Unit 1: Preliminary Work with Taxpayer Data

Individual Taxpayer Identification Number (ITIN) Application Process: Why would a taxpayer employ the services of a Certified Acceptance Agent (CAA)?

CAAs can authenticate a passport and/or birth certificate for taxpayers who request an ITIN, but do not wish to mail their original documents to the IRS.

Individual Taxpayer Identification Number (ITIN) Application Process: Example Scenario Adriana is a U.S. citizen with a Social Security number. Adriana lives and works in Mexico for an international U.S. company. Later in the year, she marries Carlos, a citizen of Mexico, who has a daughter from a prior marriage. Adriana decides to file jointly with her new husband, Carlos, and claim her stepdaughter as a dependent. In order to do so, they must request ITINs for: A. Carlos B. Adriana and Carlos C. Adriana, Carlos, and Carlos's daughter D. Carlos, and Adriana's stepdaughter

D. Carlos, and Adriana's stepdaughter

Basic Tax Forms for Individuals: The 1040-SR can be used by which of the following individuals? A. U.S. Residents B. U.S. Nationals C. U.S. Citizens D. Nonresident Aliens

D. Nonresident Aliens The 1040NR is never used by U.S. citizens residents. The IRS defines an "alien" as any individual who is not a U.S. citizen or U.S. national. A nonresident alien is an alien who has not passed the green card test or the substantial presence test. Form 1040NR is used by investors overseas, as well as nonresident taxpayers who earn money while in the U.S.

What is the income range for the 32% tax rate and MFJ/QW filing status?

$321,451 - $408,200

What is the income range for the 22% tax rate and MFS filing status?

$39,476 - $84,200

What is the income range for the 22% tax rate and Single filing status?

$39,476 - $84,200

What is the income range for the 35% tax rate and MFJ/QW filing status?

$408,201 - $612,350

What is the income range for the 12% tax rate and Single filing status?

$9,701 - $39,475

What is the income range for the 37% tax rate and HOH filing status?

$501,301 or more

What is the income range for the 37% tax rate and Single filing status?

$510,301 or more

What is the income range for the 22% tax rate and HOH filing status?

$52,851 - $84,200

What is the income range for the 37% tax rate and MFJ/QW filing status?

$612,351 or more

What is the income range for the 22% tax rate and MFJ/QW filing statuses?

$78,951 - $168,400

What is the income range for the 24% tax rate and HOH filing status?

$84,201 - $160,700

What is the income range for the 24% tax rate and MFS filing status?

$84,201 - $160,725

What is the income range for the 24% tax rate and Single filing status?

$84,201 - $160,725

What is the income range for the 12% tax rate and MFJ/QW filing statuses?

$9,701 - $39,475

What is the income range for the 12% tax rate and MFS filing status?

$9,701 - $39,475

What is the income range for the 10% tax rate and HOH filing status?

$0 to $13,850

What is the income range for the 10% tax rate and MFJ/QW filing statuses?

$0 to $19,400

Federal Income Tax Rates: What is the income range for the 10% tax rate and Single filing status?

$0 to $9,700

What is the income range for the 10% tax rate and MFS filing status?

$0 to $9,700

What is the income range for the 12% tax rate and HOH filing status?

$13,851 - $52,850

What is the income range for the 32% tax rate and HOH filing status?

$160,701 - $204,100

What is the income range for the 32% tax rate and MFS filing status?

$160,726 - $204,100

What is the income range for the 32% tax rate and Single filing status?

$160,726 - $204,100

What is the income range for the 24% tax rate and MFJ/QW filing status?

$168,401 - $321,450

What is the income range for the 35% tax rate and MFS filing status?

$204,101 - $306,175

What is the income range for the 35% tax rate and Single filing status?

$204,101 - $501,300

What is the income range for the 35% tax rate and HOH filing status?

$204,101 - $510,300

Federal Income Tax Rates: Example Scenario Yasmin is single and has $32,000 of taxable income in 2019. The first $9,700 of her $32,000 of taxable income is taxed at a 10% rate. The next segment of her taxable income, from $9,701 to $32,000 is taxed at a 12%, for a total of _________ in tax.

