tax-aide filing status married, single, and more nttc training 2013 1
TRANSCRIPT
TAX-AIDE
TAX-AIDE
Filing Status
Married, Single, and More
NTTC Training 2013 1
TAX-AIDE
Objectives
● Define allowable filing status
● List requirements
● Discuss key interview points
● Define importance of filing status in process
● Review highlights of each status
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TAX-AIDE
References
● Pub 4012, Tab B
● Pub 4491, Part 1, pg 25
● Pub 17, Chapter 2
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TAX-AIDE
Filing Status
● Two criteria: Marital status on last day of tax year
Federal definition – “married” ● Legal marriage under laws of any state
or country● Does not include civil unions or
registered domestic partners Type of dependents, if any
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Pub 17 Ch 2
TAX-AIDE
Five Choices for Filing Status
● Single
● Married filing jointly (MFJ)
● Married filing separately (MFS)
● Head of household (HH)
● Qualified widow(er) (QW)
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Pub 4012 Tab B
TAX-AIDE
Form 1040
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TAX-AIDE
Where to Start ? Interview
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Check Part II entries on Intake Form
Ask questions – Verify
TAX-AIDE
Living Situation Analysis
● Marital status as of 12/31
● Others living in home, if any Their relationship/dependency Who paid upkeep
● If widow(er) Date of death of spouse Any dependents
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TAX-AIDE
Filing Status Importance
● Many tax items affected by filing status Necessity to file a return Standard deduction Eligibility for certain deductions or
credits Tax rate brackets
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TAX-AIDE
Filing Status – Need to File a Return?
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TAX-AIDE
Filing Status – Standard Deduction
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Filing Status – Tax Rate
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TAX-AIDE
Single
● Not married as of December 31st
● Married, but legally separated
● No related dependents
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TAX-AIDE
Married Filing Jointly
● Married on last day of year Includes common law marriage Includes same-sex married couples
● Spouse died during current year/not remarried
● Generally most advantageous filing status
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TAX-AIDE
Married Filing Separately
● Taxpayer chooses to file MFS
● Spouse has already filed MFS
● Married but separated
● Rare cases – more advantageous Generally, no children in home
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TAX-AIDE
MFS Disadvantages
● Highest tax rate/lower standard deduction
● Cannot claim most tax credits
● Cannot deduct student loan interest, tuition and fees adjustment, education credits
● Capital loss limit $1,500 (not $3,000)
● Most of Social Security benefits can become taxable
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TAX-AIDE
Head of Household – Unmarried
● Provided home for qualified child May not be dependent due to divorce
● Provided home for related dependent
● Provided more than half the cost of maintaining home for dependent parents living elsewhere
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TAX-AIDE
Head of Household – Married
● Lived apart all of last six months of year
● Provided home for your child, stepchild, or eligible foster child for over six months
● No other relatives qualify
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TAX-AIDE
Head of Household
● Key advantages Higher standard deduction than Single or
MFS Advantageous tax rate structure
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TAX-AIDE
Qualifying Widow(er)
● Spouse died in one of two past years Has dependent child or stepchild Grandchild not eligible
● Maintained home for child >50% of cost
● Can file QW for two years only
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TAX-AIDE
Qualifying Widow(er)
● Advantages Standard Deduction – same as MFJ Use MFJ Tax Rates
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TAX-AIDE
TaxWise – Main Information Sheet
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Enter name and SSN only if child not also
dependent
TAX-AIDE
Quality Review
● Review prior year’s status
● Verify current year filing status with data on Intake Sheet
● Discuss options with taxpayer Ensure best option selected
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TAX-AIDE
Problem #1
● Mr Buck provides total support for his two children. His wife died in 2010, and he has not remarried.
● What is the best filing status for Mr Buck?
Head of Household
● What would have been best in TY2012?
Qualifying Widower
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TAX-AIDE
Problem #2
● Ralph and Betty’s divorce became final during 2013. Betty has full custody of their two children and will claim them as her dependents. Ralph pays $500 per month child support.
● What is Ralph’s Filing Status?
Single
● What is Betty’s Filing Status?
Head of Household
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TAX-AIDE
Problem #3
● Luke and Linda are still married, but chose to live apart for most of the year
● Their two children lived with Linda all year
● In July, Luke was out of a job so he moved back in the house for just that month
● What filing status can they each choose?
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MFJ or MFS (both must use same status)
TAX-AIDE
Problem #4
● Dick and Jane are married, lived apart all year and are filing separate returns
● Their 23-year-old daughter Jody lived with Jane all year while attending school full-time
● Jody earned $2,500 during the summer
● What is Jane’s best filing status?
Head of Household
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TAX-AIDE
Filing Status
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Questions?
Comments?