Filing Status Married, Single, and More Pub 4012 Tab B Pub 4491 Lesson 5 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 Family members living in the home (may or may not be dependents) or supported by taxpayer 2
NTTC Training TY 2018 Five Choices for Filing Status Single Married filing jointly (MFJ) Married filing separately (MFS)
Head of household (HoH) Qualified widow(er) (QW) 3 NTTC Training TY 2018 Form 1040 4 NTTC Training TY 2018 Intake Booklet Check Part II entries in Intake Booklet
Ask questions verify 5 NTTC Training TY 2018 Living Situation Analysis Marital status as of 12/31 Others living in home and/or supported by taxpayer, if any Their relationship/dependency Paid >50% of upkeep of the home?
If widow(er) Date of death of spouse Any dependent* children at home * See next slide 6 NTTC Training TY 2018 Qualifying Widow(er) Child must be a dependent or Would have been a dependent except
Gross income too high, Filed MFJ -OR Taxpayer is a dependent Applies to all open tax years can amend to get a refund 7 NTTC Training TY 2018 Use the Decision Tree On the Tri-Fold Resource Tool Dont miss the footnotes Also see Tab B-6 in Pub 4012 for interview Tips
8 NTTC Training TY 2018 Filing Status Importance Many tax items affected by filing status Necessity to file a return (Pub 4012 Tab A Chart A) Standard deduction (Pub 4012 Tab F Exhibit 1) Tax rate bracket Eligibility for certain credits (e.g. Pub 4012 Tab I EIC General Eligibility Rules Step 3) 9
NTTC Training TY 2018 Filing Status Tax Rate Initial rates of tax 2018 Status Single Married Filing Jointly Married Filing Separately Head of Household 10 Tax Rate is 10% on taxable income Up to $ 9,525 Up to $19,050 Up to $ 9,525
Up to $13,600 NTTC Training TY 2018 Tax Rate is 12% on taxable income of $ 9,526 $38,700 $19,051 $77,400 $ 9,526 $38,700 $13,601 $51,800 Single Not married as of December 31
Married, but legally separated There may be a more advantageous filing status if: Have qualifying persons Paying >50% of the homes upkeep See Qualifying Widow(er) (if recently widowed) or Head of Household 11 NTTC Training TY 2018 Married Filing Jointly (MFJ) Married on last day of year
Includes common law marriage if recognized in your state Spouse died during current tax year/not remarried Generally, most advantageous filing status 12 NTTC Training TY 2018 Married Filing Separately (MFS) Married on last day of year
Includes common law marriage Each spouse files their own tax return The spouses Name and SSN must be entered on the return Reasons for MFS Taxpayer chooses to file MFS Spouse has already filed MFS or HoH Married but separated and not filing MFJ 13 NTTC Training TY 2018
MFS Disadvantages Highest tax rate/lower standard deduction 85% of Social Security benefits are taxable if lived with spouse at all during the year Cannot claim most tax credits Cannot deduct student loan interest
Cannot use standard deduction if spouse itemized 14 NTTC Training TY 2018 Married Filing Separately Extra questions for MFS Makes 85% of social security benefits taxable Read requirements carefully spouse has NO gross income Spouse is NOT a dependent and does not
qualify for new credit for other dependents. 15 NTTC Training TY 2018 Why File MFS? No liability for spouses tax obligation (except in community property states, perhaps) Lower combined tax Itemized deductions limited by lower separate AGI (e.g. medical) Lower repayment of Advance Premium Tax Credits (ACA)
Refund is not offset by spouses outstanding tax or other debts (see Injured Spouse Comprehensive Topic as an option) Spouse is nonresident alien and does not elect to be treated as a resident (see Unique Filing Status lesson) 16 NTTC Training TY 2018 Head of Household Unmarried Provided home* for qualified child Might not be a dependent
Provided home* for related dependent >50% cost of maintaining home for dependent parents living elsewhere * Paid more than 50% of cost of keeping up the home 17 NTTC Training TY 2018 Head of Household Married
Lived apart all of last 6 months of year Provided home* for: Child, stepchild, or eligible foster child for over six months No other relatives qualify Key advantages Higher standard deduction than Single or MFS Advantageous tax rate structure * Paid more than 50% of cost of keeping up the home 18 NTTC Training TY 2018
Head of Household Providing a Home Pub 4012 Tab B Open Pub 4012 Tab B Cost of Keeping Up a Home Note Can use value of housing and apply new rule to open years 19 NTTC Training TY 2018 Qualifying Widow(er) Spouse died in one of two past years
Dependent* child and/or stepchild lived in home all year Grandchild not eligible Maintained Can home (>50% of cost) for child file QW for two years only Advantages Standard Deduction same as MFJ Uses MFJ tax rates * Or would have been a dependent but for gross income, joint return, or taxpayer is a dependent tests 20
