EA Unit 1 Section 1

Form 8857

Form: Innocent Spouse Relief is a form used by taxpayers married to a person with tax issues, allowing them to request relief from joint tax liabilities.

Form 8379

Form: Injured Spouse Allocationis a form used by taxpayers to recover their share of a joint tax refund that has been applied to their spouse's outstanding debts.

Statute to claim a refund (amend return)

3 years from file date, or two years from date tax paid

Statute for IRS to audit returns and assess additional tax

Three years from the date a return was filed or due date for filing.

Estimate Tax Due Dates for Individuals

April 15, June 15, September 15, & January 15

Tax Due Date for Farmers & Fishermen

January 15 (if not filing by March 1) or March 1 (if filing and paying all tax March 1)

2024 Tax Brackets for Individuals

%: 10, 12, 22, 24, 32, 35, & 37

1040-NR Tax Rate

Flat 30% unless a tax treaty exists

IRA Contribution Limits

$7,000, + $1,000 if age 50 or older

OASDI Tax Rates

15.30% total

12.4% SS + 2.9% Medicare

Additional Medicare Tax

An extra 0.9% tax on earned income over certain thresholds.

MFS- $125k
Sngl/HoH- $200k
MFJ- $250k

Kiddie Tax Threshold

$2,600 on unearned income

Capital Gains Tax Rates

%: 0, 15, & 20

Other long-term gains Tax Rates

28%: Artwork, antiques, gems, & collectibles
25%: Depreciable real estate

Section 179 Deduction Limit

$1,220,000

2024 Mileage Rates

Business- .67
Medical/Moving- .21
Charitable- .14

Estate Exemption Limit

$600

Gift Tax Annual Exclusion

2024- $18k

2025- $19k

Child & Dependent Care Credit (CDCTC): How Much?

1 dependent- $3,000

2+- $6,000

Child Tax Credit (CTC): How Much?

$2,000 per child

Additional Child Tax Credit (ACTC): What and amount?

Refundable portion of CTC. Up to $1,700

2024 Adoption Credit Amount

$16,810

Other Dependent Credit (ODC) Amount

$500 per dependent

American Opportunity Credit (AOTC): Amount, Limit, Refundable?

$2,500 per student per year,
4 year limit
Refundable

Lifetime Learning Credit (LLC): Amount, Limit, Refundable?

$2,000 per refund
No year limit

Non-refundable

Coverdell Education Savings

$2,000 per beneficiary

2024 Educator Expense Deduction

$300

Nanny Tax (FICA/FUPA) Thresholds

FICA- $2,700

FUTA- $1,000+ in a calendar quarter

Statute of Limitations for IRS to Collect

10 Years

“Substantial Understatement” Threshold & Statute of Limitations for IRS to Audit & Assess Additional Tax

25% gross income understated
6 years

Failure to File: Penalty, Limit, and Only Way to Avoid

5% per month

25% max

Avoid only if due a refund

Failure to Pay: Penalty & Limit  

0.5% per month

25% max

Estimated Payment Safe Harbor Rules

(0, 90, 100, 1000)

• 0 tax liability PY

• 90%- Tax owed CY

• 100%- Tax owed PY

• $1,000- Owe less CY after WHs & credits

Backup Withholding Rate

24%

E-file Limitation

Current and prior 2 years

Taxpayer Identification Numbers (3 total)

SSN

ITIN

ATIN

Dependency Tests: Requirements to be able to claim someone as dependent (3 total)

Dependent Tax Payer- Dependent cannot claim another dependent

Joint Return- MFJ taxpayer cannot be claimed as dependent

Citizenship/Residency- Must be of either US, Mexico, or Canada

Qualifying Child Tests (5 total)

Relationship

Age

Residency

Support

Tiebreaker

Qualifying Child: Relationship Test

Related by blood, marriage, or adoption, including foster care

Qualifying Child: Age Test

• Under age 19 at end of year

• Under age 24 if full time student

• Permanent & total disability at any age

Qualifying Child: Residency Test (and exceptions- 5 total)

• Child lived at home more than 6 months of the year.

• Exceptions for temporary absences due to illness, college, vacation, military service, or institutionalized care.

Qualifying Child: Support Test

Child cannot have provided more than 50% own support

Qualifying Relative Tests (4 total)

• Not a qualifying child

• Household Member or Relationship

• Gross Income

• Support

Qualifying Relative: Household Member or Relationship Test

Must have lived with TP entire year unless related by blood, marriage, or adoption

Qualifying Relative: Gross Income Test

Cannot earn more than exemption amount ($5,050 in 2024)

Qualifying Relative: Support Test

TP must provide more than 50% of dependent support (unless multiple support agreement)