Filing Status and Standard Deduction

Filing Status and Standard Deduction 1040 Department of the Treasury Internal Revenue Service (99) U.S. Individual Income Tax Return 2011 OMB No. 1545-0074 IRS Use Only Do not write or staple in this space. For the year Jan. 1 Dec. 31, 2011, or other tax year beginning, 2011, ending, 20 See separate instructions. Your first name and initial Last name Your social security number Form Session 3 If a joint return, spouse s first name and initial Last name Spouse s social security number Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Make sure the SSN(s) above and on line 6c are correct. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign Foreign country name Foreign province/county Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking Foreign postal code a box below will not change your tax or refund. You Spouse Filing Status 1 Single 4 Head of household (with qualifying person). (See instructions.) If 2 Married filing jointly (even if only one had income) the qualifying person is a child but not your dependent, enter this Check only one 3 Married filing separately. Enter spouse s SSN above child s name here. box. and full name here. 5 Qualifying widow(er) with dependent child Exemptions 6a Yourself. If someone can claim you as a dependent, do not check box 6a..... } Boxes checked on 6a and 6b b Spouse........................ No. of children c Dependents: (2) Dependent s (3) Dependent s (4) if child under age 17 on 6c who: (1) First name Last name social security number relationship to you qualifying for child tax credit lived with you (see instructions) did not live with you due to divorce or separation (see instructions) If more than four dependents, see instructions and check here Dependents on 6c not entered above Add numbers on d Total number of exemptions claimed................. lines above Income 7 Wages, salaries, tips, etc. Attach Form(s) W-2............ 7 8a Taxable interest. Attach Schedule B if required............ 8a b Tax-exempt interest. Do not include on line 8a... 8b Attach Form(s) 9 a Ordinary dividends. Attach Schedule B if required........... 9a W-2 here. Also attach Forms b Qualified dividends........... 9b W-2G and 10 Taxable refunds, credits, or offsets of state and local income taxes...... 10 1099-R if tax 11 Alimony received..................... 11 was withheld. 12 Business income or (loss). Attach Schedule C or C-EZ.......... 12 13 Capital gain or (loss). Attach Schedule D if required. If not required, check here 13 If you did not 14 Other gains or (losses). Attach Form 4797.............. 14 get a W-2, see instructions. 15 a IRA distributions. 15a b Taxable amount... 15b 16 a Pensions and annuities 16a b Taxable amount... 16b 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17 Enclose, but do 18 Farm income or (loss). Attach Schedule F.............. 18 not attach, any payment. Also, 19 Unemployment compensation................. 19 please use 20 a Social security benefits 20a b Taxable amount... 20b Form 1040-V. 21 Other income. List type and amount 21 22 Combine the amounts in the far right column for lines 7 through 21. This is your total income 22 23 Educator expenses.......... 23 Adjusted 24 Certain business expenses of reservists, performing artists, and Gross fee-basis government officials. Attach Form 2106 or 2106-EZ 24 Income 25 Health savings account deduction. Attach Form 8889. 25 26 Moving expenses. Attach Form 3903...... 26 27 Deductible part of self-employment tax. Attach Schedule SE. 27 28 Self-employed SEP, SIMPLE, and qualified plans.. 28 29 Self-employed health insurance deduction.... 29 30 Penalty on early withdrawal of savings...... 30 31 a Alimony paid b Recipient s SSN 31a 32 IRA deduction............. 32 33 Student loan interest deduction........ 33 34 Tuition and fees. Attach Form 8917....... 34 35 Domestic production activities deduction. Attach Form 8903 35 36 Add lines 23 through 35................... 36 37 Subtract line 36 from line 22. This is your adjusted gross income..... 37 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2011) Basic Income Tax Filing Status and Standard Deduction 3-1

3-2 Filing Status and Standard Deduction Basic Income Tax

Contents Lesson I: Marital Status... 3-6 Single Taxpayers...3-6 Married Taxpayers...3-6 Lesson II: Form 1040... 3-7 Personal Information Section...3-7 Name and Social Security Number...3-8 Address...3-8 Presidential Election Campaign Fund...3-8 Sign Here Section...3-9 Lesson III: Filing Status... 3-10 Married Filing Jointly...3-12 Form 1040, Personal Information Section...3-12 Form 1040, Filing Status Section...3-12 Form 1040, Sign Here Section...3-12 Married Filing Separately...3-13 Form 1040, Personal Information Section...3-13 Form 1040, Filing Status Section...3-14 Form 1040, Sign Here Section...3-14 Head of Household...3-17 Single Taxpayers...3-17 Married Taxpayers Considered Unmarried...3-18 Form 1040, Filing Status Section...3-21 Form 1040, Sign Here Section...3-21 Qualifying Widow(er)...3-23 Form 1040, Filing Status Section...3-24 Form 1040, Sign Here Section...3-24 Basic Income Tax Filing Status and Standard Deduction 3-3

Single...3-25 Form 1040, Filing Status Section...3-25 Form 1040, Sign Here Section...3-25 Comparison of Filing Statuses...3-26 Single Taxpayers...3-27 Married Taxpayers...3-27 Lesson IV: Decedents... 3-30 Form 1040, Personal Information Section...3-30 Return Due Date...3-30 Lesson V: Standard Deduction... 3-31 Age 65 or Older or Blind...3-33 Dependent Taxpayers...3-35 MFS Filing Status...3-37 Session 3 Summary... 3-39 Session 3 Homework... 3-43 Session 3 Knowledge Check Answers... 3-47 3-4 Filing Status and Standard Deduction Basic Income Tax

Introduction The taxpayer s filing status is one of the most important aspects of their tax return. Their fi ling status helps determine the following: Filing requirements Standard deduction amount Applicable tax rate Which deductions and credits they are allowed to claim In this session, we cover the factors that go into determining the taxpayer s fi ling status, their standard deduction, and how to report this information on Form 1040. We also discuss the factors and requirements for fi ling a tax return with, or for, a deceased taxpayer. For more information about Filing Status, refer to IRS Publication 17, Your Federal Income Tax, Part One, The Income Tax Return. For more information about the Standard Deduction, refer to IRS Publication 17, Part Five, Standard Deduction and Itemized Deductions. Objectives After completing this session, you will be able to Determine a taxpayer s marital status Identify the required information for the Personal Information section of Form 1040 Identify who must sign a return Determine which fi ling statuses the taxpayer qualifi es to use Identify the fi ling status that is most advantageous for the taxpayer Identify tax return requirements for decedents Determine the standard deduction amount Identify where to report the standard deduction on Form 1040 Basic Income Tax Filing Status and Standard Deduction 3-5