$3,646 [($9,700 x 10% = $970; $22,300 x 12% = $2,676) $970 + $2,676 = $3,646]

What is the income range for the 37% tax rate and MFS filing status?

$306,176 or more

Tax Return Due Dates and Extensions: Form 4868 can be filed electronically. A. True B. False

A. True

Individual Taxpayer Identification Number (ITIN) Application Process: What are the new ITIN procedures?

1. Enhanced documentation for new ITINs. 2. Older ITINs will expire if not renewed. 3. Newer ITINs will expire if not used within three years. 4. The IRS will no longer accept passports of dependents as stand-alone documents that lack a date of entry into the United States.

Relief from Joint Tax Liability: In some instances, a spouse can be relieved of the tax, interest, and penalties on a joint return. When spouses file a joint return, they are both legally responsible for the entire tax liability. However, a taxpayer can file a claim for spousal relief under which three grounds?

1. Innocent Spouse Relief 2. Separation of Liability Relief 3. Equitable Relief

June 15 Deadlines (Automatic Two-Month Extension) Which three groups of taxpayers are granted an automatic two-month extension to file and pay any tax due?

1. Nonresident aliens who do not have wage income subject to U.S. withholding 2. U.S. citizens or legal U.S. residents who are living outside the United States or Puerto Rico and their main place of business is outside the U.S. or Puerto Rico 3. Taxpayers on active military service duty outside the U.S.

Individual Taxpayer Identification Number (ITIN) Application Process: What are the three ways to apply for an ITIN?

1. Using Form W-7 2. Using an IRS-authorized Certified Acceptance Agent (CAA) 3. In-person at a designated IRS Taxpayer Assistance Center

Basic Tax Forms for Individuals: What form is used to correct errors in a previously filed Form 1040, Form 1040SR, or 1040NR?

1040X, Amended U.S. Individual Income Tax Return

Tax Return Due Dates and Extensions: Example Scenario Ramon is a U.S. Marine who has served in a combat zone since March 1, so he is entitled to extra time to file and pay his taxes. The forty-six days between the date he entered the combat zone and the April 15 deadline are added to the normal extension period of 180 days, so he has a _____________ extension period after he leaves the combat zone.

226-day

Tax Return Due Dates and Extensions: The Consolidated Appropriations Act, passed on December 20, 2019, provides for a mandatory ____________ extension in federally declared disaster areas with respect to disasters declared after the date of enactment.

60-day

Adoption Taxpayer Identification Number (ATIN): ATINs are designed explicitly for adopted children who are not yet eligible for a Social Security number. A. True B. False

A. True

Individual Taxpayer Identification Number (ITIN) Application Process: All ITINs now expire, unless they are renewed. A. True B. False

A. True

Penalties and Interest: The IRS can assess a penalty on individual taxpayers who fail to file, fail to pay, or both. A. True B. False

A. True

Recordkeeping Requirements for Individuals: Whether a paid tax return preparer is involved or not, a taxpayer is responsible for keeping copies of tax returns and maintaining other records, for as long as they may be needed for the administration of any provision of federal tax law. A. True B. False

A. True

Relief from Joint Tax Liability: When spouses file a joint return, they are both legally responsible for the entire tax liability. A. True B. False

A. True

Tax Return Due Dates and Extensions: The deadline extensions for the Special Exception for Combat Zones apply to spouses of armed service members serving in combat zones. A. True B. False

A. True

Taxpayer Biographical Information: Currently, residents of 20 states can obtain an IP PIN for any reason. A. True B. False

A. True

Taxpayer Biographical Information: People who do not have lawful status in the United States may obtain an ITIN for tax reporting purposes only. A. True B. False

A. True

Taxpayer Biographical Information: The Taxpayer First Act of 2019 requires that the IRS make the IP PIN available nationwide within 5 years. A. True B. False

A. True

Tax Return Due Dates and Extensions: If a taxpayer lives abroad, he can request an additional discretionary two-month extension of time to file his tax return beyond the regular six-month extension of October 15. A. True B. False

A. True The "additional" extension date would be December 15. Unless the extension is denied, the taxpayer will not receive a response from the IRS.

