federal income tax chapter 2. © copyright 2011 by m. ray gregg. all rights reserved. 2 filing...

Federal Income Tax

Chapter 2

Filing Status

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

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.

Filing Status

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

Not considered divorced until

final.

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.

but they could if they claimed

her WW income.

Filing Status

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

Filing Status

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

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

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

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

Head of Household and Surviving Spouse

• Problem 2 – 44– Allen?• Yes

– Beth?• No• Aunt must live

with TP

– Cindy?• Consider some other situations

Filing Status?

# exm?

Std Ded?

Rate Sch?

Situation 1

H W C(15)

Filing Status?

# exm?

Std Ded?

Rate Sch?

Situation 1

H W C(15)

Filing Status?

# exm?

Std Ded?

Rate Sch?

Situation 1

H W C(15)

Filing Status?

# exm?

Std Ded?

Rate Sch?

Situation 1

H W C(15)

Filing Status?

# exm?

Std Ded?

$11,600

Rate Sch?

Situation 1

H W C(15)

Filing Status?

# exm?

Std Ded?

$11,600

Rate Sch?

Situation 1

H W C(15)

Filing Status?

# exm?

Std Ded?

$11,600

Rate Sch?

Situation 2

H W C(15)

Filing Status?

MFJ MFJ

# exm?

Std Ded?

$11,600

Rate Sch?

Situation 2

H W C(15)

Filing Status?

MFJ MFJ

# exm?

Std Ded?

$11,600

Rate Sch?

Situation 2

H W C(15)

Filing Status?

MFJ MFJ

# exm?

Std Ded?

$11,600

Rate Sch?

Situation 2

H W C(15)

Filing Status?

MFJ MFJ

# exm?

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1

Situation 2

X1 X2 X3

H W C(15)

Filing Status?

MFJ MFJ

# exm?

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1

Situation 3

X1 X2 X3

H W C(15)

Filing Status?

MFJ MFJ SS

# exm?

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1

Situation 3

X1 X2 X3

H W C(15)

Filing Status?

MFJ MFJ SS

# exm?

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1

Situation 3

X1 X2 X3

H W C(15)

Filing Status?

MFJ MFJ SS

# exm?

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1

Situation 3

X1 X2 X3

H W C(15)

Filing Status?

MFJ MFJ SS

# exm?

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 3

X1 X2 X3 X4

H W C(15)

Filing Status?

MFJ MFJ SS

# exm?

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 4

X1 X2 X3 X4

H W C(15)

Filing Status?

MFJ MFJ SS SS

# exm?

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 4

X1 X2 X3 X4

H W C(15)

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 4

X1 X2 X3 X4

H W C(15)

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

Rate Sch?

Y-1 Y-1 Y-1

Situation 4

X1 X2 X3 X4

H W C(15)

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

Rate Sch?

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

Situation 4

X1 X2 X3 X4 X5

H W C(15)

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

Rate Sch?

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

Situation 5

X1 X2 X3 X4 X5

H W C(15)

more assmptns?

Filing Status?

MFJ MFJ SS SS

# exm?

3 3 2 2

Std Ded?

$11,600

Rate Sch?

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

Situation 5

X1 X2 X3 X4 X5

H W C(15)

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2

Std Ded?

$11,600

Rate Sch?

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

Situation 5

X1 X2 X3 X4 X5

H W C(15)

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

Rate Sch?

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

Situation 5

X1 X2 X3 X4 X5

H W C(15)

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$8,500

Rate Sch?

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

Situation 5

X1 X2 X3 X4 X5

H W C(15)

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$8,500

Rate Sch?

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

Situation 5

X1 X2 X3 X4 X5 x11

H W C(15)

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$8,500

Rate Sch?

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

Situation 6

X1 X2 X3 X4 X5 x11

H W C(15)

Filing Status?

MFJ MFJ SS SS HH

# exm?

3 3 2 2 2

Std Ded?

$11,600

$8,500

Rate Sch?

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

Situation 6

X1 X2 X3 X4 X5 x11

H W C(15)

Filing Status?

MFJ MFJ SS SS HH S

# exm?

3 3 2 2 2

Std Ded?

$11,600

$8,500

Rate Sch?