NTTC Training TY 2018 Special Notes Child is considered to have lived with taxpayer all year if born or died during year (but not stillborn) Child who is a dependent of a non-custodial parent under Rules for Divorced or Legally Separated Parents still qualifies custodial parent for HoH filing status if all other requirements met 21 NTTC Training TY 2018
TaxSlayer Filing Status Refer to Pub 4012 Entering Basic Information Section Caution: Changing the filing status during return preparation may delete the state return, if any 22 NTTC Training TY 2018 Quality Review
Review is more than just checking that a box is checked need to ask probing questions Review prior years status Verify current year filing status with data on Intake Sheet Is this the correct and most advantageous filing status for the taxpayer? 23
NTTC Training TY 2018 Filing Status - Quiz #1 Mr. Buck provides total support for his two young children His wife died in 2014, and he has not remarried What is the best filing status for Mr. Buck? Head of Household
What would have been best if his wife died in TY2016? Qualifying Widower 24 NTTC Training TY 2018 Filing Status - Quiz #2 Jane, 69, whose husband died July 1 of the current tax year, had a $20,000 pension and $15,000 in social security in the tax year Her 10-year-old grandson lived with her and is her dependent
What is the best filing status for Jane MFJ Assuming nothing changes, what filing status is best for next year? Head Of Household 25 NTTC Training TY 2018 Filing Status - Quiz #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? MFJ or MFS (both must use same status) 26 NTTC Training TY 2018
Filing Status - Quiz #4 Peter is single Peters mother lived with him until March last year In March Peter moved his mother to a nursing home and he pays for her room and care What is Peters best filing status?
Head of Household 27 NTTC Training TY 2018 Filing Status 28 NTTC Training - TY2018 Filing Status Comprehensive Topics Slides 30-32: Married Filing Separately Community Property States
Slides 33- 40: Injured Spouse 29 NTTC Training TY 2018 Community Property States Community Income Identifying and splitting community income may be necessary MFS or HoH (if married considered unmarried) Divorced/separated during the year Registered domestic partnerships (RDP) when state community property laws apply (CA, NV and WA)
30 Income splitting may be out of scope for community property states Check with your District or State Coordinator NTTC Training TY 2018 Filing MFS (or Single and RDP) in a Community Property State Complete Form 8958 if in community property state Enter $1 for spouse
31 NTTC Training TY 2018 Married Filing Separately Community Property States 32 If in a community property state, will get this warning if try to e-file without Form 8958 NTTC Training TY 2018 Injured Spouse
A common reason taxpayers choose MFS is to avoid an offset of their refund against their spouses outstanding debts such as: Past due child or spousal support Federal nontax debts, e.g. student loans Federal or state tax debts State unemployment debts In this case filing MFJ with Form 8379 Injured Spouse Allocation is an alternative 33 NTTC Training TY 2018 Injured Spouse Requirements
Filing MFJ and only one spouse owes past due amounts The MFJ return reflects an overpayment The Injured Spouse Must NOT be legally obligated to pay those debts Must have made and reported tax payments (such as withholding) or claimed a refundable tax credit (i.e. they are due a refund) 34 NTTC Training TY 2018
Form 8379 Injured Spouse Allocation Form 8379 can be filed by itself if the joint return has been filed and the refund was offset Include copies of all forms for both spouses that show income tax withheld 35 NTTC Training TY 2018 IRS Form 8379 (partial view)
36 NTTC Training TY 2018 TaxSlayer Injured Spouse Refer to Pub 4012 Tab O Navigating TaxSlayer for Injured Spouse Proceed to the Injured Spouse Form 8379 Note the warning that the form does not guarantee outcome and can delay the refund up to 14 weeks
37 NTTC Training TY 2018 TaxSlayer Form 8379 Input The counselor must thoroughly review all tax documents to allocate the proper amount of income, deductions, additional taxes, taxes withheld, and credits to the injured spouse
Do not allocate EIC, the IRS will determine that allocation 38 NTTC Training TY 2018 Filing Status Quiz #5 Jack and Jill Murphy are married and want to file MFS because Jack owes back child support and their refund will be offset What other options do they have?
What probing questions do you ask? 39 NTTC Training TY 2018 Problem #5 (Cont.) They can file MFJ with Form 8379 Injured Spouse Allocation Probing questions: Is Jill legally obligated to pay any of the debts?
Did Jill make and report tax payments (such as withholding) or claim a refundable tax credit? 40 NTTC Training TY 2018 Head of Household Married to Non-Resident Alien 41 See Slide Deck 10 Unique Filing Status NTTC Training TY 2018 Filing Status
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