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

2025 Mileage Rates

Business- .70
Medical/Moving- .21
Charitable- .14

Estate Income 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

2025 Adoption Credit Amount

$17,280

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 (up to 40%)

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)

What four items from a previous return have the potential to carry over to the current year's return?

• Carryovers

• NoL

• Tax Credit Carryovers (AMT/adoption)

• PY Depreciation & asset basis

What form is completed to request an ITIN?

W-7

Use of an ATIN cannot be used to obtain which three credits?

• EIC
• CTC
• American Opportunity Tax Credit

What is 1040-SR used for?

• Seniors aged 65+
• Only difference is easier to read & larger font

What are the numbered Schedules of Form 1040 [x3]?

• Schedule 1, Additional Income and Adjustments to Income
• Schedule 2, Additional Taxes
• Schedule 3, Additional Credits and Payments

Threshold requiring a minor to file a return for unearned income

$1,300

What are the three types of reliefs that are requested through form 8857?

• Innocent Spouse
• Separation of Liability
• Equitable Relief

What are the requirements to claim HoH [x3]?

• TP must be single, divorced, legally separated, or “considered unmarried” on the last
day of the year
• TP must have paid more than half the cost of keeping up a home
• TP must have had a qualifying person living in their home for more than half the
year (unless parent or temporary absence)

What are valid costs of keeping up a home for HoH status?

• Rent, mortgage interest, & property taxes
• Home insurance, repairs, & utilities
• Food eaten at home

Tax (U.S.) Residency Tests (2)

• Green Card Test
• Substantial Prescence Test

Requirements to meet the Substantial Prescence Test?

• 31 days during current tax year
• 183 days during three year period (current year + 2 before)

Which visa types are exempt from the substantial presence test?

• A or G (Foreign government official)
• J-1 (Scholars & Teachers)

What is the income threshold requiring filing a return for MFS status?

$5

Who claims the dependent in a divorce in which the child lives with the custodial parent but the divorce decree states the other (non-custodial) parent can claim the child on tax returns?

The custodial parent always unless they waive the claim with form 8332

How many calendars years must the following aliens reside in the US to be considered resident aliens?
(1) F&J Student visa holder
(2) J Researcher & Professor visa holder

(1) After 5 years
(2) After 2 years

Form 4868

Automatic extension of time to file an individual return

What type of individual is exempt from SE tax?

Nonresident Alien

How many years is the lookback period for the Substantial Prescence Test?

Three years

Form 8332

Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent

A nonresident alien had FICA taxes taken from his income. How can they request a refund?

Form 843

Tax return due date for nonresidents that are not subject to US withholdings

June 15

If a TP receives their green card while they are living abroad, when is their official residency starting date for tax purposes?

On the first day of physical presence in the US after receiving their green card