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

Situation 6

X1 X2 X3 X4 X5 x11

H W C(15)

Filing Status?

MFJ MFJ SS SS HH S

# exm?

3 3 2 2 2 1

Std Ded?

$11,600

$8,500

Rate Sch?

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

Situation 6

X1 X2 X3 X4 X5 x11

H W C(15)

Filing Status?

MFJ MFJ SS SS HH S

# exm?

3 3 2 2 2 1

Std Ded?

$11,600

$8,500 $5,800

Rate Sch?

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

Situation 6

X1 X2 X3 X4 X5 x11

H W C(15)

Filing Status?

MFJ MFJ SS SS HH S

# exm?

3 3 2 2 2 1

Std Ded?

$11,600

$8,350 $5,800

Rate Sch?

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

Situation 6

• Problem 2 – 44– Cindy?• No (SS)

– Dick?• Yes• Abandoned Spouse

• Problem 2 – 44

Filing Status?

# exm?

Std Ded?

Rate Sch?

Problem 2 – 45 a.

Filing Status? MFJ# exm?

Std Ded?

Rate Sch?

Problem 2 – 45 a.

Filing Status? MFJ# exm?

2 or 3?

Std Ded?

Rate Sch?

Problem 2 – 45 a.

Filing Status? MFJ# exm? 2

Std Ded?

$11,600

Rate Sch? Y-1

Problem 2 – 45 a.

2009 2010

Filing Status? MFJ# exm? 2

Std Ded?

$11,600

Rate Sch? Y-1

Problem 2 – 45 a.

2009 2010

Filing Status? MFJ HH# exm? 2 1

Std Ded?

$11,600

$8,500

Rate Sch? Y-1 Z

Problem 2 – 45 a.

2009 2010

Filing Status? MFJ S# exm? 2 1

Std Ded?

$11,600

$5,800

Rate Sch? Y-1 X

Problem 2 – 45 a.

2009 2010 2011

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

Std Ded?

$11,600

$5,800

Rate Sch? Y-1 X

Problem 2 – 45 a.

2009 2010 2011 2012

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.

2009 2010 2011 2012

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?

2009 2010 2011 2012

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

Std Ded?

$11,600

$5,800

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

What if full-time student?

• Problem 2 – 45– Juanita?• Single

– Gertrude?• H of H• Abandoned Spouse

Exemptions

• Personal

• Dependent

• Samples

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.

* (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

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

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

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

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + ? =

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + 1 = 2

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.

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + 1 = 2

c. Charles 1 + 0 = 1

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

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + 1 = 2

d. Dave 0 + 0 = 0

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.

Samples

Pers + Dep = Total

a. Ann 1 + 1 = 2

b. Barry 1 + 1 = 2

d. Dave 1 + 0 = 1

c. Ed 1 + 0 = 1

Exemptions

• Personal

• Dependent

• Samples

or exceptions

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

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?

Problem 2 - 37

b. What do they have to do?

Sign Multiple Support

agreement

Problem 2 - 37

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

Problem 2 - 37

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

Gross Income

Problem 2 - 55

Problem 2 - 55Income 51,000

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

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

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

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

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

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

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

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

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

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

Taxable Income 38,500

Problem 2 - 55

Problem 2 – 30 (a)

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

Problem 2 - 30

Income

a. Assuming he is self-supporting

Problem 2 - 30

Income 1,800 + 1,600

Problem 2 - 30

Income 1,800 + 1,600 3,400

Problem 2 - 30

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

Problem 2 - 30

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

Problem 2 - 30

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

Problem 2 - 30

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

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

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

Problem 2 – 30 (b)

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

Problem 2 - 30

Income 1,800 + 1,600 3,400

b. Assuming he is a dependent of parents

Problem 2 - 30

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

Problem 2 - 30

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

Problem 2 - 30

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

Problem 2 - 30

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

Minimum Standard Deduction(when dependents claimed by parents)

• See page 2/24

• $950 or• Earned

Income + $300

$950 min

$5,800 max

Problem 2 - 30

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

Problem 2 - 30

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

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

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

federal income tax chapter 2. © copyright 2011 by m. ray gregg. all rights reserved. 2 filing...

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