Special Rules for a Deceased Child: If a child is born and dies within the same year and is not granted an SSN, the taxpayer may still claim that child as a dependent. A. True B. False

A. True The birth must have been a live birth and not stillborn.

Penalties and Interest: A taxpayer may request penalty abatement due to "reasonable cause." What are acceptable reasons for abatement?

Acceptable reasons for abatement include: • fire • casualty • natural disaster or other disturbances • inability to obtain records due to a casualty or a disaster, death, serious illness, incapacitate, or unavoidable absence of the taxpayer or a member of the taxpayer's immediate family.

Tax Return Due Dates and Extensions: What is the normal date for individual tax returns?

April, 15 If April 15 falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day.

Tax Return Due Dates and Extensions: If you are a citizen or resident living abroad, what must you do to qualify yourself for the special two-month extension?

Attach a statement to the return, explaining which situation qualifies you for the special two-month extension. Note: Even if a taxpayer is allowed an extension, the taxpayer will have to pay interest on any tax not paid by the regular tax deadline of April 15, 2020.

Federal Deadline Exceptions: Taxpayers in a federally declared disaster areas are NOT granted extensions to file and pay their income taxes AND to make estimated payments. A. True B. False

B. False

Tax Return Due Dates and Extensions: If taxpayers file Form 4868, they are NOT expected to estimate and pay the amount of tax due by the filing deadline. A. True B. False

B. False Although an extension gives a taxpayer extra time to file a return, it does not extend the time to pay any tax due. A taxpayer will owe interest on any amount that is not paid by the regular filing deadline, plus a late payment penalty. Taxpayers are expected to estimate and pay the amount of tax due by the filing deadline.

Adoption Taxpayer Identification Number (ATIN): An ATIN can be used to obtain the Child Tax Credit, but it cannot be used to obtain the Earned Income Credit, or the American Opportunity Credit. A. True B. False

B. False An ATIN cannot be used to obtain the Earned Income Credit, the Child Tax Credit, or the American Opportunity Credit.

Tax Return Due Dates and Extensions: IRS deadlines for assessment and collection are NOT suspended during any period that a U.S. service member is in a combat zone. A. True B. False

B. False IRS deadlines for assessment and collection are also suspended during any period that a U.S. service member is in a combat zone.

Taxpayer Biographical Information: If a U.S. soldier marries a foreign spouse and wishes to file jointly, an ITIN is not required. A. True B. False

B. False If a U.S. soldier marries a foreign spouse and wishes to file jointly, an ITIN IS required.

Taxpayer Biographical Information: Incorrect taxpayer identification numbers is one of the least common causes of rejected tax returns. A. True B. False

B. False Incorrect taxpayer information is one of the MOST common causes of rejected tax returns.

Penalties and Interest: Late penalties cannot be abated for reasonable cause but interest can. A. True B. False

B. False Late penalties CAN be abated for reasonable cause but interest CANNOT be abated for reasonable cause, except under very unusual circumstances (i.e.,. a mathematical error made by the IRS).

Tax Return Due Dates and Extensions: A taxpayer has to be physically located in a federally declared disaster area to qualify as an "affected taxpayer." A. True B. False

B. False Taxpayers are also considered "affected" if the records necessary to meet a filing or payment deadline postponed during the relief period are located in a covered disaster area. Therefore, disaster relief also applies to tax preparers (and their clients) who are unable to file returns or make payments on behalf of their clients because of a disaster.

Individual Taxpayer Identification Number (ITIN) Application Process: When a taxpayer applies for an ITIN, his Form W-7, must include original documentation such as: an original passport, birth certificate, certified copies of these documents from the issuing agency, or notarized copies of these documents. A. True B. False

B. False When a taxpayer applies for an ITIN, his Form W-7, must include original documentation such as: an original passport, birth certificate, certified copies of these documents from the issuing agency. Notarized copies are no longer accepted.

