Income Tax 2021 2022 filing status per to get ready to get refunds to the max dive in into income tax 2021 2022. Most of this information can be found in the form 1040 instructions tax year 2021 found on the IRS website irs.gov IRS dot Govt.
Also remember that when we’re thinking about filing statuses, you want to think about what the impacts are have a general idea of what they will be on the tax return easiest to do that visualizing the tax formula.
Different filing statuses such as single head of household married filing joint will have major impacts on the standard deduction, as well as the tax rates will be the progressive tax tables will be dependent upon the filing statuses.
There also could be many other areas that would be impacted, including the phasing out of credits, for example, will have different phase out limits depending on the filing statuses. And just the ability to be taking certain credits,
especially the ones you want to be considering are going to be those low income or refundable credits, things like the child tax credits, the Earned Income Tax Credit, what are they going to be the implications if you have someone going say from single to married, or married to say divorced or something like that.
So we’ve got the 1040. Up top is where the filing status will be checked off. single, married filing jointly married filing separately, often referred to as M Fs, married filing or I’m sorry, head of household, often referred to as h o h.
And then we’ve got the qualifying widow widow, we’re Q W. Remember the strategy will be you want to have the general rules that will be in place. And the general rules will include who qualifies for what usually fairly straightforward between the different filing statuses.
But then there could be a gray area such as is someone married at the end of the year is someone divorced or separated, then of course, you could start the more research for those areas. Also, custody issues could be issues with regards to whether someone qualifies for head of household.
For example, you could start your research on those areas by going to the irs.gov looking at the form 1040 instructions and go from there to pick up more information. they’ll refer you to other areas such as publications that could help you in some of those gray areas.
You also want to know the general idea for with regards to the hierarchy of which filing statuses would be better so that when you’re talking to clients about them, you can talk intelligently about it just in general. And if they’re asking you a question about what if I got married or didn’t get married, if there’s a divorce, you can give some answers to that as well.
There is an impact on the standard deduction, you can kind of get an idea of the standard deductions fairly easily in your mind by by just remembering the main principle number of the single or married filing separate, which is the 12,005 50 and then double it for married, that would give you the 25 to 100, the head of household will typically be in between that at the 18 800.
And then you could also have differences on age based on age. And based on whether some whether they’re blind, which could modify those items as well. Remember that the different tax brackets is will be dependent upon this is the tables here for your your progressive tax brackets.
So you got the single filers versus the married filers, and the married separately, filers and the head of household. These are probably items that you’re that you may not be, you know, given or given this detail, you’re not going to memorize these tables in your head. But you can get an idea of the of the percentages.
And you can get an idea of what would be happening to these brackets as you go from say me single to married, for example. And then when you process returns in the software, you can then talk about the average tax rate, and the marginal tax rate and so on.
So here are the status these last time we took a look at the married filing separately, the single and the married filing joint, you can kind of I think it’s easiest to visualize these into separate buckets and then branching out into those buckets.
One, either single or non married, let’s say non married versus married. If they’re not married, then they usually have the option of either being single or head of household,
not so much the option or they would fall into one of those categories under the bucket of non married and it would typically be dependent upon whether they have like a qualifying dependent, usually head of household would be the better filing status if qualified for If married, then they would usually be filing married filing joint, but they might then file married filing separately in certain conditions.
They can’t generally jump back to single that’s the general idea. Then there could be gray areas in terms of what someone married at the end of the year. Were they legally married if they if they live together for long, you know and state laws those kind of questions where they say separated or divorced according to state law, custody issues with regards to a child, especially oftentimes in a head of household type of situation.
And then you’ve got the qualifying widow widower, which is somewhat self explanatory. Although it’s a little bit more complex when you put it into practice, because that would be the year of death of someone,
for example, a spouse would typically still be married filing joint, and then you got the question of whether they would qualify for qualifying widow widow or, or whether they would go back to single being dependent in part on whether there’s going to be a dependent again.
So we’re looking here at the head of household, we’re looking this time at the head of household last time, we looked at single, married filing joint, married filing separate.
So head of household, you could check the head of household box at the top of form 1040, or 1040 SSR. If you’re unmarried and provide a home for certain other persons, you are considered unmarried for this purpose. If any of the following applies, you were legally separated according to your state law under a decree of divorce or separate maintenance at the end of 2021.
So usually, if you were, if they were never married, then it’s fairly straightforward. If if they were married, then then they were divorced. That’s fairly straightforward. If they were separated, and there’s not like a divorce, per se, but like a separation of some kind, then it gets gray. And you got to go into the state law and see what not if it qualifies for a separation,
and so on and so forth. You also might want to consider and make sure that you’re in alignment with the two spouses. If one spouse for example, files married, filing joint, or married filing separate even and the other spouse files as single or something like that, or head of household, then that could be incongruent.
