Federal Income Tax Chapter 2. © Copyright 2011 by M. Ray Gregg. All rights reserved. 2 Filing...

Federal Income Tax

Chapter 2

© Copyright 2011 by M. Ray Gregg. All rights reserved.

2

Filing Status

For each of the following situations, can Hank and Wynona file a joint return for 20x1? Explain.


3

Filing Status

Hank and Wynona married on December 20, 20x1, after a whirlwind courtship. On December 28, 20x1, following a violent argument, Wynona packed off home to mother, vowing never to return. No legal action was taken during 20x1.Yes.

Married on lastday of year.


4

Filing Status

Hank and Wynona, after years of marriage, were separated under an interlocutory (not final) decree of divorce on December 30, 20x1.

Yes.

Not considered divorced until

final.


5

Filing Status

Hank, while on temporary assignment in England for a large corporation, married Wynona, a citizen of Great Britain. They were still in London at the end of 20x1, but they return to the United States in January 20x2. They made no election for 20x1 to include Wynona’s worldwide income on a U.S. tax return.

No,

but they could if they claimed

her WW income.


6

Filing Status

Hank died on January 2, 20x1, after years of marriage to Wynona. Wynona did not remarry.

Yes.


7

Filing Status

For each of the following situations, a) state Hank’s and b) state Wynona’s filing status for 20x1?


8

Filing Status

Hank and Wynona were divorced on January 14, 20x1. They have no children or other dependents, and they did not remarry during the year.

Hank = Single

Wynona = Single


9

Filing Status

Hank and Wynona separated (not by decree) in May 20x1. They agreed Hank would claim the children as dependents. Wynona provided a home for them. Hank and Wynona will not file as married filing jointly.

Hank = Married Filing Separate

Wynona = Head of Household


10

Filing Status

Hank and Wynona separated (not by decree) in August 20x1. Wynona provided a home and support for the children. They will not file as married filing jointly.

Hank = Married Filing Separate

Wynona = Married Filing Separate


11

Head of Household and Surviving Spouse

• Problem 2 – 44– Allen?• Yes

– Beth?• No• Aunt must live

with TP

– Cindy?• Consider some other situations


12

X1

H W

Filing Status?

# exm?

Std Ded?

Rate Sch?

Situation 1


13

X1

H W C(15)

Filing Status?

# exm?

Std Ded?

Rate Sch?

Situation 1


14

X1

H W C(15)

Filing Status?

MFJ

# exm?

Std Ded?

Rate Sch?

Situation 1


15

X1

H W C(15)

Filing Status?

MFJ

# exm?

3

Std Ded?

Rate Sch?

Situation 1


16

X1

H W C(15)

Filing Status?

MFJ

# exm?

3

Std Ded?

$11,600

Rate Sch?

Situation 1


17

X1

H W C(15)

Filing Status?

MFJ

# exm?

3

Std Ded?

$11,600

Rate Sch?

Y-1

Situation 1


18

X1 X2

H W C(15)

H W C

Filing Status?

MFJ

# exm?

3

Std Ded?

$11,600

Rate Sch?

Y-1

Situation 2


19

X1 X2

H W C(15)

H W C

Filing Status?

MFJ MFJ

# exm?

3

Std Ded?

$11,600

Rate Sch?

Y-1

Situation 2


20

X1 X2

H W C(15)

H W C

Filing Status?

MFJ MFJ

# exm?

3 3

Std Ded?

$11,600

Rate Sch?

Y-1

Situation 2


21

X1 X2

H W C(15)

H W C

Filing Status?

MFJ MFJ

# exm?

3 3

Std Ded?

$11,600

$11,600

Rate Sch?

Y-1

Situation 2


22

X1 X2

H W C(15)

H W C

Filing Status?

MFJ MFJ

# exm?

3 3

Std Ded?

$11,600

$11,600

Rate Sch?

Y-1 Y-1

Situation 2


23

X1 X2 X3

H W C(15)

H W C

W C

Filing Status?

MFJ MFJ

# exm?

3 3

Std Ded?

$11,600

$11,600

Rate Sch?

Y-1 Y-1

Situation 3


24

X1 X2 X3

H W C(15)

H W C

W C

Filing Status?

