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Robert B. O’Neill, CPA, LL.M. (Taxation), JD
February 25, 2014
Topic Here
Filing Status
Exemptions
Education Credit – American Opportunity Credit - Lifetime Learning Credit - Tuition and Fee Adjustment Resident Alien vs. Non-Resident Alien - U.S. Residency - Non-Resident
Fellowship/Stipends – PA Taxation Chapter 101.6 Reg. (b)(4)
J Visa
Filing status
Single: On the last day of the tax year, you are unmarried, windowed,divorced, or legally separated.
Married Filing Jointly: Couple’s combined income and combineddeductions are used to figure couple’s combinedtax liability. A married couple can file jointly even if onespouse has no income or they lived apart for part or allof the year.
Filing jointly means including worldwide income of both spouses on the return.
Married Filing Separately: Least favorable tax rules.
To avoid joint and several tax liability on the joint return.
If other spouse files separate, of if either spouse is a nonresident alien or dual-resident
alien at any time during the year and do not elect to file jointly.
Head of Household: Unmarried or Considered Unmarried
Files a separate return.Paid more than half the cost of keeping up the home
for the tax year.Taxpayer’s spouse did not live in the home during the
lastsix months of the tax year.Taxpayer’s home was the main home of the taxpayer’s
child,stepchild or foster child for more than half the year.
Qualifying Widow(er)
Taxpayer’s spouse died in either of the two prior years, and
the taxpayer has not remarried.Taxpayer’s child lived in the home for the full year.Taxpayer paid more than half the cost of keeping up
the home.
Legal Marriage
A marriage that is recognized by state law is usually recognized as a legal marriage for federal income tax purposes.
Marriages performed outside the United States usually are recognized as legal marriages.
Living together, no matter how long does not create a marriage unless a couple meets all the requirements to be considered married under Common-law marriage rules. These rules vary from state to state.
Taxpayer who are divorced under a final divorce decree as of December 31 of the tax year cannot file a joint return.
Personal Exemptions
Each taxpayer, other than someone who can be claimed as a dependent of another taxpayer, is entitled to claim a personal exemption.
A married couple filing jointly can each claim a personal exemption on their joint return, one exemption for each spouse.
If one spouse dies during the year, the surviving spouse may claim an exemption for the deceased souse if the survivor has not remarried by the end of the year.
Dependency Exemptions
Taxpayers who support another person may be entitled to an exemption known as a dependency exemption.
Qualifying Child: Son, daughter, stepchild, foster child, brother, sister,
stepbrother, stepsister, half brother, half sister, or descendant of any of them.
Child under 19 at the end of the year, or under age 24 if the child
is a full-time student. No age limit if child is permanently and
totally disabled.
Did the child provide less than half of his or her own support?
Qualifying Relative and Other Dependents:
If you do not meet the test to be considered a qualifying child or
someone who is not related to the taxpayer.
The American Opportunity Credit
• Maximum credit is $2,500. (100% of the first $2,000 of qualified expenses plus 25% of the next $2,000). A per student credit.
• Qualified expenses include tuition, fees, and related expenses (including course materials such as textbooks).
• Must be enrolled at least half-time in a degree or certificate program.
• The credit is available for the first four years of college.
• Cannot be claimed by an individual who is claimed as a dependent on another taxpayer’s return.
• Cannot be claimed by someone filing as married filing separately.
The Lifetime Learning credit
• A maximum credit of $2,000.
• 20% of the first $10,000 of qualified expenses. It is a per return (i.e. per family) credit.
• The credit is nonrefundable only.
• Qualified expenses include tuition and fees. Some course materials may
be eligible if required for a course and purchased directly from the school.
• This credit for any student in graduate school or taking collegeclasses, but not necessarily in a degree program.
Tuition and Fees Deduction
• Above –the –line deduction of up to $4,000.
• The deduction is for higher education tuition and related expenses.
• The deduction may be claimed only by the individual who paid the tuition.
• It is a per return deduction.
Work related Education Expenses
• Education required by Employer or by Law
needed to keep present salary, status or job
• Education to Maintain or Improve Skills skills needed in your present work
Resident Alien vs. Non-Resident Alien
Resident aliensNon-U.S. citizens who have met either the green card test
or substantial presence test for the calendar year.
Generally taxed the same as U.S. citizens, file Forms 1040EZ,
1040A, 1040. Green Card Holder
Substantial Presence Test
Non-Resident Aliens who did not meet the green card test or substantial
presence test at any time during the year. File Forms 1040NR, or Form 1040EZ
Dual Status taxpayerAre aliens (non-U.S. citizens) who are residents for part of the year. Base form depends on residency at end of year.
J-1Visa
Nonimmigrant visas for individuals approved to participate in exchange programs in the United States.
Usually considered non-resident aliens and are required to pay Federal, State, and Local taxes. Generally exempt from Social Security and Medicare taxes.
Does a Tax Treaty Exist?
Fellowship/Stipends
• Pennsylvania Taxation
Chapter 101.6 Regulation (b)(4)
• Philadelphia Taxation
Second LookReview