On the tax return side, you might get a letter about that, or something like that. So in any case, but if at the end of 2021, your divorce wasn’t final, and intellectually decree, you are considered married, you are married, but lived apart from your spouse for the last six months of 2021. And you meet the other rules under married persons who live apart later. So
then you got again, that kind of gray areas, you’re married, but you’re living apart, you are married to a non resident alien at any time during the year and the election to treat the alien spouse as a resident alien is not made,
check the quote, head of household and quote box only if you are unmarried or considered unmarried. And either test one or test two applies Head of Household test number one. So remember, you only need to be one of the tests that was an either or thing.
And when you’re looking at the tax law, or instructions you want to keep aware of when you’re looking at different tests, for example, does it say or, or does it say and with regards to the test, this is an oral test of one of the two needs to be applying test number one, you paid over half their cost of keeping up a home,
that was the main home for all of 2021 of your parents whom you can claim as a dependent, except under multiple support agreement. And so you got this kind of exception situation, which is another kind of gray area, see who qualifies as your dependent later.
So we could expand on that if that gray area applies, your parent didn’t have to live with you. So we’ve got this kind of dependent test if you’re qualifying for head of household, and remember, we’re in the bucket of non married at this point in time with regards to filing status question than being do I have to file single or head of household head of household would typically be beneficial.
Normally, you need a dependent in that case. And when you’re talking about a dependent that’s apparent, it’s a little bit kind of looser in terms of the conditions, including this item down here, which says Your parents didn’t have to live with you in order to qualify.
So let’s take a look at it one more time, you paid over half the cost of keeping up a home, that was the main home for all of 2021 of your parents, whom you can claim as a dependent. So typically, they’re going to claim as a dependent, but this is your parent, rather than say a child except under a multiple support agreement.
So then you’ve got that exception with the multiple support agreement in that instance, gray area, you can see who qualifies as your dependent, and you can get into that more detail. Your parent, your parents don’t have to live with you. So you don’t have to be added requirement, which is often the case of having them to live with you.
So now we have Head of Household test number two, remember that this is an order type of thing, not an type of thing. So one of the two tests would need to be met, possibly to be moving up from in a non married status from single to the head of household.
So test number two, you paid over half the cost of keeping up a home in which you lived and in which one of the following also lived for more than half of the year. So you get that second component that’s going into play someone else lived for more than a half of the year, if half or less.
See exceptions to the time lived with you later. So you’re gonna say okay, what if I had someone that lived with me less than half of the year? Is there an exception in certain instances, that’s going to be a gray area where you could then go into more detail and see if there’s going to be an exception in those cases.
So one any person Who you can claim as a dependent. So they’re going to be someone you can claim as a dependent, that’s going to be the general rule, but don’t include.
So these are going to be exceptions to the rule again, kind of like gray areas on here. So one or a your child whom you claimed as a dependent because of the rule for children of divorced or separate parents, under who qualifies as your dependent.
You can see more on that exception later, if you qualify in that or if that’s one of the exception or be any person who is your dependent only because he or she lived with you for all of 2021 or see any person you claim as dependent under a multiple support agreement, see who qualifies as your dependent later.
So that’s going to be another kind of gray area, when especially when you’ve got these kind of support agreements, you’ve got two people that have the support, typically, you would think that common ruling would be like a 5050 support test.
So then you’ve got the question of 5050 support, what if there’s a 5050 living type of arrangement with the two parents for example, then you know, who would claim them as a dependent for tax purposes, these become great areas that you got to dig into.
And you also want to be in alignment, you want to get these kinds of straight in like the the negotiations with regards to custody agreements, and divorces, and so on, because that will make it easier for the taxes.
And if some if one person for example, or if two people claim the same dependent on the tax return, then you’re going to the IRS is going to be able to catch that like automatically because they’re going to see the same social security number or it might even bounce back the Suffolk second tax return that is filed.
And then you you go through a whole rigmarole whole hassle that you would like to avoid by by basically getting these arrangements down as best you can. Up front. So head of household test to to your unmarried qualifying child who isn’t your dependent. So if it’s an unmarried qualifying child, that’s not your dependent, then you may still be still be qualifying in that case to qualify for head of household in the event that
they’re not the dependent. Again, a bit more of an unusual situation three, you’re married qualifying child who isn’t your dependents only because you can be claimed as a dependent on someone else’s 2021 return. That’s an unusual type of situation. So but you have a situation in that case,
where you have a qualifying child, but but the only reason they’re not a dependent is because they’re not meeting this one particular test, which is your married qualifying child who isn’t your dependent, but only because you can be completely be claimed as a dependent on someone else’s 2021 return.
And for your qualifying child who even though you are the custodial parent, is it your defendant because of the rule for children who divorced or separate parents under who qualifies as your dependent, you could take a look at more detail on that later. And again, another kind of gray area.