Use of Prior Year Returns: A tax preparer is required by law to do all of the following in regard to prior year returns EXCEPT: A. Inform a taxpayer of an omission on a prior year return. B. Fix an omission on a prior year return. C. Inform a taxpayer of a mistake on a prior year return. D. Inform a taxpayer of the consequences of a mistake or omission on a prior year return.

B. Fix an omission on a prior year return.

Individual Taxpayer Identification Number (ITIN) Application Process: Which of the following is true about ITINs? A. The issuance of an ITIN affects an individual's immigration status and gives the taxpayer the right to work in the United States. B. ITINs are for federal tax reporting only and are not intended to serve any other purpose. C. A taxpayer with an ITIN can apply for Social Security benefits. D. A taxpayer with an ITIN can claim both the Child Tax Credit and the Earned Income Tax Credit.

B. ITINs are for federal tax reporting only and are not intended to serve any other purpose. The issuance of an ITIN does not affect an individual's immigration status or give the taxpayer the right to work in the United States. A taxpayer with an ITIN is not eligible to receive Social Security benefits or the Child Tax Credit or Earned Income Tax Credit. ITINs are for federal tax reporting only and are not intended for any other purpose.

Recordkeeping Requirements for Individuals: Generally, a taxpayer should keep copies of tax returns and supporting documentation for at least _______________ from the date the returns were filed or the date they were due, whichever is later. A. one year B. two years C. three years D. four years

C. three years

Adoption Taxpayer Identification Number (ATIN): An ATIN issued for an adoptive child will expire _____________ from the date it is issued, although an extension can be requested. A. one year B. two years C. three years D. four years

B. two years

Penalties and Interest: Which is generally greater, the failure-to-file penalty, or the failure-to-pay penalty?

Failure-to-file penalty

Basic Tax Forms for Individuals: What new form was released this year, specifically for use by seniors who are age 65 and older?

Form 1040-SR

Penalties and Interest: What form is used by taxpayers who live abroad and qualify for the foreign earned income exclusion or the foreign housing exclusion or deduction?

Form 2350, Application for Extension of Time to File U.S. Income Tax Return. Form 2350 does not extend the time to pay taxes, it only extends the time time to file.

Tax Return Due Dates and Extensions: If a taxpayer cannot file his tax return by the due date, he may also request an extension by filing __________________.

Form 4868

Tax Return Due Dates and Extensions: What is Form 4868?

Form 4868, Application for Automatic Extension of Time to File, which grants an additional six months to file a tax return.

Taxpayer Biographical Information: Example Scenario Umberto is an Italian citizen who has never been to the United States. In January 2019, he inherits a rental property from his deceased aunt, Guiseppina, who was a green-card holder living in the U.S. On the advice of his accountant, Umberto decides to keep the rental property. He hires a management company to receive the rents and manage the property in his absence. Umberto requests a(n) _______________ for reporting purposes. He will report his U.S. rental income on ______________.

ITIN; 1040NR

Taxpayer Biographical Information: A taxpayer who cannot obtain an SSN must apply for a(n) _____________ or a(n) _________________ in order to file a U.S. tax return.

ITIN; ATIN

Recordkeeping Requirements for Individuals: The IRS does not require taxpayers to keep records in any particular way, but it says individuals need good records for the following purposes: (Name the purposes)

Identify sources of income: Taxpayers receive money or property from a variety of sources, individuals need this information to separate business from nonbusiness income and taxable from nontaxable income. Keep track of expenses: Tracking expenses as they occur helps taxpayers identify expenses that can be used to claim the deductions. Keep track of the basis of property: Taxpayers need to retain records showing the original cost or other basis of property they own and any improvements made to them. Support items reported on tax returns: If the IRS has questions about items on a return, a taxpayer should have records to substantiate those items. In an IRS audit, the burden of proof on the taxpayer to prove their expenses in order to deduct them. Prepare tax returns: Good records help taxpayers (and their preparers) file accurate returns more quickly.

Taxpayer Biographical Information: A taxpayer can request a(n) _______________________ that must be entered into software for the IRS to accept an electronically filed tax return. Victims of tax-related identity theft can request one.