Lesson I: Marital Status The fi rst step in determining a taxpayer s fi ling status is to determine their marital status on the last day of the year. Single Taxpayers A taxpayer is single if, on December 31, they Have never been married Are divorced Have had their marriage annulled Are legally separated from their spouse Became widowed in a prior tax year and have not remarried Married Taxpayers Same gender unions are not recognized as marriages for federal income tax purposes. The taxpayer is considered married for the entire year if on December 31 They are legally married They are living together in a common-law marriage that is recognized in the state where they now live or in the state where the common law marriage began Their spouse died during the year Knowledge Check One 1. Carl and Cindy were married on December 31 of the tax year. Which of the following statements is true about their marital status for fi ling status purposes? Because they were not married most of the tax year, they are considered single. Because they did not live together during the year, they are considered single. Because they were married at the end of the year, they are considered married. They can choose whether to be considered married or single. 3-6 Filing Status and Standard Deduction Basic Income Tax

2. Under which circumstance is Katie considered married for fi ling status purposes? She was single at the end of the tax year, but was married when she fi led her tax return. Her divorce became fi nal on December 3 of the tax year. She is not divorced, but is legally separated from her husband. She is not divorced or legally separated from her husband, but she has not seen or talked to him for 15 years. 3. Jose s wife, Juanita, died on June 19 of the tax year and he has not remarried. Which of the following describes Jose s marital status for fi ling status purposes? Single Married Unmarried Legally separated Lesson II: Form 1040 Several items of information are entered on all tax returns. This lesson focuses on items commonly included in the Personal Information and Sign Here sections of Form 1040. Personal Information Section Several items of taxpayer data are entered in the Form 1040, Personal Information section, as shown in Figure A and listed below: Name SSN or ITIN Spouse s name Spouse s SSN or ITIN Address Presidential Election Campaign fund choice Spouse s Presidential Election Campaign fund choice Basic Income Tax Filing Status and Standard Deduction 3-7

Figure A - Form 1040, Personal Information Section 1 3 1040 Department of the Treasury Internal Revenue Service (99) U.S. Individual Income Tax Return 2011 OMB No. 1545-0074 IRS Use Only Do not write or staple in this space. For the year Jan. 1 Dec. 31, 2011, or other tax year beginning, 2011, ending, 20 See separate instructions. Your first name and initial Last name Your social security number Form LANCE VANHORN 400 00 1089 If a joint return, spouse s first name and initial Last name Spouse s social security number TRACI MAINES-VANHORN 410 00 1089 Home address (number and street). If you have a P.O. box, see instructions. Apt. no. 8269 BRANCH COURT Make sure the SSN(s) above and on line 6c are correct. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign CASTLEBERRY, PA 16830 Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking Foreign country name Foreign province/county Foreign postal code a box below will not change your tax or refund. You Spouse 2 4 Name and Social Security Number The taxpayer s name 1 and SSN 2 are entered in the Form 1040, Personal Information section. Due Diligence: Obtain information on names and SSNs from Social Security cards, when available, as W2s, driver s licenses, and other documents are frequently incorrect. When a couple uses the MFJ status for the fi rst time, they must decide whose SSN or ITIN to list as the primary taxpayer, and whose to list as the spouse. It is important that all subsequent tax returns for this couple be fi led with the identifying numbers listed in the same order. If the taxpayer moves after fi ling their return, use Form 8822, Change of Address, to notify the IRS of the address change. The notifi cation should be sent to the IRS Service Center as determined by the taxpayer s old address. If the taxpayer or their spouse is not eligible for an SSN, they can apply for an Individual Taxpayer Identifi cation Number (ITIN) using Form W-7, Application for IRS Individual Taxpayer Identifi cation Number. File Form W-7 with their completed tax return. When an individual has an ITIN, enter this number on the SSN line. The IRS verifi es that the taxpayer s last name matches Social Security Administration (SSA) records for the SSN on their tax return. Taxpayers who change their name because of marriage or divorce should notify their local SSA offi ce immediately. There are delays in processing a return and issuing a refund if the name and SSN on a tax return do not match the SSA s information. Address Enter the taxpayer s current home address 3 in the box provided in the Form 1040, Personal Information section. If the taxpayer has moved since the end of the tax year, fi ling a tax return with the new address will automatically change the taxpayer s address at the IRS. Presidential Election Campaign Fund The Presidential Election Campaign fund helps pay for presidential election campaigns. The taxpayer can designate $3 to be paid into this fund. If the taxpayer is fi ling a joint return, their spouse may also designate $3 for this fund. Making this election does not change their tax owed or reduce their refund. On Form 1040, mark the Presidential Election Campaign You check box 4 if the taxpayer wants $3 to go to this fund. Mark the Spouse check ck box if the spouse wants $3 to go to this fund. 3-8 Filing Status and Standard Deduction Basic Income Tax

Sign Here Section The tax return is not complete without the taxpayer s signature. The taxpayer signs 5 and dates their return in the Sign Here section of Form 1040, Page 2, shown in Figure B. Figure B - Form 1040, Sign Here Section Sign Here Joint return? See instructions. Keep a copy for your records. Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. E Your signature Date Your occupation Daytime phone number Lance VanHorn 5 3/13/2012 Construction Spouse's signature. If a joint return, rn both must sign. Date Spouse's occupation Traci Maines-VanHorn 3/13/2012 Homemaker 6 Identity Protection PIN (see instr.) 8 7 If fi ling a joint return, both the taxpayer and their spouse must sign the return, even if only one of them had income. If the taxpayer uses IRS e-fi le, they must sign and date Form 8879, IRS e-fi le Signature Authorization. If a parent, guardian, or other legally responsible individual fi les a return for a child who cannot sign, they must sign the return for them. This individual must sign the child s name on the Your signature line and write, By <parent s or guardian s signature>, parent (or guardian) for minor child. Enter the taxpayer s occupation 6 in the Your occupation box. If the When entering occupations, taxpayer fi les a joint return, then also enter their spouse s occupation. enter the taxpayer s job title, if they have one, or the best The taxpayer is not required to provide their daytime phone number, 7 description of their work. but entering one may help speed up the processing of their return. If Because of space limitations, the occupation may have the IRS has questions the taxpayer can answer over the phone, they to be abbreviated. Make may be able to continue processing the return without mailing a letter. it as readable as possible. Note: Homemaker and The IRS issues an Identity Protection PIN 8 for taxpayers who are Unemployed are acceptable. victims of identity fraud. This 6-digit number from the IRS helps protect the taxpayer from additional attempted fraud when fi ling their tax return. Basic Income Tax Filing Status and Standard Deduction 3-9

