General Requirements: Social Security Number
- Enter a valid Social Security Number for all parties on the return, including each dependent claimed
- If no SSN, list the individual taxpayer identification number (ITIN) or adoption taxpayer identificaton number (ATIN)
- If a child was born an died in the same year, and does not have an SSN, attach birth certificate, death certificate, or hospital records showing the child was born alive.
General Requirements: ITIN
- An Individual Taxpayer Identification Number is a tax processing number issued by the IRS upon receipt of form W-7
- Issued to those not eligible for a SSN
- Issued regargless of immmigration status
- Starts with number 9
General Requirements: Filing deadlines
- Tax return is due by 15th day of the 4th month after the close of the tax year
- Usually falls on April 15
- If date falls on weekend or holidate, the due date is delayed until the next business day
- A paper return is ontime if postmarked by deadline
- A e-filed returns is on time if the authorized electronic return transitter postmarks the transmission by the due date.
General Requirements: Tax Payments
- A non-business taxpayer with tax due from a tax return may pay by check, money order, credit card or debit card.
- If you are an individual taxpayer, IRS Direct Pay offers a free, electronic payment method at irs.gov/payments.
- Checks made payable to “United States Treasury” with identifying info on check, like first SSN used.
- A payment by mail should include a Form 1040-V Payment Voucher
General Requirements: Installments
- Installment agreements generally provide up to 72 months to pay the tax
- An installment agreement is not valid unless accepted by the iRS
- If the taxpayer owes $10,000 or less and meets other criteria, the IRA must accepts the request
- during the past 5 years, all returns and taxes were paid on time
- the IRS determines the taxpayer cannot pay in full
- the full amount is payid within 3 years and tax laws are abdided by while in effect.
General Requirements: Refund Deposits
- The taxpayer can receive a refund by check or by direct deposit
- Form 888 necessary if depositing to more than 1 account or to buy up to $5,000 in paper seriees I bonds
- A refund may be depsited into an IRA, Roth IRA, or SEP-IRA, but not a SIMPLE
- May also be sent to TreasuryDirect online to buy Treasury bills and bonds
General Requirements: Filing a Claim for Refund
The normal deadline for filing a claim for a refund or credit is:
- three years from date of filing the original return, or
- two years after paying the tax, whichever is later.
Payments made before the due date are treated as paid on the due date, and payment made after the due date are treated as being paid on the date paid.
The refund is limited to the tax paid during the time period: either 3 years or 2 years. An exception to the 3 year rule is for bad debt or worthless securities, which has a seven year from return due date limitation.
General Requirements: Joint and Several Liability
- A married taxpayer is jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise because of the joint return, even after divorce.
- Joint and several liability means that each taxpayer is legally responsible for the entire liability
- Relief from joint liability is different than injured spouse relief claim
General Requirements: Injured Spouse Relief
- A taxpayer is an “injured spouse” if he files a joint retrn and all or part of this share of the refund was, or will be, applied against the separate past-due federal, state, child support, or federal non-tax debt of his spouse.
- An injured spouse may file Form 8379 to prevent one spouse’s share of the refund from being applied to the past due obligation.
General Requirements: Extensions
- A taxpayer may request an automatic six-month extension by filng Form 4868 by the due date of the return or by paying all or poart of the income tax due using a credit or debit card
- This is not an extension of time to pay taxes
- Other extensions include:
- Serving in a combat zone: filing and payment deadline increase by 180 days following the date they leave a qualified combat zone or hospitalization due to injury from services
- individuals outside US: a US citizen or resident may receive an automatic two-month extention to file and pay federal income tax due if in naval service outside US, or if main place of business is outside US, or in PR.
General Requirements: Accounting Periods
- The period covered by personal income tax returns is the 12-month period from Jan 1 to Dec 31, known as the calendar year.
- A fiscal year is any 12-month period that ends on the last day of any month except December
- A taxpayer will choose the type of accounting period when he files his 1st income tax return.
General Requirements: Accounting Methods
- Most taxpayers use the cash method. If used, the taxpayer must report income in the year of constructive receipt, which is when the income is available for unrestricted access. Physical possession is not required.
- Examples of contructive receipt include:
- Garnished wages
- Canceleed debt, bu tnot as gift or loan
- Income payments directly to a third party
- Income received in advance
- Checks received an payable
- Do not report Series E or EE bonds until final maturity date
Individual Tax Return: Individual Filing Requirement
- The gross income threshold determines whether a taxpayer must file a return.