Identity Protection Personal Identification Number (IP PIN)

Penalties and Interest: What happens if a taxpayer is subject to both the failure-to-file penalty and the failure-to-pay penalty?

If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5% failure-to-pay is reduced by the failure-to-pay penalty.

Penalties and Interest: What is the amount of Failure-to-Pay Penalty?

If the taxpayer does not pay his taxes by the original due date (determined without regards to any extension), he could be subject to a failure-to-pay penalty of 1/2 of 1% (0.5%) of unpaid taxes for each month after the due date that the taxes are not paid. The penalty can be as much as 25% of a taxpayer's unpaid taxes. The failure-to-pay penalty rate increases to a full 1% per month for any tax that remains unpaid the day after a demand for immediate payment is issued, or ten days after notice of intent to levy certain assets is issued.

Recordkeeping Requirements for Individuals: Necessary records that all taxpayers should keep include items related to: (name the items)

Income: Forms W-2, Forms 1099, bank statements, pay stubs, brokerage statements, Schedules K-1 Expenses: Sales slips, invoices, receipts, credit card statements, canceled checks or other proof of payments, written communications from qualified charities, Forms 1098 to support mortgage interest and potentially real estate taxes paid (if the taxes are paid through an impound account) Home purchase and sale: Closing statements, HUD statements, purchase and sales invoices, proof of payment, insurance records, receipts for improvement costs Investments: Brokerage statements, mutual fund statements, Forms 1099-DIV

Penalties and Interest: In addition to filing penalties, the taxpayer will also be charged interest on the amount due. Generally, interest accrues when?

It accrues on any unpaid tax from the due date of the return until the date of payment in full.

Basic Tax Forms for Individuals: What is the difference between the Form 1040 and the form 1040_SR?

It is essentially the same, but it is designed to be easier to read with a bigger font.

Basic Tax Forms for Individuals: Example Scenario Reynaldo is a worldwide boxing champion and a legal citizen of the Philippines. Reynaldo receives a non-immigrant visa to fight in a boxing match in the U.S., where he earns $500,0000 for the fight. He only remains in the U.S. for six days. After his boxing appearance, he returns to the Philippines. Reynaldo is not eligible for an SSN and must request an ITIN to report his U.S. income. Without the ITIN, he would be subject to automatic backup withholding on his U.S. earnings. Reynaldo's tax accountant correctly reports his income and tax on Form 1040NR. Does Reynaldo have to report his worldwide income on the 1040NR?

No. He only has to report the income he earned in the United States.

Tax Return Due Dates and Extensions: Example Scenario Seraphina is an enrolled agent. Her client, Watson, is a single father with one child, a 14-year-old daughter named Tiffany, Watson has sole custody of Tiffany and provides all his daughter's financial support. On April 15, 2020, Seraphina attempts to efile Watson's tax return, but the return is rejected because the dependent on his return has already been claimed by another person. Watson believes that his estranged ex-wife may have tried to claim Tiffany, but he cannot be sure, and has no way to contact his ex-wife to confirm. Seraphina recommends filing on paper because she does not believe that the efile reject can be resolved. What does Saraphina do?

She prints out the paper return for Watson, who signs it with an original signature, and mails it certified mail before the post office closes on April 15. The return is considered timely and goes through regular processing. Watson receives his full refund about 45 days later.

Tax Return Due Dates and Extensions: The IRS will accept a postmark as proof of a timely-filed return. For example, if a tax return is postmarked April 15, 2020, but does not arrive at an IRS service center until April 30, 2020, the IRS will accept the return as having been filed on time. In cases where a tax return is filed close to the deadline, it is advisable for a taxpayer to pay for proof of mailing or certified mail. E-filed tax returns are given an "electronic postmark" to indicate the day they are accepted and transmitted to the IRS. What is this rule called?

The Mailbox Rule

Penalties and Interest: What does a taxpayer have to do to request an abatement of interest?

Taxpayers may request abatement of interest by filing Form 843, Claim for Refund and Request for Abatement, or by submitting a request by letter.