Knowledge Check Two 1. A taxpayer must have a(n) to fi le a return. Identifying number Passport Refund Spouse 2. If a taxpayer is not eligible for an SSN, they can apply for a(n) using Form W-7. ATIN Exemption ITIN Social Security card 3. Indicating that the taxpayer wants $3 to go to the Presidential Election Campaign fund. Increases the amount of tax owed Has no effect on the amount owed or the refund Decreases the amount of refund Increases the amount of refund Lesson III: Filing Status Let s take a look at the five fi ling statuses: Married Filing Jointly (MFJ) Married Filing Separately (MFS) Head of Household (HOH) Qualifying Widow(er) (QW) Single In some cases, state taxation considerations may make fi ling separate returns more benefi cial overall. Depending on their marital status, a taxpayer may qualify for more than one fi ling status. Usually, they choose the status that gives them the largest refund or lowest balance due. Other considerations, including refusal of a spouse to fi le a joint return, may cause the taxpayer to choose a fi ling status that appears less benefi cial. Use Figure C to determine the most advantageous fi ling status for a taxpayer. 3-10 Filing Status and Standard Deduction Basic Income Tax

Figure C - Determination of Filing Status Start Here Was the taxpayer married on the last day of the year? 1 YES NO Did the taxpayer's spouse die during the year? NO YES Married Filing Jointly (MFJ) or Married Filing Separately (MFS) NO Did the taxpayer and their spouse live apart during the last 6 months of the year? YES Did the taxpayer's spouse die in either of the two previous years, and the taxpayer has not remarried, and does the taxpayer have a dependent child? 2 NO Did the taxpayer pay more than half the costs of keeping up their home lived in for more than half of the year by their: 3 Qualifying child 4 Parent 5 Other relative 6 YES NO Qualifying Widow(er) (QW) Single NO Do both of the following apply? The taxpayer files a separate return from their spouse The taxpayer pays more than half the costs of keeping up their home occupied more than half the year by their child whom they claim as a dependent? 7 YES Head of Household (HOH) YES Footnotes: 1. The taxpayer's filing status is single if, on the last day of the year they were legally separated from their spouse and do not qualify for another filing status. 2. 3. 4. If the taxpayer paid over half the costs of maintaining a home for their child, they can file as QW for two years after the death of their spouse. Their child or stepchild (foster child is not included) must be their dependent and that child must have lived with the taxpayer all year. The taxpayer must have been entitled to file MFJ (even if they didn't) in the year of their spouse's death. See IRS Publication 17 for rules applying to birth, death, or temporary absence during the year. Military deployment/tdy is a temporary absence and the individual is considered to have lived in the taxpayer's home. A qualifying child is one who meets the relationship, age, residency, support, joint return, and special test for a qualifying child of more than one person. 5. 6. 7. A parent does not have to live with the taxpayer if the taxpayer paid more than half the cost of maintaining a home for the parent for the entire year, but the taxpayer must be able to claim an exemption for the parent. Other relatives include grandparent, brother, or sister, who meet certain tests. The taxpayer must be able to claim an exemption for any of these individuals. Or the child's other parent claims them under the rules for children of divorced or separated parents. Basic Income Tax Filing Status and Standard Deduction 3-11

Married Filing Jointly Taxpayers who are married can choose to fi le a tax return that reports their combined income and deductions on one joint return. When they make this choice, their fi ling status is Married Filing Jointly (MFJ). Generally, married taxpayers who choose to fi le jointly pay less tax and are eligible for more credits than married taxpayers who fi le separate returns. Except in unusual circumstances (such as when the taxpayer s spouse dies during the tax year), both the taxpayer and their spouse must agree to fi le jointly, and both must sign the return. Each taxpayer who signs a joint return can be held responsible for all additional tax, interest, or penalties that might result from an IRS audit of the return. Form 1040, Personal Information Section When their filing status is MFJ, enter the taxpayer s and spouse s name and SSN in the Personal Information section. Form 1040, Filing Status Section For MFJ returns, mark the Married fi ling jointly check box in the Form 1040, Filing Status section. Form 1040, Sign Here Section For MFJ returns, both the taxpayer (the primary taxpayer) and their spouse (secondary taxpayer) must sign the return. In the Sign Here section at the bottom of Form 1040, Page 2, the taxpayer must sign their name on the Your signature line and their spouse must sign the Spouse s signature line. Each should also enter the date they signed the return. Illustration One Brandon C. (400-00-1080) and Ashley N. (410-00-1080) Johnson are married and fi ling a joint return. They live at 7154 Greentree Lane, Kensington, AK 99980. Neither wants $3 to go to the Presidential Election Campaign fund. Brandon is a fi refighter and Ashley is a business analyst. The Johnsons Form 1040, Personal Information, Filing Status, and Sign Here sections are completed as shown. 3-12 Filing Status and Standard Deduction Basic Income Tax

