The tax return is it correct or a discrepancy
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The tax return is it correct or a discrepancy. And…..does it concern the Office of Student Financial Aid. Does it concern F/A?. You are obligated to know : ( 1) whether a person was required to file a tax return, ( 2) what the correct filing status for a person should be, and

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The tax return is it correct or a discrepancy

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The tax return is it correct or a discrepancy

The tax returnis it correct or a discrepancy

And…..does it concern the Office of Student Financial Aid


Does it concern f a

Does it concern F/A?

  • You are obligated to know:

  • (1) whether a person was required to file a tax return,

  • (2) what the correct filing status for a person should be, and

  • (3) that an individual cannot be claimed as an exemption by more than one person.

  • 2014-2015 Federal Student Aid Handbook:

    • Application and Verification Guide


Agenda

agenda

  • Filing Requirements

  • Filing Status

  • Exemptions

  • Questions

  • Comment Codes


Filing requirements

Filing requirements

  • Individuals in General

  • Dependents

  • Children

  • Self-employed

  • Aliens

  • Other Situations


Individuals in general

Individuals in general

  • This chart covers everything EXCEPT:

  • Surviving spouse, executors, administrators, legal representatives, U.S. citizens and residents living outside the US, residents of Puerto Rico, and individuals with income from U.S. possessions.

  • The other 5 points that we are going to cover!


Individuals in general1

Individuals in General


Individuals in general2

Individuals in General

  • Age

    • If you were born on January 1, 1949, you are considered age 65 at the end of 2013.

    • You are considered 65 on the day before your 65th birthday.

  • Gross Income

    • all income you received in the form of money, goods, property, and services that is not tax exempt

    • Do not include Social Security Benefits Unless…..

    • Do not include losses

    • Business or Farm Gross Income is minus “direct costs”


Individuals in general3

Individuals in General


Dependents

Dependents

  • In this table, earned income includes salaries, wages, tips, professional fees, taxable scholarship and fellowship grants. (Self-Employment)

  • Unearned income includes investment-type income such as taxable interest, ordinary dividends, capital gain distributions, unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust.

  • Gross income is the total of your earned and unearned income.


Dependents1

Dependents

Table 1-2.

2013 Filing Requirements for Dependents


Dependents2

Dependents

Table 1-2.

2013 Filing Requirements for Dependents


Children

children

  • Certain children under age 19 or full-time students under age 24

    • IF the child’s ONLY income is interest and dividends

    • A Parent can include the child’s income on their own return

  • Certain other Conditions are met

  • Child will then not have to file a tax return


Self employed persons

Self-Employed Persons

  • Defined

    • Carry on a trade or business as a sole proprietor

    • Are an independent contractor

    • Are a member of a partnership

    • Are in business for yourself in any other way

    • (in some cases this income will appear on a 1099-MISC BUT a 1099-MISC does not always mean that they have to file a Sch. C)


Self employed persons1

Self-Employed Persons

  • Filing requirements

    • Gross income is equal to or greater than the general filing requirements for the individual

    • You net earnings were $400 or more

    • You had church employee income of $108.28 or more


Aliens

Aliens

  • Resident Alien: Same rules as US Citizens

    • Green Card Test

    • Substantial Presence Test

    • Both can be found in publication 519

  • Nonresident Alien or Dual-status: Different rules apply. See Publication 519. (Usually don’t qualify for Federal Aid.)


Other situations

Other situations


Filing status

Filing status

  • Marital Status

  • 5 Filing Status’s

    • Single

    • Married Filing Jointly

    • Married Filing Separately

    • Head of Household

    • Qualifying Widower


Marital status for irs

Marital Status for IRS

  • Status as of the last day of the year

    • Divorced or Married on Dec 31/status for entire year

    • Spouse dies during the year / married for entire year

  • Common Law Marriage

    • Per state rules

    • Kansas: Beginning in 2012, Under Kansas Statute 23-2502, both parties to a common-law marriage must be 18 years old. The three requirements that must coexist to establish a common-law marriage in Kansas are: (1) capacity to marry; (2) a present marriage agreement; and (3) a holding out of each other as husband and wife to the public.

  • Same-sex Marriage

    • If they were lawfully married in a state (or foreign country) that recognizes same-sex marriage then you and your spouse are considered married for filing purposes.


Marital status for fafsa

Marital status for Fafsa

  • Parent’s marital status as of today

  • Student’s marital status as of today

  • Common Law Marriage (same rules as IRS)

  • (Same as IRS) DOMA: Same-sex couples must report their marital status as married if they were legally married in a state or other jurisdiction that permits same-sex marriage.


Filing status1

Filing status

  • Single: If you do not qualify for any other status

  • Married Filing Joint / Married Filing Separately

    • If you were married on last day of year

    • Must be spouse you were married to as of Dec 31.

  • Head of Household

    • Unmarried or considered unmarried on the last day of the year (next slide)

    • Paid more than half the cost of keeping up a home for the year

    • Qualifying person lived with you for more than half the year (some exceptions)

  • Qualifying Widower

    • Spouse died over 1 year or 2 years ago (can only claim 2 years after year of death)

    • Claiming a dependent child that lived with you all year (some exceptions)


Hoh considered unmarried

HOH:Considered unmarried

  • File a separate return

  • Paid more than half the cost of keeping up the home for the tax year

  • Spouse did not live in your home during the last 6 months of the tax year

  • Your home was the main home of your child, stepchild or foster child for . more than half the year

  • You must be able to claim the exemption for the child (exception)


Exemptions

Exemptions

  • Each person has only one exemption (called personal exemption)

  • Exemptions can be claimed by the individual unless someone else is claiming the exemption for the individual as a dependent

    • That does not stop the individual from filing a tax return

    • It does stop the individual from claiming someone else’s exemption

  • Individuals can be used for other credits even if their exemption is not being used on a tax return.

  • Not claiming themselves on their tax return does not mean they can’t be independent.


Questions

Questions

  • Diana VanDyke

  • [email protected]

  • Butler Community College

  • 316-218-6260

  • Thank you!


Comment codes

Comment Codes

  • 361, 362, 365, 366 & 367: The parents’ marital status you reported in Item 59 does not appear to agree with the parents’ tax return filing status reported in Item 82. If one of these items is incorrect, you need to make a correction. If the information you reported is correct, make sure the income information reported in Items 85 through 89, 93, and 94 correctly reflects your parents’ 2013 income.

  • 363 & 367: You reported that your parents’ marital status is widowed. Review Items 85 through 89, 93, and 94 to make sure the income information reported does not include your parent’s spouse’s 2013 income.

  • 364 & 368: You reported that your parents’ marital status is married and also reported that your parents’ tax return filing status was qualifying widow(er). Please review Items 85 through 89, 93, and 94 to make sure the income information reported correctly reflects your parents’ 2013 income.


Di quote

Di quote

  • Knowledge is Power………Warp Speed Ahead!


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