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Individual 1.5 Returns of Dependents 1.6 Nonresident and Dual status Aliens
Terms in this set (34)
What is the standard deduction for a dependent?
One with unearned income is limited to the greater of $1,050 or the amount of earned income plus $350.
Define Kiddie Tax
Net unearned income N.U.I of a dependent under 19 or 24 as a full time student, is taxed.
Are the tax rates the same?
Define Net unearned income.
1. Unearned income minus the sum of $1,050 also called first clause.
2. the great of either the standard deduction or itemized deduction or the amount of allowable deductions that are directly connected with the production of unearned income.
If a dependent has unearned income of $4,500. How much will be taxes at the ordinary and capital gain rates of of estates and trusts?
$4,500 minus the first clause of $1,050, then subtract the standard deduction of another $1,050 = the net unearned income of $2,400 dollars.
So if $1,050 is essentially subtracted twice from the net unearned income of dependent. This means...what?
All dependent are allowed at least a $2,100 reduction in unearned income?
payment received for performance of personal services and reported on W2?
Examples of earned income
Taxable scholarships, salaries, wages, and tips.
Examples of unearned income.
interest, dividends, capital gains, trust distributions, debt cancellation, pension/annuities, social security, royalties.
When does the kiddie tax not apply to an 18 year old dependent or under 24 full time student?
When the dependent has earned income that exceeds one half of their support.
Taxpayer was both a nonresident and resident alien during tax year.
Dual status alien
Taxpayer is considered a resident alien.
Green card and substantial presence tests are both met.
If tax payer doesn't meet the green card or substantial presence test.
They can choose to be treated as a U.S. resident for part of the year.
Taxpayer is a resident if lawful permanent resident of the united states at any time during the year.
Green card test.
Nonresident alien married to U.S. citizen or resident at the end of tax year.
The non resident may file a joint return, both spouse are treated as U.S. Residents for the entire tax year.
If the tax payer chooses to be treated as U.S. resident what is taxed?
Both spouses are taxed on world wide income.
What if the taxpayer chooses not to treat his nonresident spouse as a resident alien?
The taxpayer is considered unmarried for head of household purposes.
That tax payer is considered unmarried for tax purposes but...
Considered married for earned income credit.
When can non resident alien's itemize
if income received is connected with a united states trade or business.
What do these deductions include
state and local income tax deductions, charitable contributions to united states organizations, casualty and theft losses, and other itemized deductions.
When does a nonresident alien get a standard deduction
if married and files as U.S resident.
Benefits of chooses to be treated as U.S. Resident?
standard deduction, elderly and education credits,
Are nonresident aliens required to file a return if they earn wages connected with a united states trade or business?
Most types of united states source income received by a foreign taxpayer are subject to a tax rate of...
Are scholarships, grants, or fellowships received by nonresdient alien for activities conducted outside the united states subject to U.S. taxation?
No, they are treated as foreign source income and therefore not subject to united states taxation.
A tax payer is considered a U.S. resident when physically present for at least
A. 31 days during 2018 and...
B. 183 days during 2018, 2017, and 2016,
How are the 183 days calculated.
All days in 2018 count. only 33% of days in 2017 count. and only 1/6 of the days in 2016 count.
Who may choose to revoke resident status of the nonresident alien spouse?
Either spouse for any tax year.
When must this be done?
By the due date for filing the tax return for that tax year.
spouse revoking must attach signed statement of declaration.
What does it include
1. name, address, social security number of each spouse.
2. Name and address of person who is revoking the choice for a deceased spouse.
3. List states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or real property is located from which either spouse receives income.
The death of either spouse ends the choice starting when?
beginning with the first tax year following the year in which the spouse died.
What about divorce or legal separation?
Ends the choice at beginning of tax year in which the legal separation occurs.
I.R.S. can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or provide adequate access to those records.
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