EA Unit 2 Determining filing status and residency

To be eligible for the qualifying widow(er) filing status, the taxpayer normally must:

Not have remarried before the end of the year. Have been eligible to file a joint return for the year the spouse died; it does not matter if a joint return was actually filed. Have a qualifying child for the year. • Have furnished over half the cost of keeping up the qualifying child's home for the entire year.

Filing requirements for dependents. A dependent under 65 must file a return if any of the following apply:

• Their "unearned" income was over $1,100 in 20193; • Their "earned" income was over $12,2003; or • Their "gross" income was more than the larger of: o $1,100 or o Their earned income (up to $11,850) plus $350

Single A taxpayer is considered single for the entire tax year if, on the last day of the tax vear, he or she was:

• Unmarried, • Legally separated under a decree of divorce or separate maintenance, • Legally divorced, or • Widowed

Tax Residency through Marriage

A nonresident alien who does not meet the substantial presence test, and does not have a Breen card, may still elect to be treated as a resident for tax purposes if he is married to a citizen or resident.

Divorced or Noncustodial Parents:

A taxpayer can file as HOH and not claim the qualifying child as their dependent. This happens most often with divorced parents. This is because the head of household filing status applies to the taxpayer who maintains the main home of a qualifying child. However, a custodial parent may choose to release the dependency exemption to a noncustodial parent. In this scenario, the custodial parent would claim head of household filing status, while the noncustodial parent would claim the dependency exemption.

Death or Birth during the Year:

A taxpayer may still file as head of household if the qualifying child is born or dies during the year. The taxpayer must have provided more than half of the cost of keeping up a home that was the child's main home while he was alive.

Nonresident Alien Spouses: Special Rules

A taxpayer who is married to a nonresident alien spouse may elect to file as HOH by "disregarding" the nonresident alien spouse. This is a unique rule that only applies to taxpayers who are married to nonresidents. must have a qualifying child (or another qualifying dependent, such as a parent)

Green Card Test

An alien taxpayer is automatically considered a U.S. resident if he is a "lawful permanent resident" of the United States at any time during the tax year.

Substantial Presence Test

An alien taxpayer without a green card is considered a U.S. resident for tax purposes only if be meets the substantial presence test for the calendar year. To meet this test, he must be physically present in the United States for at least: • 31 days during the current tax year (2019), and 183 days during the three-year period, which includes the current year (2019) and the two years immediately preceding the current year (2018 and 2017). For purposes of the 183-day requirement, all the days present in the current year are counted, along with: • 1/3 of the days present in the previous year (i.e., 2018), and • 1/6 of the days present in the second year before the current year (i.e, 2017).

Amending Filing Status from MFS (exception)

An exception allows a personal representative for a deceased taxpayer to change from a joint return, elected by the surviving spouse, to a separate return for the decedent for up to a year after the filing deadline.

Annulments

Annulment is a legal procedure for declaring a marriage null and void. Unlike divorce, an annulment is retroactive. Taxpayers who have annulled their marriage must file amended returns

Married Filing Separately (MFS) The MFS status is for taxpayers who are married and either:

Choose to file separate returns, or • Do not agree to file a joint return.

Dependent Parents:

If a taxpayer's qualifying person is a dependent parent, the taxpayer can file as HOH even if the parent does not live with the taxpayer.

Married Filing Jointly (MFJ)

Live together as husband and wife, or as a legally married same-sex couple, Live together in a common-law marriage recognized in the state where they now reside or in the state where the common law marriage began, Live apart but are not legally separated or divorced, or Are separated under an interlocutory decree

Exempt Individuals

Regularly commutes to work in the U.S. from a residence in Canada or Mexico, general more than 75% of the workdays during the applicable working period Is present in the U.S. as a crew member of a foreign vessel Is unable to leave because of a medical condition that arose while in the United States Is a professional athlete in the U.S. to compete in a charitable sports event. Is an exempt individual. Exempt individuals include aliens who are: o Foreign government-related individuals in the U.S. temporarily, o Teachers on temporary visas o Visiting Scholars or researchers. o Students on temporary visas

Determining Residency for Tax Purposes

Resident aliens are generally taxed on their worldwide income, the same as U.S. citizens Nonresident aliens are taxed only on their income from sources within the United States and on certain income connected with the conduct of a trade or business in the U.S. Dual-status aliens are those that are both nonresident and resident aliens during the same tax year. Different rules apply for the part of the year a taxpayer is a U.S. resident and the part of the year he is a nonresident.

Same-Sex Spouses

Same-sex spouses, who are legally married, must file as either married filing jointly or married filing separately. They do not have the choice to file as single. However, be aware that civil unions and registered domestic partnerships are not legally considered "marriages" for IRS purposes.

2019 Gross Income Filing Thresholds

Single: $12,200 (65 or older: $13,850) Head of household: $18,350 (65 or older: $20,000) Married filing jointly: $24,400 65 or older (one spouse): $25,700 65 or older (both spouses): $27,000 Married filing separately (of any age): $5 (this is not a typo; it really is $5) Qualifying widow(er) with dependent child: $24,400 (65 or older $25,700) Any taxpayer with self-employment income of $400 or more in any taxable year must file a tax return.

Amending Filing Status from MFS

Taxpayers generally cannot change from a joint return to a separate return after the due date of the return.

Head of Household (HOH)

The taxpayer must be single, divorced, legally separated, or "considered unmarried" on the last day of the year. The taxpayer must have paid more than half the cost of keeping up a home for the year. The taxpayer must have had a qualifying person living in his home for more than half the year.

Filing Requirements for Self-Employed Taxpayers

There are different requirements for self-employed taxpayers. Generally, a taxpayer is required to file a tax return if he has net self-employment earnings of $400 or more.