MFJ MFJ SS

# exm?

3 3

Std Ded?

$11,600

$11,600

Rate Sch?

Y-1 Y-1

Situation 3


25

X1 X2 X3

H W C(15)

H W C

W C

Filing Status?

MFJ MFJ SS

# exm?

3 3 2

Std Ded?

$11,600

$11,600

Rate Sch?

Y-1 Y-1

Situation 3


26

X1 X2 X3

H W C(15)

H W C

W C

Filing Status?

MFJ MFJ SS

# exm?

3 3 2

Std Ded?

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1

Situation 3


27

X1 X2 X3

H W C(15)

H W C

W C

Filing Status?

MFJ MFJ SS

# exm?

3 3 2

Std Ded?

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 3


28

X1 X2 X3 X4

H W C(15)

H W C

W C

W C

Filing Status?

MFJ MFJ SS

# exm?

3 3 2

Std Ded?

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 4


29

X1 X2 X3 X4

H W C(15)

H W C

W C

W C

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2

Std Ded?

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 4


30

X1 X2 X3 X4

H W C(15)

H W C

W C

W C

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 4


31

X1 X2 X3 X4

H W C(15)

H W C

W C

W C

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 4


32

X1 X2 X3 X4

H W C(15)

H W C

W C

W C

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1 Y-1

Situation 4


33

X1 X2 X3 X4 X5

H W C(15)

H W C

W C

W C

W C

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1 Y-1

Situation 5


34

X1 X2 X3 X4 X5

H W C(15)

H W C

W C

W C

W C

more assmptns?

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1 Y-1

Situation 5


35

X1 X2 X3 X4 X5

H W C(15)

H W C

W C

W C

W C

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1 Y-1

Situation 5


36

X1 X2 X3 X4 X5

H W C(15)

H W C

W C

W C

W C

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

Rate Sch?

Y-1 Y-1 Y-1 Y-1

Situation 5


37

X1 X2 X3 X4 X5

H W C(15)

H W C

W C

W C

W C

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

$8,500

Rate Sch?

Y-1 Y-1 Y-1 Y-1

Situation 5


38

X1 X2 X3 X4 X5

H W C(15)

H W C

W C

W C

W C

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

$8,500

Rate Sch?

Y-1 Y-1 Y-1 Y-1 Z

Situation 5


39

X1 X2 X3 X4 X5 x11

H W C(15)

H W C

W C

W C

W C

W C

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

$8,500

Rate Sch?

Y-1 Y-1 Y-1 Y-1 Z

Situation 6


40

X1 X2 X3 X4 X5 x11

H W C(15)

H W C

W C

W C

W C

W

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

$8,500

Rate Sch?

Y-1 Y-1 Y-1 Y-1 Z

Situation 6


41

X1 X2 X3 X4 X5 x11

H W C(15)

H W C

W C

W C

W C

W

Filing Status?

MFJ MFJ SS SS HH S

# exm?

3 3 2 2 2

Std Ded?

$11,600

$11,600

$11,600

$11,600

$8,500

Rate Sch?

Y-1 Y-1 Y-1 Y-1 Z

Situation 6


42

X1 X2 X3 X4 X5 x11

H W C(15)

H W C

W C

W C

W C

W

Filing Status?

MFJ MFJ SS SS HH S

# exm?

3 3 2 2 2 1

Std Ded?

$11,600

$11,600

$11,600

$11,600

$8,500

Rate Sch?

Y-1 Y-1 Y-1 Y-1 Z

Situation 6


43

X1 X2 X3 X4 X5 x11

H W C(15)

H W C

W C

W C

W C

W

Filing Status?

MFJ MFJ SS SS HH S

# exm?

3 3 2 2 2 1

Std Ded?

$11,600

$11,600

$11,600

$11,600

$8,500 $5,800

Rate Sch?

Y-1 Y-1 Y-1 Y-1 Z

Situation 6


44

X1 X2 X3 X4 X5 x11

H W C(15)

H W C

W C

W C

W C

W

Filing Status?

MFJ MFJ SS SS HH S

# exm?

3 3 2 2 2 1

Std Ded?

$11,600

$11,600

$11,600

$11,600

$8,350 $5,800

Rate Sch?

