Video instructions and help with filling out and completing Why Form 8815 Dependents

Instructions and Help about Why Form 8815 Dependents

Music good afternoon class and welcome to today's session which is called filing status and dependents and this is a subject that most tax preparers think is boring uninteresting irrelevant and after all it's such a beginner stuff I've been doing tax returns for you know two decades why should I be wasting my time on these topics just a test where you're at and how clever you really are on your knowledge base I've thrown up three different questions here and we're going to be covering the topics covered by these questions in today's class so maybe you consider a little bit unfair to be asking the questions at the start rather than after I've taught the topic but as we head into the class I wanted to have your brain working a little bit and if you would just take a moment to read each of these questions and select the answer that you feel is appropriate I will then let you know what the real answer is and why so let's take a look first at the filing status question this is really a head of household question John is married but has not lived with his wife since May 1st of the tax year his mother lived with him all year and he paid all of the costs of keeping up the home he can claim an exemption for his mother and the tax payer May's file as head of household true or false this particular question is one of the most frequently missed questions on the Oregon tax consultant exam if you're not from Oregon you might wonder what that is but it's actually a pretty relevant exam in order to take the Oregon consultant exam you must either be an enrolled agent or you must be a person who has practiced in Oregon as a tax preparer for a minimum of two years and 1100 hours of work experience as a tax preparer and to become a tax preparer in the first place you have to go through a minimum 80 hours of schooling you have to pass a state exam for tax preparers so by the time you get to the consultant exam with all of those years of experience and having studied and taken a test you would think that the majority of preparers could get this question right when they sit that consultant exam and in fact it stands out as one of the questions that is most frequently missed I'll tell you right now that the correct answer is false we're going to get into the class a little bit later into the category of had household and when we get there you will see that the reason John does not qualify as head of household is that although he has a dependent he does not have a qualifying child and therefore because he's married he does not meet the test for being considered unmarried and he would be forced to file either as married filing joint or married filing separate and would not qualify for head of household so let's move on now to the next question in line and really these are related it's two different scenarios with Natasha and her husband Natasha separated from her husband on November 1st her 12 year old son continued to live with his father so that he could finish out the school year at his regular school Natasha's income for the year is $60,000 whereas her spouse's income is only $20,000 under the tiebreaker rules which parent can claim that child's dependency exemption for the child on their married filing separate return well the tiebreaker rules are basically getting down to a situation where two parents cannot agree on who will claim that child and if the parents can't agree on who will claim that child then the tiebreaker rule is established which parent is entitled to that child's exemption under the tiebreaker rules Natasha losses because residency Trump's income even though Natasha had the higher income the child looked at the father the greater amount of the year and therefore the father is entitled to the exemption now in the second illustration we're assuming that the income is the same and that Natasha is earning 60 and the husband is earning 20,000 but in this situation they live together the entire year so the child is physically residing with each parent equally and when the residency is a child with both parents is equal than the income when so in the second situation Natasha wins and she would be entitled to claim her child's exemption we're gonna move on now to an in-depth discussion of filing status and dependents and when it comes to filing status really the status that confuses people the most is this head of household status and IRS treats head of household is a high-risk area in other words when they do audits they're focusing in on head of household is possibly a reason why they've even triggered an audit they'll be getting right into the issue of head of household eligibility right early on in the interview with a client trying to disturb Lesure with a taxpayer trying to establish whether or not that taxpayer qualifies as head of household many many people think their head of household when they don't meet the definition of head of household for example my husband was in the military and the military usually considers the service member to be kind of household in a family situation and refers to them as that but it doesn't mean that that translates over to the filing status the filing status has entirely separate rules and normal conceptions of who is the head of household has nothing to bear with that for example a married couple living together there is no head of household there might be a person who considers himself the head of the household has enough income to