What factors determine whether an individual must file a federal tax return for the 2026 tax year?
• Gross income thresholds based on filing status and age (standard deduction amounts). • Self-employment income of $400 or more (net). • Special situations, including: • Taxpayer owes special taxes (AMT, additional tax on IRA, household employment taxes). • Advance Premium Tax Credit reconciliation. • Unreported Social Security/Medicare tips. • Dependents may need to file based on earned/unearned income thresholds.
What are the five filing statuses and when are they used?
• Single – Unmarried at year end and not qualifying for other statuses. • Married Filing Jointly – Married at year end; includes spouse who died during year. • Married Filing Separately – Married but filing separately; some credits/benefits restricted. • Head of Household – Unmarried, paid >50% cost of home, qualifying person lived there >6 months. • Qualifying Surviving Spouse – Can file MFJ rates for 2 years after spouse’s death if supporting a dependent child.
What are the tests for a Qualifying Child for 2026?
- Relationship – Child, sibling, or descendant. 2. Age – Under 19, or under 24 if full-time student, or any age if disabled. 3. Residency – Lived with taxpayer > half the year. 4. Support – Child did NOT provide over half their own support. 5. Joint Return – Child does not file joint return unless only for refund.
What is the gross income test for a Qualifying Relative?
• Dependent must have gross income below the annual limit (inflation-adjusted). • Taxpayer must provide over half of the person’s support. • Dependent must not be a qualifying child. • Must be a member of household OR meet relationship test.
What types of income are always taxable?
• Wages, salaries, tips • Business income • Interest (except municipal) • Dividends • Capital gains • Unemployment compensation • Rental income • Cancellation of debt • Gambling winnings • Jury duty pay • Prizes, awards • Alimony (pre-2019 only)
What types of income are excluded from federal taxation?
• Gifts and inheritances • Life insurance proceeds • Child support • Municipal bond interest • Workers’ compensation • Veterans’ disability benefits • Qualified scholarships used for tuition/required fees
What are the most common above-the-line deductions for individuals?
• Educator expenses • HSA contributions • IRA contributions • Student loan interest • Self-employed health insurance • Self-employment tax deduction • Alimony paid (pre-2019 agreements only) • Penalty on early withdrawal of savings
How are capital gains taxed?
• Short-term (<1 year) – taxed at ordinary income rates. • Long-term (≥1 year) – taxed at preferential rates: 0%, 15%, or 20%. • Additional 3.8% NIIT may apply for high-income taxpayers. • Maximum $3,000 net capital loss deductible against ordinary income.
What expenses are deductible for rental real estate?
• Mortgage interest • Depreciation • Repairs • Taxes • Insurance • Advertising • Property management fees • Travel to rental property • Utilities (if landlord-paid) Passive activity rules may limit loss deductions.
