific tax situations with other taxpayers and volunteers.
Which of the following meets the member of household or relationship test for taxpayer John Smith?
John's foster child who has lived with him for seven months and is cared for by John as his own
Tom and Judith Ballard want to file under the Married Filing Separately status. If Tom wants to itemize his casualty losses, then _____.
Judith must either itemize her deductions or claim a zero standard deduction
Bob and Judy live together and are not married. They have one child together, Katie, who is 4 years old. Bob, Judy, and Katie are U.S. citizens and have SSNs. Katie did not provide any of her own support and lived with Bob and Judy all year. Bob's AGI is $18,500 and Judy's AGI is $14,000. They had no other income. Neither Bob nor Judy can be claimed as a dependent by any other taxpayer. Bob pays for Katie's daycare so he and Judy can work. Bob pays over half of the costs of maintaining their home. Who may claim Katie as their qualifying child, and what can be claimed on the return?
Katie is a qualifying child for both Bob and Judy. If they agree and Bob claims Katie, he can claim the Head of Household filing status, the child tax credit, the child and dependent care credit, and the earned income credit if all other rules are met.
During the tax year, Laramie earned $1,300 providing occasional childcare, cleaning, and cooking services for a household. The employer did not withhold federal income taxes from her wages, and did not issue a Form W-2 for her. Which statement is true?
Laramie must report the income on Form 1040
Sal Catron is a U.S. citizen and his wife, Reina, is a nonresident alien. They file a joint return, to which they attach a statement declaring their choice to treat Reina as a resident alien. Which of the following events would end the choice for later years?
The death of either spouse
True or False? Bob is 27 years old. No one can claim him as a dependent. His gross income was $17,000 during the tax year. Based only on this information, Bob is required to file a tax return.
True- Bob is required to file a return
You are trying to determine whether John can claim his mother as a dependent on his tax return. Follow along in the conversation, then select the correct question to ask. Click here to listen to the conversation. Click here to view a table that shows John's contributions toward his mother's support. You: Do you know what your mother's total support requirements were for the year, and how much of that you contributed? John: I contribute about $3,600 a year toward my mother's food, medical, and utilities. Her total yearly support requirements, including rent, food, medical, clothing, etc., are about $8,000 a year. How would you respond?
Well, unfortunately you cannot claim her as a dependent. You did not contribute more than half of her financial support for the entire year.
Base your answer on the previous case study facts regarding Sally except that Ann files a return only to have her withholding refunded. Can Sally claim Ann and Bobby as dependents?
Yes
Bob is 22 and a full-time student for the entire year. During the tax year, he lived with his parents when he was not in the dorm. During the tax year, he worked part-time, but that income did not pay over half of his total support. Does Bob pass the tests for a qualifying child?
Yes
Melvin is a single 20-year-old full-time student who works part time. During the interview with Melvin, you learn that: Melvin's only income was $6,400 in wages He lived with his parents all year and they provided more than half of his support, but they will not claim him as a dependent Melvin can claim _____.
0 exemptions because his parents can claim him as a dependent
To qualify as a resident alien for tax purposes, a non-U.S. citizen with no green card must be physically present in the United States for a total of at least ______ days over a 3-year period assuming that the days are counted according to the requirements of the test.
183
For the purposes of the substantial presence test, you are not to count the days an exempt individual is in the United States. Which of the following individuals is considered exempt for purposes of the substantial presence test?
Ada, who is temporarily in the United States as a teacher on a J visa
You: Are you legally married? Becky: Well, my husband and I aren't actually divorced. How would you respond?
Are you legally separated?
What should you do if a taxpayer is not required to file a tax return, and you are uncertain if they will benefit from filing?
Begin a return to determine if filing a tax return would benefit the taxpayer- Begin a tax return to determine if the taxpayer would benefit from filing. Otherwise the taxpayer might miss out on receiving certain tax credits.
Elaine Smith has one Form W-2 from her clerk job of 36 years, showing wages of $37,000. She has been divorced from her husband for over 20 years. She pays all the costs of keeping up her home and is the main provider for her seven-year-old granddaughter, Lisa and her 30-year-old son, Todd. Lisa is Todd's niece. Both her son and granddaughter lived with Elaine all year. Her son worked part time and earned $9,000. He is not disabled. She would like to file a tax return and claim her son and granddaughter as dependents. To help Elaine, you would first use the interview tips in the Volunteer Resource Guide to ask about each of her sons and grandchildren. Click here to review Elaine's intake and interview sheet. Based on this information, you would explain to Elaine that she can claim _____ as a dependent.
Her granddaughter only
Olivia held both common stock and preferred stock in several U.S. corporations. Several of them paid dividends during the tax year. She received Forms 1099-DIV listing these as _____.
Ordinary dividends
To determine if a widowed taxpayer can use the Qualifying Widow(er) status, you need to know all the following information EXCEPT _____.
If the taxpayer filed a joint return for the year the spouse died
When are employees required to report their tip income to their employer?