Department of the Treasury Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2011 OMB No. 1545-0074 IRS Use Only Do not write or staple in this space. For the year Jan. 1 Dec. 31, 2011, or other tax year beginning, 2011, ending, 20 See separate instructions. Your first name and initial Last name Your social security number Form BRANDON C JOHNSON 400 00 1080 If a joint return, spouse s first name and initial Last name Spouse s social security number ASHLEY N JOHNSON 410 00 1080 Home address (number and street). If you have a P.O. box, see instructions. Apt. no. 7154 GREENTREE LANE Make sure the SSN(s) above and on line 6c are correct. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign KENSINGTON, AK 99980 Check here if you, or your spouse if filing Foreign country name Foreign province/county Foreign postal code jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Spouse Filing Status 1 Single 4 Head of household (with qualifying person). (See instructions.) If 2 Married filing jointly (even if only one had income) the qualifying person is a child but not your dependent, enter this Check only one 3 Married filing separately. Enter spouse s SSN above child s name here. box. and full name here. 5 Qualifying widow(er) with dependent child Sign Here Joint return? See instructions. Keep a copy for your records. Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation Daytime phone number E Brandon C. Johnson 3/12/2012 Firefighter Spouse's signature. If a joint return, both must sign. Date Spouse's occupation Ashley N. Johnson 3/12/2012 Business Analyst Identity Protection PIN (see instr.) Married Filing Separately Married taxpayers can also fi le separate returns, with each spouse reporting their own income, personal exemption, and deductions for the expenses they paid. Married Filing Separately (MFS) is a fi ling status available for married taxpayers who (either of the following): Choose to fi le separate returns Cannot agree to fi le a joint return Married taxpayers who fi le separate returns assume the tax, interest, and penalty for items on their return only. After the due date of the tax return, the taxpayer cannot change their fi ling status from MFJ to MFS. If one spouse chooses not to fi le a joint return, both spouses must fi le separate returns. MFS is usually less advantageous than MFJ. A taxpayer who fi les separately usually cannot claim a personal exemption for their spouse. They can never claim their spouse as a dependent. Special rules apply if an MFS taxpayer lives in a community property state. For more information, refer to the Community or Separate Property and Income section of IRS Publication 555, Community Property. Form 1040, Personal Information Section When a married taxpayer chooses MFS as their fi ling status, enter the spouse s SSN in the appropriate box in the Personal Information section. Do not enter the spouse s name in the Personal Information section when the taxpayer chooses MFS as their fi ling status. Basic Income Tax Filing Status and Standard Deduction 3-13

Form 1040, Filing Status Section For MFS returns, mark the Married fi ling separately check box in the Form 1040, Filing Status section and enter the spouse s name on the appropriate line in this section. Form 1040, Sign Here Section For MFS returns, only the taxpayer s signature is required in the Sign Here section of Form 1040, Page 2. The taxpayer must sign their name on the Your signature line. Illustration Two Daniel P. (400-00-1081) and Selena (410-00-1081) Washington are married and fi ling separate returns. They live at 8905 Bracken Place, Parson, WY 83081. Selena wants $3 to go to the Presidential Election Campaign fund. She is a manager. Selena s Form 1040, Personal Information, Filing Status, and Sign Here sections are completed as shown. Department of the Treasury Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2011 OMB No. 1545-0074 IRS Use Only Do not write or staple in this space. For the year Jan. 1 Dec. 31, 2011, or other tax year beginning, 2011, ending, 20 See separate instructions. Your first name and initial Last name Your social security number Form SELENA WASHINGTON 410 00 1081 If a joint return, spouse s first name and initial Last name Spouse s social security number Home address (number and street). If you have a P.O. box, see instructions. 8905 BRACKEN PLACE Apt. no. 400 00 1081 Make sure the SSN(s) above and on line 6c are correct. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign PARSON, WY 83081 Check here if you, or your spouse if filing Foreign country name Foreign province/county Foreign postal code jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Spouse Filing Status 1 Single 4 Head of household (with qualifying person). (See instructions.) If 2 Married filing jointly (even if only one had income) the qualifying person is a child but not your dependent, enter this Check only one 3 Married filing separately. Enter spouse s SSN above child s name here. box. and full name here. DANIEL P WASHINGTON 5 Qualifying widow(er) with dependent child Sign Here Joint return? See instructions. Keep a copy for your records. Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation Daytime phone number E Selena Washington 2/25/12 Manager Spouse's signature. If a joint return, both must sign. Date Spouse's occupation Identity Protection PIN (see instr.) 3-14 Filing Status and Standard Deduction Basic Income Tax

Knowledge Check Three 1. Andrew and Karen s divorce was fi nalized on November 30 of the tax year. Which fi ling status do they qualify to use? MFJ MFS Either MFJ or MFS Neither MFJ nor MFS 2. James and Clara were married fi ve years ago. They are not divorced or legally separated, but have lived apart since last year. Which filing status do they qualify to use? MFJ MFS Either MFJ or MFS Neither MFJ nor MFS 3. Ben died on November 29 of the tax year. His wife, Marie, has not remarried. Which filing status does Marie qualify to use? MFJ MFS Either MFJ or MFS Neither MFJ nor MFS 4. Gary and Sally are married. Their fi ling status is MFJ. Sally has income, but Gary does not. Who is required to sign their return? Gary only Sally only Both Gary and Sally Neither Gary nor Sally 5. Kent and Jackie are married. Kent s fi ling status is MFS. Jackie is not required to fi le because she did not have any gross income. Who is required to sign Kent s return? Kent only Jackie only Both Kent and Jackie Neither Kent nor Jackie Basic Income Tax Filing Status and Standard Deduction 3-15

Partial Problem One Use the information provided to complete the Form 1040, Personal Information and Filing Status sections, using the most advantageous fi ling status. Larry Hopkins (400-00-1082) and Tamara Smith-Hopkins (410-00-1082), married Larry is in the military and has been stationed in Germany for the past two years. Tamara lives in their home at: 8269 Branch Court Your City, YS and ZIP Code They want to fi le a joint return, if they qualify to do so. Tamara is having the return prepared while Larry is away. Larry wants $3 to go to the Presidential Election Campaign fund, but Tamara does not. Partial Problem Two Use the information provided to complete the Form 1040, Personal Information and Filing Status sections for Armani, using the most advantageous fi ling status. Armani (400-00-1083) and Yassimin (410-00-1083) Hyku, married The Hykus have no children. In October, Armani moved out of the family home. He refuses to fi le a joint return with Yassimin and does not want $3 to go to the Presidential Election Campaign fund. Armani s Current Address: 662 Twin Lakes Drive Your City, YS and ZIP Code 3-16 Filing Status and Standard Deduction Basic Income Tax

