Tax Chapter 3

Married, Filing Seperately

Filing status for married taxpayers who chose to fill out separate income tax returns. Most do so because tax rate is lower.

Married Filing Jointly

The filing status used by a man and a woman who are married at the end of the tax year and not legally separated under a final decree of divorce or separate maintenance and who record total income, exemptions, and deductions of both spouses on one tax return.

The child is married

The kiddie tax does not apply if the child is married and files a joint return

The Child has only earned income

The kiddie tax does not apply to earned incom

The child has a modest amount of unearned income

The kiddie tax does not apply unless unear ned income exceeds $2,200 (in 2019, $2,100 in 2018).

Relationship Test

taxpayer's son, daughter, stepchild, an eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of these relatives.

Frazier, age 55, is married but is filing a separate return. His wife itemizes her deductions.

$0. Frazier is ineligible to use the standard deduction and therefore must itemize because he is married filing a separate return when his spouse itemizes dedu

Ellie is 15 and claimed as a dependent by her parents. She has $800 in dividends income and $1,400 in wages from a part-time job.

$1,750. When filing her own tax return, Ellie is limited to the greater of $1,100 or $1,750 (the sum of the earned income for the year plus $350).

Shonda is age 68 and single. She is claimed by her daughter as a dependent. Her earned income is $500, and her interest income is $125.

$2,750. When filing her own tax return, Shonda is limited to the greater of $1,100 or $850 (the sum of the $500 of earned income for the year plus $350). This limitation applies only to the "basic" standard deduction. A dependent who is 65 or older or blind is also allowed the additional standard deduction amount on his or her own return. Therefore, Shonda's standard deduction is $2,750 ($1,100 + $1,650)

Ruby and Woody are married and file a joint tax return. Ruby is age 66, and Woody is 69. Their taxable retirement income is $10,000.

$27,000. A taxpayer who is age 65 or over or blind in 2019 qualifies for an additional standard deduction of $1,300 or $1,650, depending on filing status. Ruby and Woody's standard deduction is $24,400 (married filing jointly) plus the additional $1,300 for Ruby being age 65 or older and another $1,300 for Woody's being age 65 or older.

Single Tax Payers

A taxpayer who is unmarried (including a taxpayer who is legally separated or divorced) and does not qualify for head-of-household status (discussed below) will file as a single taxpayer.

Amelia, age 33, is an abandoned spouse who maintains a household for her three dependent children. She has AGI of $58,000 and itemized deductions of $10,650.

AGI $ 58,000 Less: Standard deduction (head of household) (18,350) Taxable income $ 39,650

Dale, age 42, is divorced but maintains the home in which he and his daughter, Jill, live. Jill is single and qualifies as Dale's dependent. Dale has AGI of $64,000 and itemized deductions of $9,900.

AGI $ 64,000 Less: Standard deduction (head of household) (18,350) Taxable income $ 45,650

Scott, age 49, is a surviving spouse. His household includes two unmarried stepsons who qualify as his dependents. He has AGI of $75,000 and itemized deductions of $10,100.

AGI $ 75,000 Less: Standard deduction (surviving spouse) (24,400) Taxable income $ 50,600

Sybil, age 40, is single and supports her dependent parents who live with her, as well as her grandfather who is in a nursing home. She has AGI of $80,000 and itemized deductions of $8,000.

AGI $ 80,000 Less: Standard deduction (head of household) (18,350) Taxable income $ 61,650

Drew and Meg, ages 40 and 41, respectively, are married and file a joint return. In addition to four dependent children, they have AGI of $125,000 and itemized deductions of $27,000.

AGI $125,000 Less: Itemized deductions (27,000) Taxable income $ 98,000

Surviving Spouse

Joint filing status also applies for two years following the death of one spouse if the surviving spouse maintains a household for a dependent child. The child must be a son, stepson, daughter, or stepdaughter who qualifies as a dependent of the taxpayer.

Why would one file seperately when married?

Significant medical expenses incurred by one spouse to subject of the 10% AGI limitation. When both parties have high incomes. Itemized deductions

The child is 20, not a student, and not disabled

The kiddie tax does not apply. The age coverage is under 19 or a full-time student under age 24

Head of Household

To qualify for the head-of-household filing status, a taxpayer must pay more than half the cost of maintaining a household as his or her home. The household must also be the principal home of a dependent. Except for temporary absences (e.g., school, hospitalization), the dependent must live in the taxpayer's household for over half the year. Must meet relationship test.

Kiddie Tax

the tax on a child's unearned income based on the child's parents' marginal rate