Penalties and Interest: Example Scenario Nicoletta died two years ago. She had a filing requirement when she passed away. However, Nicoletta died without a will, and an executor was not named by the court until November 10, 2019. Ezequiel was named the executor. Ezequiel filed two years of delinquent tax returns on behalf of his deceased sister, and also requested a penalty abatement for filing Nicoletta's final tax returns late. What is likely to have happened?

The IRS granted the penalty abatement, although the interest on the amount due was not abated, and still had to be paid by the executor.

Penalties and Interest: How is the interest determined on overdue tax?

The interest is determined by the federal short-term rate plus 3%. interest compounds daily, Unlike late penalties, interest cannot be reduced or abated for reasonable cause.

Tax Return Due Dates and Extensions: How long is the extension for taxpayers who qualify for the Special Exception for Combat Zones?

These taxpayers have their deadlines suspended from the day they started serving in the combat zone until 180 days after they leave the combat zone.

Penalties and Interest: What is the amount of the Failure-to-File Penalty?

Usually 5% of the unpaid taxes for each month or part of a month that a return is late. The penalty is based on the tax that is not paid by the due date, without regard to extensions. The penalty will not exceed 25% of a taxpayer's unpaid taxes. For the tax year 2019, the failure-to-file penalty has increased to $435 or 100% of the unpaid tax (whichever is less) for a taxpayer who files his return more than 60 days late.

Taxpayer Biographical Information: What form is used to request on ITIN?

W-7

Taxpayer Biographical Information: What form is used to request an ATIN?

W-7a

Tax Return Due Dates and Extensions: Example Scenario Danny owns a 30% interest in a partnership that is located in a federally declared disaster area. However, Danny himself does not live in the disaster zone. Since Danny must rely on the information (Schedule K-1) from the partnership to file his individual tax return, he qualifies as an "affected taxpayer" for purposes of receiving filing and payment relief. Are Danny's filing and payment deadlines are suspended until the end of the postponement period, just like the affected partnership?

Yes

Taxpayer Biographical Information: Example Scenario Kristal is a U.S. citizen living in Norway. In 2019, she met and married Trond, a Norwegian citizen. The couple plans to live in Norway. Kristal and Trond make the election to file jointly and treat Trond as a U.S. resident alien by ________________. To make this election, Trond must request a(n) _______________.

attaching a statement to their joint return; ITIN

Federal Income Tax Rates: The IRS groups individuals by ranges of their taxable income level, or ______________, and applies increasing tax rates to each successive level.

brackets

Recordkeeping Requirements for Individuals: The responsibility to prove entries, deductions, and statements mad on a taxpayer's tax return is known as the ________________.

burden of proof

Use of Prior Year Returns: When enrolled agents and other tax professionals prepare tax returns for clients, they are expected to perform due diligence in ______________, _________________, and ________________ taxpayer data.

collecting; verifying; gathering

Use of Prior Year Returns: A tax preparer is expected to review prior year tax returns for _______________, _________________, and _________________.

compliance; accuracy; completeness

Use of Prior Year Returns: A preparer is required to notify a taxpayer of an error or omission and the ________________ of not correcting the error or omission.

consequences

Individual Taxpayer Identification Number (ITIN) Application Process: To request an ITIN, taxpayers must file Form W-7, Application for IRS Individual Taxpayer Identification Number, and supply documentation that establishes their _____________ and ______________.

foreign status; true identity

Recordkeeping Requirements for Individuals: Generally, taxpayer must meet their burden of proof by having the information and receipts (where needed) for the expenses and deductions claimed on their return. However, in tax-related criminal cases and civil fraud cases, the burden of proof is on the ______________.

government

Use of Prior Year Returns: The use of prior year returns can help prevent major ____________________ and alert a preparer to _____________________ that might affect the taxpayer.

mathematical errors; specific issues

Federal Income Tax Rates: An individual's federal taxable income is taxed at ______________ rates in the United States; the more taxable income taxpayer has, the higher the percentage of that income he pays in taxes.

progressive

Taxpayer Biographical Information: To prevent filing returns with stolen identities, a tax preparer should ask taxpayers to provide:

two forms of identification (picture IDs are preferable) that include the taxpayer's name and current address. [Further guidelines can be found in Publication 4491, VITA/TCE Training Guide.