Head of Household Taxpayers who pay more than half the cost of keeping up a home during the tax year may be able to choose HOH as their fi ling status. Only one HOH status can be used for each household. Single Taxpayers In addition to paying more than half the cost of keeping up a home, single taxpayers must meet one of the following criteria to use HOH fi ling status: Live in the home with a qualifying dependent for more than half the year Live in the home for more than half the year with a qualifying child who is being claimed as a dependent by a noncustodial parent Provide the home where a dependent mother or father lives all year The cost of keeping up a home includes expenses for rent, mortgage interest, property or real estate taxes, homeowner s insurance, repairs, utilities, and food eaten in the home. The taxpayer need not live with a dependent parent to choose HOH as their filing status. Qualifying dependents are individuals who are related to the taxpayer in one of the following ways: A child or a descendant of a child, including a stepchild or foster child A brother, sister, stepbrother, or stepsister A parent, grandparent, or other direct ancestor A stepfather or stepmother An uncle or aunt A nephew or niece A father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law An unrelated dependent cannot qualify a taxpayer for HOH fi ling status, even if the taxpayer paid more than half their support and provided a home for them all year. HOH qualifying relationships are the same as most of the relationships that allow an individual to be the taxpayer s qualifying relative. Basic Income Tax Filing Status and Standard Deduction 3-17

Married Taxpayers Considered Unmarried If the taxpayer is married, only their child who lives with them can qualify them to use HOH as a fi ling status. Due Diligence: Always make suffi cient inquiries of the taxpayer to confi rm if the HOH fi ling status applies to their situation. Pay particular attention to whether the taxpayer satisfies the requirement that the qualifying individual lived with the taxpayer for more than half the year (except for dependent parents). Temporary absences such as for business, military service, medical care, and education count as time lived at home. Taxpayers who are married, but did not live with their spouse at any time during the last six months of the year, may be able to choose HOH as their fi ling status. To choose HOH as their fi ling status, a married taxpayer must meet all of the following requirements: File a separate tax return Live apart from their spouse for the entire last six months of the tax year Provide more than half the cost of keeping up their home for the entire tax year Have lived in the home for more than half the year with one of the following: A son, daughter, stepchild, or foster child who is their dependent A son, daughter or stepchild who is being claimed as a dependent by a noncustodial parent Taxpayers who meet these qualifi cations are considered unmarried by the IRS for purposes of determining HOH fi ling status. For all other fi ling statuses, these taxpayers are still considered married. Taxpayers whose spouse died during the year do not qualify to use HOH as their fi ling status, even if they meet the rules listed here. Use Figure D to determine whether a taxpayer qualifi es to choose HOH as their fi ling status. 3-18 Filing Status and Standard Deduction Basic Income Tax

Figure D - Head of Household Chart (page 1) General HOH Tests Married Test Is the taxpayer married? 1 Yes See the Married Taxpayer - Head of Household flowchart No General Requirements Does the taxpayer furnish more than half the cost of maintaining a home for a qualifying individual? Yes No The taxpayer cannot use HOH. Support Test Did the individual provide more than half of their own support? Yes No Joint Return Test Is the individual filing a joint return? 2 Yes No Qualifying Individual Tests Relationship Test Is the individual the taxpayer s: Child under the uniform definition of a child, 3 or descendant of such Sibling, step-sibling, or descendant of such Yes Qualifying Child Residency Test Did the individual have the same principal place of abode as the taxpayer for more than half of the year? Yes Age Test Was the individual permanently and totally disabled OR younger than the taxpayer and one of the following? Under age 19 Under age 24 and a full-time student for some part of each of five months during the year Yes Qualifying Child Dependent Test If the individual is married, can the taxpayer claim them as a dependent? 4 No No No The taxpayer cannot use HOH. No No No No Relationship Test Is the individual the taxpayer s relative? 5 Yes Qualifying Relative Residency Test Did the individual have the same principal place of abode as the taxpayer for more than half of the year? Answer Yes if the individual is the taxpayer s parent and the taxpayer provides more than half the support of the parent s separate household. Yes Qualifying Relative Dependent Test Can the taxpayer claim the individual as a dependent? 6 Yes Yes Is another taxpayer eligible to claim this individual as a qualifying child for any tax benefits? No The taxpayer can use HOH. The individual is a qualifying individual for HOH. Yes Tiebreaker rule Footnotes: 1. Marital status is determined as of 11:59 p.m., December 31. 2. Answer No if a joint return is filed merely as a claim for refund and no tax liability would exist for either spouse on separate returns. 3. A child under the uniform definition of a child is the taxpayer's son, daughter, stepchild, legally adopted child or one lawfully placed with the taxpayer for legal adoption, or eligible foster child. An eligible foster child is one who is placed with the taxpayer by an authorized placement agency or by a judgment, decree, or other order of any court of competent jurisdiction. 4. Answer "Yes" if the only reason the taxpayer cannot claim the individual is that the taxpayer can be claimed as a dependent by someone else. 5. Relatives include: A child under the uniform definition of a child, or a descendant of such A brother, sister, stepbrother, or stepsister A son or daughter of a brother or sister of the taxpayer (for example, a nephew or a niece) A father or mother, or an ancestor of either A brother or sister of the father or mother of the taxpayer (for example, an uncle or an aunt) A stepfather or stepmother A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law 6. Answer No if the taxpayer can claim the individual as a dependent only because of a multiple support agreement. Basic Income Tax Filing Status and Standard Deduction 3-19