If their tips total $20 or more per month
Which section of the competed Intake/Interview & Quality Review Sheet should indicate which Forms W-2 and Forms 1099 the taxpayer received?
Income
Which of the following types of income are exempt from federal taxes?
Inheritances
You are clarifying Larry's Form 13614-C. Larry is at a VITA/TCE site to have his taxes prepared. He completes Form 13614-C and tells the tax preparer: He is 26 years old His filing status is Head of Household He wants to claim his 2-year-old nephew for EITC He has no child care expenses He earned $19,000 in wages Do you think it's safe to rely on good faith for Larry's information?
No, Larry's situation requires more inquiry Based on the information you will learn in the course, Larry's information regarding his qualifying child and filing status is questionable. Further inquiries should include: Why is the uncle claiming the child and not the parents? Why isn't there child care expense and who cares for the child while the taxpayer works? Is there anyone else living in the household that contributes? Is there anyone else eligible to claim the child? Do the tie-breaker rules apply? If asked, can the taxpayer provide proof that the qualifying child lived with him for more than half of the year?
You are clarifying Steven's Form 13614-C. Steven is at a VITA/TCE site to have his taxes prepared. He completes Form 13614-C and tells the tax preparer: He is 22 years old He has two sons, ages 10 and 11 He has Social Security cards for both boys and himself His W-2 wage indicates earnings of $20,000 Do you think it's safe to rely on good faith for Steven's information?
No, Steven's situation requires more inquiry Steven's age and the age of the qualifying children appear to be inconsistent. Further inquiries are needed to determine: Are the boys his sons by birth, foster sons, adopted sons, step-sons? Is there anyone else eligible to claim the children as qualifying children? Do the tie-breaker rules apply? If asked, can the taxpayer provide proof that the qualifying children lived with him for more than half of the year?
Sharon claimed the standard deduction on last year's tax return and received a state tax refund. Is the refund taxable and, if so, how does Sharon report it?
No, the refund is not taxable
Are the only acceptable means of verifying taxpayers's identity a valid U.S. drivers license, passport, or military ID?
No- Other acceptable means are a current state ID, visa, national ID, employer ID, school ID or other proof of taxpayer identification.
If needed, refer to the Chart A - For Most People Who Must File to answer this question. Henrietta and Javier are married and plan to file a joint return. Henrietta is 67 and had a gross income of $11,000 for the tax year. Javier is 66. His gross income was $5,000 for the year. Do they need to file a tax return?
No- That's right. Since their combined gross income is less than the minimum amount for their ages and filing status, they do not have to file a return.
Becky: I guess I should file as single, since I live alone. How would you respond?
Not necessarily. Are you legally married?
You: How much of the costs of keeping up the home did you provide? Latricia: At least 75 percent. Her father provides about 25 percent in child support. How would you respond?
Okay, then you should file as Head of Household.
You: Are you legally separated? Becky: No, we're not legally separated or divorced. How would you respond?
Okay. Since you're still legally married, you have the option of Married Filing Jointly or Married Filing Separately. Have you and your husband discussed whether to file a joint return?
John, a U.S. citizen, lives in Germany. His wife is a German citizen who has never lived in the United States. Their 2-year-old son was born in Germany. John's stepdaughter, a German citizen whom John has not adopted, also lives with them. John and his wife provide all the support for the two children. Click here to refer to the Dependent tables in the Volunteer Resource Guide. How many dependents can John claim?
One John can claim his son as a dependent. The son qualifies as a U.S. citizen because his father is a U.S. citizen.
Phil is a widower who works full-time and has an AGI of $35,000. He supports his 16-year-old daughter, Mariah, who lives with him in California. Phil's parents also live with him. Phil's parents always file a joint return to pay tax on their pension income, investment income, and Social Security benefits. Phil's parents' AGI is $42,321. Everyone in Phil's family is a U.S. citizen and has SSNs. This tax year, Mariah earned $10,000 working part-time. She put the $10,000 in a college savings account. If Phil and his parents both claim Mariah as a dependent on their returns, who would be entitled to claim Mariah as a dependent based on the tie-breaker rule?
Phil would claim Mariah as a dependent because he is Mariah's parent.
The two filing statuses that generally result in the lowest tax amounts are Married Filing Jointly and _____.
Qualifying Widow(er)
Yolanda and Sean Mercer want to file under the Married Filing Separately status. If Yolanda wants to itemize deductions, then _____.
Sean must either itemize his deductions or claim a zero standard deduction
Hazel has four savings accounts in four different banks. The total amount of interest earned from the accounts is $3,000. Hazel receives four Forms 1099-INT. How should she report this interest income?
She lists each payer and amount on Schedule B and files it with her tax return
This tax year, Jacob and Rita Newberry attached a statement to their tax return stating that they choose to be treated as U.S. residents for the entire year. If Jacob and Rita's choice ended, which of the following would not preclude them from making this choice again in future years?
They moved to a foreign country