Y-1 Y-1 Y-1 Y-1 Z X

Situation 6


45


• Problem 2 – 44– Cindy?• No (SS)

– Dick?• Yes• Abandoned Spouse


46


• Problem 2 – 44



47

2009

W C W

Filing Status?

# exm?

Std Ded?

Rate Sch?

Problem 2 – 45 a.


48

2009

W C W

Filing Status? MFJ# exm?

Std Ded?

Rate Sch?

Problem 2 – 45 a.


49

2009

W C W

Filing Status? MFJ# exm?

2 or 3?

Std Ded?

Rate Sch?

Problem 2 – 45 a.


50

2009

W C W

Filing Status? MFJ# exm? 2

Std Ded?

$11,600

Rate Sch? Y-1

Problem 2 – 45 a.


51

2009 2010

W C W

C W

Filing Status? MFJ# exm? 2

Std Ded?

$11,600

Rate Sch? Y-1

Problem 2 – 45 a.


52

2009 2010

W C W

C W

Filing Status? MFJ HH# exm? 2 1

Std Ded?

$11,600

$8,500

Rate Sch? Y-1 Z

Problem 2 – 45 a.


53

2009 2010

W C W

C W

Filing Status? MFJ S# exm? 2 1

Std Ded?

$11,600

$5,800

Rate Sch? Y-1 X

Problem 2 – 45 a.


54

2009 2010 2011

W C W

C W

C W

Filing Status? MFJ S S# exm? 2 1 1

Std Ded?

$11,600

$5,800

Rate Sch? Y-1 X

Problem 2 – 45 a.


55

2009 2010 2011 2012

W C W

C W

C W

C W

Filing Status? MFJ S S S# exm? 2 1 1 1

Std Ded?

$11,600

$5,800 $5,800 $5,800

Rate Sch? Y-1 X X X

Problem 2 – 45 a.


56

2009 2010 2011 2012

W C W

C W

C W

C W

Filing Status? MFJ S S S# exm? 2 1 1 1

Std Ded?

$11,600

$5,800 $5,800 $5,800

Rate Sch? Y-1 X X X

What if full-time student?


57

2009 2010 2011 2012

W C W

C W

C W

C W

Filing Status? MFJ SS SS S# exm? 3 2 2 1

Std Ded?

$11,600

$11,600

$11,600

$5,800

Rate Sch? Y-1 Y-1 Y-1 X

What if full-time student?


58



• Problem 2 – 45– Juanita?• Single

– Gertrude?• H of H• Abandoned Spouse


59

Exemptions

• Personal

• Dependent

• Samples


60

Determine the number of personal and dependency exemptions in each of the following situations. Assume any condition for a dependency exemption not mentioned is met.


61

* (entire year)

Personal Dependents(after ’04)

REQUIREMENTS FOR ALL

qual ID citizen jointreturn

claim noother dep

CHILDREN OTHERS

relationshipage

supportabode (>1/2)

relationship *gross income

support


62


A. Ann supports her mother, who lives in her own apartment.


63

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2


64


B. Barry supports his aunt and her husband, who live in their own apartment.


65

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + ? =


66

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + 1 = 2


67


C. Charles provided $3,000 of support for his sister. She received $6,000 of social security benefits which she used to pay some of her own expenses.


68

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + 1 = 2

c. Charles 1 + 0 = 1


69


D. Dave, who is a dependent of his parents, files a return and reports his earnings from a summer job.


70

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + 1 = 2


d. Dave 0 + 0 = 0


71


E. Ed and his two brothers help support their mother. Each contributed $3,000 toward her support. She received a taxable pension of $4,000 and used the money to pay her own expenses.


72

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + 1 = 2


d. Dave 1 + 0 = 1

c. Ed 1 + 0 = 1


73

Exemptions

• Personal

• Dependent

• Samples


or exceptions


74

Problem 2 - 37Social Security $1,500Mario 2,600Caroline (unrelated) 800Doug (son) 500Elaine (sister) 1,600 Total $7,000

a. Who might be able to claim Anna?not

< 10%


75

Mario or Elaine

Social Security $1,500Mario 2,600Caroline (unrelated) 800Doug (son) 500Elaine (sister) 1,600 Total $7,000

Problem 2 - 37

a. Who might be able to claim Anna?