Figure D - Head of Household Chart (page 2) General HOH Tests Married Test Is the taxpayer single? 1 No General Considered Unmarried Requirements Is the taxpayer filing a joint return, or did their spouse live with them at any time during the last six months of the year? Yes See the Single Taxpayer - Head of Household flowchart Yes No General Requirements Does the taxpayer furnish more than half the cost of maintaining a home for a qualifying individual? No The taxpayer cannot use HOH. Yes Relationship Test Is the individual the taxpayer s child under the uniform definition of a child? 2 No Yes Residency Test Did the individual have the same principal place of abode as the taxpayer for more than half of the year? No The taxpayer cannot use HOH. The individual is not a qualifying individual for HOH. Yes Qualifying Child Tests Age Test Was the individual permanently and totally disabled OR younger than the taxpayer and one of the following? Under age 19 Under age 24 and a full-time student for some part of each of five months during the year Yes Support Test Did the individual provide more than half of their own support? No Yes No Joint Return Test Is the individual filing a joint return? 4 Yes No No Dependent Test Can the taxpayer claim the individual as a dependent? 3 Yes Is another taxpayer eligible to claim this individual as a qualifying child for any tax benefits? Yes Tie-breaker rule No The individual is a qualifying individual to be considered unmarried. The taxpayer qualifies for Head of Household. Footnotes: 1. Marital status is determined as of 11:59 p.m., December 31. 2. A child under the uniform definition of a child is the taxpayer's son, daughter, stepchild, legally adopted child or one lawfully placed with the taxpayer for legal adoption, or eligible foster child. An eligible foster child is one who is placed with the taxpayer by an authorized placement agency or by a judgment, decree, or other order of any court of competent 3. Answer "yes" if the taxpayer could have claimed the individual as a dependent except for the Special Rule for Divorced or Separated Parents. If the custodial parent waives the dependency exemption under this rule, it does not affect the custodial parent's eligibility for this filing status. jurisdiction. 4. Answer No if a joint return is filed merely as a claim for refund and no tax liability would exist for either spouse on separate returns. 3-20 Filing Status and Standard Deduction Basic Income Tax

Form 1040, Filing Status Section For HOH returns, mark the Head of household check box in the Form 1040, Filing Status section. If the taxpayer s qualifying individual is a child who is not their dependent, enter the qualifying child s name on the appropriate line. Illustration Three Grant Kennedy (400-00-1084) is single. He lives at 79 Birch Avenue, Bristol, WA 98184. His son, Marcus, lived with him all year and is his qualifying child. Grant completed Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, allowing Marcus s mother to claim Marcus as a dependent. Marcus s name is entered on the Head of household line in the Filing Status section, because he is not Grant s dependent. Grant does not want $3 to go to the Presidential Election Campaign fund. Grant s Form 1040, Personal Information and Filing Status sections are completed as shown. Department of the Treasury Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2011 OMB No. 1545-0074 IRS Use Only Do not write or staple in this space. For the year Jan. 1 Dec. 31, 2011, or other tax year beginning, 2011, ending, 20 See separate instructions. Form Your first name and initial Last name Your social security number GRANT KENNEDY 400 00 1084 If a joint return, spouse s first name and initial Last name Spouse s social security number Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Make sure the SSN(s) above 79 BIRCH AVENUE and on line 6c are correct. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign BRISTAL, WA 98184 Check here if you, or your spouse if filing Foreign country name Foreign province/county Foreign postal code jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Spouse Filing Status 1 Single 4 Head of household (with qualifying person). (See instructions.) If 2 Married filing jointly (even if only one had income) the qualifying person is a child but not your dependent, enter this Check only one 3 Married filing separately. Enter spouse s SSN above child s name here. MARCUS KENNEDY box. and full name here. 5 Qualifying widow(er) with dependent child Form 1040, Sign Here Section For HOH returns, the taxpayer must sign their name on the Your signature line in the Sign Here section of Form 1040, Page 2. Basic Income Tax Filing Status and Standard Deduction 3-21

Knowledge Check Four 1. Tim is divorced. He paid more than half the cost of keeping up his home. His daughter, Susan (5), lived with him for eight months during the year. He cannot claim Susan as a dependent because he gave his ex-wife a signed Form 8332 for Susan. Can Tim use HOH as his fi ling status? Yes No 2. Samuel and his wife, Bridgette, lived together with their son, Mitchell (9), during the year until Bridgette moved out on November 17. Samuel paid 100% of the cost of keeping up the home for himself and Mitchell. He provided 100% of Mitchell s support after Bridgette moved out. Samuel and Bridgette are not divorced or legally separated. Can Samuel use HOH as his fi ling status? Yes No 3. Debbie (25) lived with her unemployed roommate, Tessa (26), for the entire year and paid more than half the cost of keeping up their home. Debbie and Tessa are both single. Debbie can claim Tessa as her dependent. Can Debbie use HOH as her fi ling status? Yes No 4. Betty is divorced. Her son, Claude (25), lived with her all year. Betty paid more than half the cost of keeping up the home and more than half of Claude s support. Claude is single, but Betty cannot claim him as a dependent because he earned $6,480. He used his earnings to pay for his car, clothing, and entertainment. Can Betty use HOH as her fi ling status? Yes No 5. Kim (31) is single. Her boyfriend, John (28), and his son, Chase (4), lived with her all year. Kim paid more than half the cost of keeping up the home and provided more than half of John s and Chase s support. She can claim them both as dependents. Can Kim use HOH as her fi ling status? Yes No 3-22 Filing Status and Standard Deduction Basic Income Tax

6. Daniel and his wife, Faith, lived together with their daughter, Vanessa (3), during the year until Daniel moved out on May 15. Faith paid more than half the cost of keeping up the home all year, including the time Daniel lived with them. Faith gave Daniel a signed Form 8332 for Vanessa. Daniel and Faith are not divorced or legally separated. Can Faith use HOH as her fi ling status? Yes No 7. Gregor is single and lived with his single girlfriend, Abigail, all year. Gregor s son, Evan (14), lived with them all year. Gregor provided all of Evan s support. Abigail s daughter, Gabby (12), also lived with them all year. Abigail provided all of Gabby s support. Gregor and Abigail split the cost of keeping up the home. Can both Gregor and Abigail use HOH as their fi ling status? Yes No 8. Daphne is single. Who is not a qualifying individual for Daphne for the HOH fi ling status? Her father, whom she can claim as a dependent Her grandchild, who is single and is her qualifying child Her married qualifying child, whom she can claim as a dependent Her aunt (her father s sister), whom she cannot claim as a dependent Qualifying Widow(er) Taxpayers whose spouse died during one of the two previous tax years may be able to choose Qualifying Widow(er) (QW) as their fi ling status. For example, if the spouse died in 2010, and if the taxpayer has not remarried, they may be able to use the QW fi ling status for 2011 and 2012. QW fi ling status qualifi es the taxpayer to use the same tax rates and standard deduction amount allowed for MFJ returns. Other individuals who live with the taxpayer, such as a grandchild or a niece, do not qualify a taxpayer to choose QW as a fi ling status. Basic Income Tax Filing Status and Standard Deduction 3-23