Federal Income Tax Rates: The applicable tax rate for each successive bracket that is applicable to the taxpayer applies only to the additional amounts of taxable income that fall ______________ that particular bracket.

within

Federal Income Tax Rates: For tax year 2019, what are the tax brackets for individuals?

• 10% • 12% • 22% • 24% • 32% • 35% • 37%

Use of Prior Year Returns: In reviewing prior year returns, a preparer need to determine whether there are items that affect the current year's return, including the following:

• Carryovers • Net Operating Losses (NOLs) • Credit for prior year minimum tax (Form 8801, Credit for Prior Year Minimum Tax-Individuals, Estates, and Trusts) • Prior-year depreciation and asset basis

Basic Tax Forms for Individuals: Aside from correcting errors on previously filed Forms 1040, Forms 1040SR, and Forms 1040NR, what else is Form 1040X used for?

• Change amounts previously adjusted by the IRS • Make a claim for a carryback due to a loss or unused credit • Correct a liability for the Additional Medicare Tax, or • Make certain elections after the prescribed deadline

Tax Return Due Dates and Extensions: The IRS may also abate interest any late filing penalties that apply to taxpayers in federally declared disaster areas in addition to granting extensions to file and pay income taxes. This type of tax relief generally includes:

• Individuals and businesses located in a disaster area • Those whose tax records are located in a disaster area, and • Relief workers who are working in the disaster area

Taxpayer Biographical Information: A tax professional must collect this information from each taxpayer to prepare an accurate tax return:

• Legal name, date of birth, and marital status • Residency status and/or citizenship • Dependents • Taxpayer identification number (SSN, ITIN, or ATIN)

Basic Tax Forms for Individuals: A redesigned Form 1040 was released for the 2019 tax year. What changes were made?

• Schedules 4, 5, and 6 have been permanently eliminated. • Schedule 1, Additional Income and Adjustments to Gross Income: This schedule includes new lines for alimony payments, as well as a question regarding virtual currency transactions during the year. • Schedule 2, Additional Taxes: This new schedule combines the previous year's Schedules 2 and 4. • Schedule 3, Additional Credits and Payments: This redesigned schedule includes all the same information from Schedule 3 in the prior year, but also includes the information from Schedule 5.

Tax Return Due Dates and Extensions: Which individuals in a combat zone can automatically extend the deadline for filing a tax return, claim for a refund, and the deadline for payment of tax owed?

• Service member • Red Cross personnel • Accredited correspondent • Contracted civilian serving in a combat zone

Special Rules for a Deceased Child: Example Scenario Morganna gave birth to a son on November 1, 2019. The baby had health problems and died a week later. He was issued a birth certificate and a death certificate, but not an SSN. Her son will be considered a "qualifying child" for tax purposes, even though the child only lived a short time. How must Morganna file in order to claim the child?

• She must paper-file her return to claim her deceased child as a dependent. • She must attach a copy of the birth certificate or hospital medical records (they must show that the child was born alive, not stillborn • She must write "DIED" in the space for the dependent's Social Security number on the tax return.

Taxpayer Biographical Information: What are the types of ITINs?

• Social Security Number (SSN) • Individual Taxpayer Identification Number (ITIN) • Adoption Taxpayer Identification Number (ATIN)

Taxpayer Biographical Information: The IRS requires each individual listed on a federal income tax return to have a valid taxpayer identification (ITIN). That includes:

• Taxpayer • Spouse (if married) • Dependents listed on the return

Adoption Taxpayer Identification Number (ATIN): For an adopted child who does not have an SSN, a taxpayer may request an ATIN if: (name the requirements)

• The child is placed in the taxpayer's home for legal adoption • The adoption is a domestic adoption, or the adoption is a foreign legal adoption, and the child has a permanent resident alien card or certificate of citizenship • The taxpayer cannot obtain the child's existing SSN, even though he has made a reasonable attempt to obtain it from the birth parents, the placement agency, and other persons • The taxpayer cannot obtain an SSN for other reasons, such as the adoption not being final