76


Problem 2 - 37

b. What do they have to do?


77

Sign Multiple Support

agreement


78


Problem 2 - 37

c. Can anyone claim head-of-household? Explain.


79


Problem 2 - 37

d. Can Mario claim an old age allowance for his mother? Explain.

Gross Income


80

Problem 2 - 55


81

Problem 2 - 55Income 51,000


82

Problem 2 - 55Income 51,000 + -5,000 46,000


83

Problem 2 - 55Income 51,000 + -3,000 48,000


85

Problem 2 - 55Income 51,000 + -3,000 48,000Less: Adjustments 0ADJUSTED GROSS INCOME 48,000


86

Problem 2 - 55Income 51,000 + -3,000 48,000Less: Adjustments 0AGI 48,000Exemption


87

Problem 2 - 55Income 51,000 + -3,000 48,000Less: Adjustments 0AGI 48,000Exemption 1 = 3,700Std or Item Ded


88

Problem 2 - 55Income 51,000 + -3,000 48,000Less: Adjustments 0AGI 48,000Exemption 1 = 3,700Std or Item Ded 5,700


89

Problem 2 - 55Income 51,000 + -3,000 48,000Less: Adjustments 0AGI 48,000Exemption 1 = 3,700Item or Std Ded 4,000 or 5,800


90

Problem 2 - 55Income 51,000 + -3,000 48,000Less: Adjustments 0AGI 48,000Exemption 1 = 3,700Item or Std Ded 4,000 or 5,800 9,500Taxable Income


91

Problem 2 - 55Income 51,000 + -3,000 48,000Less: Adjustments 0AGI 48,000Exemption 1 = 3,700Item or Std Ded 4,000 or 5,800 9,500Taxable Income 38,500


92

Problem 2 - 55Income 51,000 + -3,000 48,000Less: Adjustments 0AGI 48,000Exemption 1 = 3,700Item or Std Ded 4,000 or 5,800 9,500Taxable Income 38,500

Tax Calculation:TI 38,500


93

Problem 2 - 55Taxable Income 38,500

Tax Calculation:TI 38,500Less Base 30,650Excess 7,850

x Mar Rate 25%Tax on Excess 1,963

+ Tax on Base 3,893Total Tax 5,856


94


95

Taxable Income 38,500





96

Problem 2 - 55


97





Problem 2 - 55


98





Problem 2 - 55


99






100






101






103

Problem 2 – 30 (a)


104

Problem 2 - 30a. Assuming he is self-supporting


105

Problem 2 - 30

Income

a. Assuming he is self-supporting


106

Problem 2 - 30

Income 1,800 + 1,600



107

Problem 2 - 30

Income 1,800 + 1,600 3,400



108

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI



109

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption



110

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 1 = 3,700Item or Std Ded



111

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 1 = 3,700Item or Std Ded 600 or 5,800



112

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 1 = 3,700Item or Std Ded 600 or 5,800 9,500



113

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 1 = 3,700Item or Std Ded 600 or 5,800 9,500Taxable Income 0



114

Problem 2 – 30 (b)


115

Problem 2 - 30b. Assuming he is a dependent of parents


116

Problem 2 - 30

Income 1,800 + 1,600 3,400

b. Assuming he is a dependent of parents


117

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0



118

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption



119

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 0 = 0



120

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 0 = 0Item, Min, or Std



121

Minimum Standard Deduction(when dependents claimed by parents)

• See page 2/24

• $950 or• Earned

Income + $300

$950 min

$5,800 max


122

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 0 = 0Item, Min, or Std 600 950



123

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 0 = 0Item, Min, or Std 600 950 2,100



124

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 0 = 0Item, Min, or Std 600 950 2,100 2,100Taxable Income



125

Problem 2 - 30

Income 1,800 + 1,600 3,400Less: Adjustments 0AGI 3,400Exemption 0 = 0Item, Min, or Std 600 950 2,100 2,100Taxable Income 1,300



126

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Federal Income Tax Chapter 2. © Copyright 2011 by M. Ray Gregg. All rights reserved. 2 Filing...

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