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  • Home
  • Breaking News/How Tos
  • Training
  • Certification Help
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  • Spanish/Espanol Training
  • Filing Status
  • Income
    • CAPITAL GAINS
    • Schedule K-1
    • Retirement
  • Self Employed
    • Rideshare Info
  • Adjustments to Income
  • Credits
  • Education Credit
  • Healthcare Info
  • Quality Review & Print Sets
  • Refunds
  • Balance Due
  • Scope of Service
  • PRACTICE SCENARIOS
    • Advance Scenario #2
    • Advance Scenario #3
  • Foreign Student
  • W-4 INFO
  • W-7 ITIN APPLICATION
  • FAFSA
  • VALET DROP OFF
  • CERT ACCEPT AGENT
  • Veteran Refund
  • FSA SITE INFO
  • Migrant Workers
  • Financial Literacy
  • LITC
  • Volunteering SWFL
  • Amendment
  • 9LESSONS
  • Consent Form
  • CE CREDITS
  • Scenarios
  • Getting Started
  • POA
  • Greeter Intake
  • VOL Agreement
  • New Page
  • TAXHELP
  • Transcripts
  • HSA

Filing status & dependent info

When entering a tax return, the very first thing you have to determine filing status, and while you may think that this is a white and black thing, just like everything else, there are exceptions to rules.  Unfortunately, making a mistake in selecting the correct filing status can result in a variety of problems.  Use the decision tree below and Interview Tips on PUB 4012 page B-7
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From IRS's Link & Learn interactive training modules  for Filing Basics & Filing Status: 

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Training Videos
CASH Campaign of maryland
Excellent Online Training Videos!

Married Filing Separate-Special Rules


From PUB 17 2018 (my comments in green)
If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.
1. Your tax rate generally is higher than on a joint return.
2. Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.
3. You can’t take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000). However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. For more information about these expenses, the credit, and the exclusion, (see chapter 31 of PUB 17. If living apart do they may qualify for Head of Household)
4. You can’t take the earned income credit.
5. You can’t take the exclusion or credit for adoption expenses in most cases.
6. You can’t take the education credits (the American opportunity credit and lifetime learning credit), or the deduction for student loan interest.
7. You can’t exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.
8. If you lived with your spouse at any time during the tax year:
      a. You can’t claim the credit for the elderly or the disabled,
     b. You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
9. The following credits and deductions are reduced at income levels half of those for a joint return.
        a. The child tax credit and the credit for other dependents.
        b. The retirement savings contributions credit.
10. Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
11. If your spouse itemizes deductions, you can’t claim the standard deduction. (so unless you itemize your standard deduction is zero)
12. If you can claim the standard deduction, your basic standard deduction is half of the of the amount allowed on a joint return. (in 2020 it would be $12,400 instead of $24,800)
13. Married Filing separate is not entitled to Marketplace subsidy so...If you get Marketplace Health Insurance, and its subsidized (meaning Marketplaces pays a portion or all of your insurance premiums) the subsidized premiums have to be repaid--luckily there is a cap on the amount they ask you to repay though.
There are many reasons a married person may choose to file separate; occasionally the combined refunds or balance due may be more in the clients favor to file separate, but generally it is not. My husband and I are happy together but we keep our finances totally separate and file separate returns--its just our preferred choice. 

If you have a client that is choosing to file separate because the IRS will garnish their refund due to their spouse's  past debt (say child support or school loans), make sure they are aware of the Injured Spouse Form and how it can prevent their portion of the refund from being garnished to pay the other's debt.  Remember, filing separate disallows EITC, Education Credits, and more--so it may be beneficial to file joint with the injured spouse form 8379)  ***It does take 16 weeks to process the return if an 8379 is filed, but the benefits can be worth it.

The presentation below is from Prosperity Now's VITA-Train.
 Dear IRIS Letters. Read the Letters to the VITA Advice Columnist, formulate your response, then check to see if your answer matches IRIS, the expert. These are wonderful resources created by the marvelous VITA guru and instructor, Brad Martin of United Way of Southwest Alabama and shared by Prosperity NOW's VITA-Train.  There are five (5) Dear IRIS letters followed by the responses. Enjoy!
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From Lancaster VITA--training Video
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From IRS's Link & Learn interactive training modules  for Dependents:
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AARP'S TCE Tax program has some marvelous resources. One of them is their Decision Tree for Determining Tax Credits. I recommend having a printed copy in your PUB 4012  or binder. (multiple pages and trees--fantabulous resource!)
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The presentation below is from Prosperity Now's VITA-Train.​
 Online Dependency Qualification Calculator
​(Click on image below)
from Colorado Tax Aide

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IRS's Interactive Tax Assistance
(Whom may I claim as a Dependent?)
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 And who is ready for a Quiz? Created by Prosperity Now-TON (Taxpayer Opportunity Network) VITA-Train. Answers can be found by clicking link below.
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Click here for Answers
How about another Quiz? From AARP's National Tax Training Committee, here is a thirty (30) question quiz on Filing status and Dependency.  Answers can found by clicking the link below.
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Click here for Answers
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About
Contact Me
You can contact me at maryvitataxes@gmail.com 
Please note: I, Mary Meador, AM NOT a certified accountant or tax law expert. I volunteer with VITA providing free tax preparation for individuals and families whose income is less than $66,000 a year. We deal with simple returns at our sites.  I cannot guarantee the accuracy of all the information on this site as tax laws change and I may not have a clear understanding of complicated issues. I am trying to provide basic tax preparation information for our volunteers to get started--remember Publication 4012 is your go-to resource for questions, as well as irs.gov and Publication 17. ​