The QW fi ling status can be used if the taxpayer meets all of the following tests: Their spouse died in one of the two previous tax years, and they did not marry again before the end of the current tax year. Their dependent son, daughter, or stepchild lived with them all year, except for temporary absences. They paid more than half the cost of keeping up the home for themselves and their qualifying dependent for the entire year. For the year the spouse dies, the surviving spouse may fi le a joint return with their deceased spouse. Form 1040, Filing Status Section For QW returns, mark the Qualifying widow(er) with dependent child check box in the Form 1040, Filing Status section. Illustration Four Phillipe St. John (400-00-1085) was widowed one year ago. He lives at 603 Vine Terrace, Camdon Circle, TX 75285, with his dependent son. He qualifi es to use QW as his fi ling status. He wants $3 to go to the Presidential Election Campaign fund. Phillipe s Form 1040, Personal Information and Filing Status sections, are completed as shown. 1040 Department of the Treasury Internal Revenue Service (99) U.S. Individual Income Tax Return 2011 OMB No. 1545-0074 IRS Use Only Do not write or staple in this space. For the year Jan. 1 Dec. 31, 2011, or other tax year beginning, 2011, ending, 20 See separate instructions. Your first name and initial Last name Your social security number Form PHILLIPE ST JOHN 400 00 1085 If a joint return, spouse s first name and initial Last name Spouse s social security number Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Make sure the SSN(s) above 603 VINE TERRACE and on line 6c are correct. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign CAMDON CIRCLE, TX 75285 Check here if you, or your spouse if filing Foreign country name Foreign province/county Foreign postal code jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Spouse Filing Status 1 Single 4 Head of household (with qualifying person). (See instructions.) If 2 Married filing jointly (even if only one had income) the qualifying person is a child but not your dependent, enter this Check only one 3 Married filing separately. Enter spouse s SSN above child s name here. box. and full name here. 5 Qualifying widow(er) with dependent child Form 1040, Sign Here Section For QW returns, the taxpayer must sign their name on the Your signature line in the Sign Here section of Form 1040, Page 2. 3-24 Filing Status and Standard Deduction Basic Income Tax

Single A taxpayer s fi ling status is Single if they are not married and do not qualify for either HOH or QW filing status. Form 1040, Filing Status Section For Single returns, mark the Single check box in the Form 1040, Filing Status section. Illustration Five The only fi ling status Betty V. Nyreen (400-00-1086) qualifi es to use is Single. She lives at 412 Bayfront Crescent, Tuttville, SD 57586. She wants $3 to go to the Presidential Election Campaign fund. Betty s Form 1040, Personal Information and Filing Status sections, are completed as shown. Department of the Treasury Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2011 OMB No. 1545-0074 IRS Use Only Do not write or staple in this space. For the year Jan. 1 Dec. 31, 2011, or other tax year beginning, 2011, ending, 20 See separate instructions. Form Your first name and initial Last name Your social security number BETTY V NYREEN 400 00 1086 If a joint return, spouse s first name and initial Last name Spouse s social security number Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Make sure the SSN(s) above 412 BAYFRONT CRESCENT and on line 6c are correct. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign TUTTVILLE, SD 57586 Check here if you, or your spouse if filing Foreign country name Foreign province/county Foreign postal code jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Spouse Filing Status 1 Single 4 Head of household (with qualifying person). (See instructions.) If 2 Married filing jointly (even if only one had income) the qualifying person is a child but not your dependent, enter this Check only one 3 Married filing separately. Enter spouse s SSN above child s name here. box. and full name here. 5 Qualifying widow(er) with dependent child Form 1040, Sign Here Section For Single returns, the taxpayer signs their name on the Your signature line in the Sign Here section of Form 1040, Page 2. Basic Income Tax Filing Status and Standard Deduction 3-25

Knowledge Check Five 1. How long can a taxpayer use QW as their fi ling status? For fi ve years after their spouse dies Only the fi rst year after their spouse dies Up to two years after the year their spouse dies Only the year in which their spouse dies 2. Herman s spouse died three years ago, and he has not remarried. He paid more than half the cost of keeping up the home where he lives alone. What is the most advantageous fi ling status Herman can use? MFJ HOH QW Single Partial Problem Use the information provided to complete George s Form 1040, Personal Information and Filing Status sections. George Ingles (04-21-1986, 400-00-1091), single Current Address: 54 Prarie Landing Arch Your City, YS and ZIP Code George does not have a qualifying individual for any tax benefi ts. He wants $3 to go to the Presidential Election Campaign fund. Comparison of Filing Statuses A taxpayer may qualify for more than one fi ling status. In this situation, your job is to determine the most advantageous fi ling status available to them! 3-26 Filing Status and Standard Deduction Basic Income Tax

Single Taxpayers Single taxpayers may qualify to use the following fi ling statuses: QW HOH Single The most advantageous tax rate results from using QW (same as MFJ rates), followed by HOH, and lastly, Single (the highest rate of the three). Example: Monica is a single taxpayer with taxable income of $32,024. Let s assume that Monica qualifi es for all three statuses. Each status results in the following tax: QW: $3,954 HOH: $4,196 Single: $4,379 If Monica uses the QW status, she reduces her tax by $425 over the tax for the Single fi ling status. Married Taxpayers Married taxpayers may qualify to use the following fi ling statuses: MFJ HOH MFS The most advantageous tax rate is MFJ, followed by HOH, and lastly, MFS (the highest rate of the three). Example: Let s look at Phil and Tessa, married taxpayers with combined taxable income of $68,000, split evenly between them. Each status results in the following tax, assuming Phil and Tessa each use the same status for their own income ($34,000 income each and combining the tax): MFJ: $8,508 HOH: $8,992 MFS: $9,358 Using the MFJ status reduces the tax by $850 over the MFS fi ling status tax. Basic Income Tax Filing Status and Standard Deduction 3-27