So the general rule that you want to have in mind, once again, for head of household is you paid over half the cost of keeping up a home in which you live and in which one of the following also lived for more than half of the year. And then you’ve got basically your exceptions, and that would typically be a dependent. That’s test number two.
And test number one is specific to like a parent, where you have basically that different kind of living conditions, then you’ve got all all of the basically exceptions Well, what if they’re not a dependent but but they they lived with me and so on, or I can be claimed as a dependent,
then you get into the more detail, you can go to the form 1040 instructions to start looking into those items in more detail. If the child isn’t claimed as your dependent, enter the child’s name and the entry space below the filing status checkboxes, if you don’t enter the name, it will take us longer to process your return.
So if someone if, for example, you’re filing head of household and you fall into the situation, where you could still qualify for head of household, but they’re not you have someone that’s not a dependent, that’s going to be a requirement to help you to qualify, then it’s not going to be on the first page of a tax return where the dependent usually goes.
So then you still want to put that information in place so that they can check that box off or they can they could see that that qualification is meant to meet for the head of household if you don’t do that it could cause some problems.
So qualifying child to find out if someone is your qualifying child you can see step one under who qualifies as your dependent. And then we have the dependent to find out if someone is your dependent see who qualifies as your dependent later.
So clearly, we’ve got this whole other topic in terms of well, who is a qualifying child and then who is a dependent. We’ll talk about more that in more detail later. Head of Household exception to time lived with you. So now we’re looking into that exception where you’re saying usually they have to basically live with you we said for like half the year.
But what if they didn’t? Are there any exceptions to that rule? So here we can go and dig into that. So tip temporary absences by you or the other person’s for special circumstances such as school, vacation, business, medical care, military service or detention in juvenile facility count as time lived in the home.
So these are kind of items where you can imagine, well, they’re not living with me here, but it’s not like they’re living on their own, and possibly like, you know, their own place or something like that they’re specifically going to school or they haven’t medical care, or so on and so forth,
then you might still be able to qualify, even though they didn’t technically live in your home for that half of the year requirement also seek kidnap child later under who qualifies as your dependent,
if applicable, if the person for whom you kept up a home was born or died in 2021, you still may may be able to file as head of household. So what happens in the event that someone died in 2021? Well, they might not have lived with you for half a year. But that’s because they you know, they died and in that,
so they were living you, they could have lived with you the whole, you know, time of that year that they were there. So if the person is your qualifying child, the child must have lived with you for more than half the part of the year he or she was alive.
If the person is as anyone else, you could see publication 501 on the IRS website, you could find that similarly, if you adopted the person for whom you kept up at home in 2021, the person was lawfully placed with you for legal adoption by you in 2021, or the person was an eligible foster child placed with you during 2021,
the person is considered to have lived with you for more than half of 2021 if your main home was the person’s main home for more than half the time since he or she was adopted or placed, placed with you in 2021. Head of Household keeping up a home. So what does that mean? To find out what is included in the cost of keeping up a home you can see publication 501.
So when you’re saying okay, well, what does it mean to be keeping up a home that seems kind of vague. In general, you can you can see, well, obviously, if it was a dependent child, you would think it would be pretty straightforwardly met.
But you can imagine a lot of gray area there as well in that in that test. So you could take a look at that publication and find out on the IRS website for more information. Similarly, if you adopted the person for whom you kept up at home in 2021, the person was lawfully placed with you for legal adoption by you in 2021,
or the person was an eligible foster child placed with you during 2021 The person is considered to have lived with you for more than half of 2021 if your main home was this person’s made home for more than half the time since he or she was adopted or placed in custody.
So now we’ve got head of household married persons who lived apart even even if you weren’t divorced or legally separated at the end of 2021 You are considered unmarried if all of the following apply. So now we’ve got the gray area of what what if some,
what does it mean for someone to basically be unmarried which could divorce would be a fairly straightforward condition of going back to unmarried which you would then go from married filing joint or married filing separate to the single filing or head of household
but you can imagine gray area in terms of what is separation mean which you might rely on state law to some degree to help you out with you lived apart from your spouse for for the last six months and of 2021 temporary absence for special circumstances such as for business, medical care school or military service count as time lived in the home,
you file a separate return from your spouse you paid over half the cost of keeping your home for 2021 Head of Household married persons lived apart your home was the was the main home of your child, stepchild or foster child for more than half of 2021 If half or less see exception to time lived with you earlier.
You can claim this child as your dependent or child or could claim the child except that the child’s other parent can claim him or her under the rule for children of divorced or separated parents under who qualifies as your dependent and you can see more detail on that later.
Head of Household married persons who live apart the adoption and foster and adopted child is always treated as your own child and adopted child includes a child lawfully placed with you for legal adoption a foster child is any child placed with you by an authorized placement agency or by judgment decree or other order of any court of competent jurisdiction.