- It is the sum of the standard deduction and personal exemption amounts for each filing status
Individual Tax Return: Dependent Filing Requirements
If the client is 65, older or blind:
- Unearned income more than $2,600 ($4.,150 if 65 or older and blind)
- Earned income more than $7,850 ($9,400 if 65 or older and blind
If not 65 or older or blind:
- Unearned income more than $1,050
- Your earned income was more than $6,300
Individual Tax Return: Form 8814
Parents can elect to include a child’s income on the parent’s return by filing form 8814, when a child’s income is interest, dividends, or capital gains distribution. To make this election, the following conditions apply:
- at the end of the year, the child is under 19 or a full-time student under 24
- gross income of less than $10,500
- must file return unless election is made
- must not file a joint reutrn for he year
- must not make estimated tax payments for year
- no overpayment from previous years applied to this yer
- no income tax taken out of income under backup withholding rules
Individual Tax Return: Special Filing Cases
A taxpayer is required to fule a return is any of the conditions apply:
- special taxes are owed, or certain credits must be recaptured
- net earnings from self-employment are at least $400
- Wages are $108.28 or more from church or qualified church-controlled organization that is exempt from payroll taxes
Individual Tax Return: Filing Status
- In general, filing status depends on marital status.
- For federal tax purposes, taxpayers of the same sec are considere dmarried if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if their current state (or foreign country) does not.
Individual Tax Return: Single Filing Status
A taxpayer is “single” if, on the last day of the year,
- he is unmarried or legally separated from a spouse under a final court decree and
- does not qualify for another status.
Individual Tax Return: HH Filing Status
- Filing as head of household usually results in lower tax rates than single or married filing separately
- To qualify, a person must:
- be unmarried or considered unmarried (files a separate return and spouse did not live in home the last 6 months of tax year)
- live with a qualfying child or relative for whom the taxpayer can claim an exemption
- a qualifying relative must be a member of the taxpayer’s family (not merely a member of the household)
- if claiming the the dependent parent, you must pay more than half the cost of maintaining the parent’s home
Individual Tax Return: MFJ Filing Status
- Taxpayers may choose married filing jointly as the filing status if they are married and agree to file a joint return
- Both are responsible for the tax and any interest or penalty due
- Different accounting methods are allowable, but both must use the same accounting period and are generally required to sign the return
- When a court decree of annulment reverses a marriage, they must amend previous joint returns.
- If one spouse is a nonresident alient, they must have a SSN or an ITIN to file a joint return
Individual Tax Return: MFS Filing Status
Married couple can choose married filing separately as a status if they want to be responsible only for their respective taxes. They will ususally pay more total tax on separate returns that when using another filing status. The following rules apply:
- cannot take credit for child and dependent care expenses in most cases, and the limit on income excluded under empployer’s dependent care assistance is $2,500
- no earned income credit, no adoption credit, no education credits or deductions
- no exclusion on savings bonds interest, when used for education purposes
- if the taxpayer lived with a spouse during the tax year, the following conditions apply:
- cannot claim credit for elderly or disables
- must include in oincome more of any SS received
- child tax and retirement savings contribution credut reduce at a level of income equal to one-hald of the amount allowable to joint filers
- capital loss limit limited to $1,500
Individual Tax Return: QW Filing Status
If one spouse dies during the tax year, the survivor can file jointly if he otherwise qualifies for that status. The year of death is the last year to file jointly with a deceased spouse. In certain cases, qualifying widower with dependent child is the filing status for two tax years following the year a spouse died. To qualify, all of the following tests should be met:
- must be entitled to file a joint return with his spouse for the year the spouse died
- must not remarry before the end of the tax year
- must have a child or stepchild (not a foster child) for whom he can claim an exemption
- a child lived in the person’s home all year, except for temporary absences
- the taxpayer and deceased spouse paid more than half of the cost of maintaining a home
Individual Tax Return: Personal Exemptions
- There are two types of exemptions: personal exemptions and exemptions for dependents. While each is worth the same amount, different rules apply.
- Reduce the dollar exemptins by 2% for each $2,500 above the AGI threshold
- An exemption is available for MFJ, MFS, and QW, but not a divorce or separated spoise, in the year the divorce or separation decree is finalized. This rule applies even for those who provide all of a former spouse’s support.
Individual Tax Return: Dependent Exemptions
To claim an exemption for a dependent, a taxpayer must meet all three of the following tests:
- Dependent Taxpayer Test - the taxpayer cannot qualify as a dependent of another person
- Joint Return Test - the taxpayer cannot claim a married person who files a joint return as a dependent, unless the married person filed ony to claim a refund
- Citizenship or Resident Test - a dependent taxpayer must be a US citizen, a US resident alient, US national, or a redient of Canada or Mexico, for some part of the year.
- *Support Test - a taxpayer must provide more than half of the total annual support