Knowledge Check Six 1. Bob s wife died a year and a half ago, and he has not remarried. Bob paid more than half the cost of keeping up a home that was the main home for himself and his stepdaughter, Valerie. Bob can claim Valerie as a dependent. What is the most advantageous fi ling status Bob can use? MFJ MFS QW Single 2. Paula s spouse died two years ago, and she has not remarried. Paula paid more than half the cost of keeping up a home that was the main home for herself and her aunt, Rose. Paula does not claim Rose as a dependent. What is the most advantageous fi ling status Paula can use? MFJ HOH QW Single 3. Myra s spouse died a year ago, and she has not remarried. Myra paid more than half the cost of keeping up a home that was the main home for herself and her granddaughter, Helen (7). Myra can claim Helen as a dependent. What is the most advantageous fi ling status Myra can use? MFJ HOH QW Single 3-28 Filing Status and Standard Deduction Basic Income Tax

Partial Problem One Use the information provided to complete the Form 1040, Personal Information and Filing Status sections, using the most advantageous fi ling status. Oscar Edwards (03-17-1973, 400-00-1088) and Marnie Z. Edwards (08-3-1975, 410-00-1088), married Lived with their dependent daughter, Courtney Edwards (06-01-1996, 401-00-1088), until Oscar died two years ago. Marnie has not remarried. Current Address: 1881 Limber Lane Your City, YS and ZIP Code Marnie paid all of the cost of maintaining their home. Marnie does not want $3 to go to the Presidential Election Campaign fund. Partial Problem Two Use the information provided to complete the Form 1040, Personal Information and Filing Status sections, for Sanaa using the most advantageous fi ling status. Sanaa Karenga (12-14-1974, 400-00-1087), single Sanaa paid more than half the cost of maintaining a home for herself and her daughter, Adia Karenga (12-17-1999, 401-00-1087). She provided more than half the support for Adia, and no one else qualifi es to claim Adia as a dependent. Current Address: 1234 South Main Street Your City, YS and ZIP Code Sanaa does not want $3 to go to the Presidential Election Campaign fund. Basic Income Tax Filing Status and Standard Deduction 3-29

Lesson IV: Decedents Decedent - A deceased individual. The decedent may not owe federal income tax if their death was due to service in a combat zone, or due to military or terrorist actions. A personal representative can be an executor, an administrator, or the person who is in charge of the decedent s property. A court-appointed personal representative must attach a copy of the court appointment to the return. A decedent s tax return can be fi led electronically. The same fi ling requirements that apply to individuals in general also apply when deciding whether a fi nal income tax return must be fi led for a taxpayer who died during the tax year. A return should be fi led to get a refund if tax was withheld or estimated tax was paid by a decedent. This is true even if a return is not required to be fi led. For single decedents, a personal representative must fi le the decedent s fi nal income tax return. The final return must include the decedent s income for the year up until the date of their death. For married decedents, the surviving spouse can generally fi le a fi nal joint return with the decedent. The fi nal joint return must include the decedent s income for the year, up to the date of death, and the surviving spouse s income for the entire year. Form 1040, Personal Information Section When a tax return is fi led for a decedent, write DECEASED, the decedent s name, and the date of death across the top of Form 1040, Page 1, above the Personal Information section. In this section, enter the name, address, and SSN of the decedent. If it is a joint return, the surviving spouse s name and SSN must also be included in this section. If a joint return is not being fi led, enter the decedent s name in the Your fi rst name and initial and Last name boxes in the Personal Information section. Include the personal representative s name and address in the address boxes. Return Due Date All income tax returns of a decedent are due at the same time they would have been due, had the taxpayer not died. When April 15 falls on a weekend or holiday, the tax return is due on the next business day. Example: Priscilla died on February 25, 2011. Her fi nal return (which is for tax year 2011) is due by April 17, 2012. File the returns with the IRS Service Center for the state or county where the individual who is fi ling the return lives. 3-30 Filing Status and Standard Deduction Basic Income Tax

Knowledge Check Seven 1. Amy s father, George, died on January 15, before fi ling his tax return for the previous tax year. Amy has been designated his personal representative and is required to fi le his return. By what date does Amy generally have to fi le his previous year return? April 15 of the current year December 31 of the current year April 15 of next year Within 60 days of the date of death 2. What income must be included on a decedent taxpayer s fi nal MFJ individual income tax return? Only their spouse s income Both the decedent s and spouse s income for the entire year Both the decedent s and spouse s income up to the date of the decedent s death The decedent s income up to the date of their death, and the spouse s income for the entire year Lesson V: Standard Deduction The standard deduction is a dollar amount that reduces taxable income. Most taxpayers have a choice of either using a standard deduction or itemizing their deductions. The standard deduction is a benefi t that eliminates the need for a taxpayer to itemize expenses such as medical, interest, taxes and charitable contributions. Generally, the standard deduction amounts are adjusted each year for infl ation. This lesson focuses on determining the appropriate amount a taxpayer can take as a standard deduction. Basic Income Tax Filing Status and Standard Deduction 3-31

The standard deduction is based on the following factors: Filing status Age Blindness Dependency status Use Table 20-1, Standard Deduction Chart for Most People, from IRS Publication 17, Part One, to determine the standard deduction 1 for most taxpayers. This amount is entered in the Tax and Credits section of Form 1040, Page 2, Line 40. Table 20-1. Standard Deduction Chart for Most People* If your filing status is... Your standard deduction is: Single or Married filing separately $5,800 Married filing jointly or Qualifying 11,600 1 widow(er) with dependent child Head of household 8,500 *Do not use this chart if you were born before e January 2, 1947, are blind, or if someone else can claim you (or your spouse if filing jointly) as a dependent. Use Table 20-2 or 20-3 instead. The taxpayer benefi ts from the standard deduction if this amount is greater than the their allowable itemized deductions. Select the method that produces the greater deduction and the lowest tax. If the taxpayer chooses to take the standard deduction, enter the amount in the Form 1040, Tax and Credits section. Example: Betty s (29) filing status is Single. She chooses to take her standard deduction of $5,800, because her itemized deductions only amount to $4,654. Enter $5,800 in the Form 1040, Tax and Credits section, Line 40. BETTY Form 1040 (2011) Page 2 38 Amount from line 37 (adjusted gross income).............. 38 Tax and 39a Check You were born before January 2, 1947, Blind. Total boxes Credits { } if: Spouse was born before January 2, 1947, Blind. checked 39a Standard Deduction b If your spouse itemizes on a separate return or you were a dual-status alien, check here 39b for 40 Itemized deductions (from Schedule A) or your standard deduction (see left margin).. 40 5,800 1 3-32 Filing Status and Standard Deduction Basic Income Tax