Hello.
We want to pick up where we left off in our first session.
We're on Page 1-5 and I just want to review quickly the tax formula and then we will move
forward from that point.
We looked at how do we come up with the tax that we owe, how do we get a refund, how does
the formula work in determining our taxes?
And we said, okay, we start out with our gross income, meaning we put everything in there,
and we're going to next session talk about what's included in that gross income, less
any adjustments.
There are certain adjustments we can take to income, and that gets us to our adjusted
gross income, our AGI.
And then we can take either the standard deduction, we're going to look at today what that is,
versus itemized deduction.
And so we look at the both of them and then we're going to take the greater of the two,
and then we're going to subtract from that exemptions.
So we have our adjusted gross income minus either the standard deduction or itemized
deduction, minus the exemptions, that's who we claim on our tax return along with ourselves,
and that gets us to our taxable income.
We're going to briefly look at the tax rate schedules and tax tables today, because that's
what we use to determine our tax.
And then from our tax, we often get tax credits which reduce our tax or we may have an additional
tax that may be added to our tax, and that comes down to our tax due.
It comes down to our tax due, and then that's what we actually owe.
And then throughout the year, as I spoke before, we have withholding in order to take care
of that tax due, and then we also can make quarterly estimated payments.
And if the tax due is more than our withholding or our quarterly estimated payments, then
we owe.
If the tax due is less than what we paid in, meaning we paid in more than what was due,
then we would get a refund.
So that's basically how it works, and that picks us up on Page 1-6 of where we look at
our standard deduction.
So I want to talk to you briefly about what is the standard deduction.
The standard deduction is the deduction that the IRS or the government gives -- just gives
us.
So if I don't have any itemized deductions, meaning maybe I don't have a home where I'm
paying mortgage and I can deduct mortgage, maybe I don't have charitable contributions
and medical and all those things that make up our itemized deduction, but the IRS says,
okay, you may not have those things, but we're just going to give you a basic standard deduction
of which you can use to help reduce your adjusted gross income.
So our standard deduction is based on your filing status, which we're going to talk about
today, but I want to go ahead and cover these amounts.
The standard deduction, if you are single, you get a $5,450 standard deduction.
If you are married filing jointly, you get a $10,900 standard deduction.
If you are married filing separately, then you would get a $5,450 standard deduction.
If you were filing head of household, which we'll talk about that, you get an $8,000 standard
deduction.
And then if you are a widow, you would get a $10,900 standard deduction.
So it's based on how you file your tax return.
And so also they offer you some additional ones.
If you are blind or 65 plus, meaning 65 or older, you get an additional amount.
If you are considered unmarried, then you would get an additional amount of 1,350 for
each.
So if I'm blind and 65 or older, I would end up getting $2,750 -- 2,700, I'm sorry, dollars
in addition to my standard deduction up here.
And then if I'm married, I would get an additional $1,050 for being blind or 65 and older.
So you get an additional amount.
Also, so what happens is that these are the standard deduction options.
So I go ahead and compute what my itemized deductions would be.
So if I'm single and I have itemized deductions of 3,000, then I'm going to want to take the
standard deduction.
If I'm single and I have itemized deductions of 10,000, then I'm going to want to take
the itemized deduction.
So you take the higher of the two.
And then also your exemption amount, I'm going to go ahead and mention that.
You get a $3,500 exemption amount for each dependent and for personal exemptions, which
we will talk about that in detail.
So that gets us to Page 1-7 in your text where they talk about, well, you know, people often
want to know I didn't really make that much money, do I have to file a tax return, am
I required to file?
And they do have some rules in which help you determine if you're going to be required
to file a tax return.
So I want to go to the IRS site and kind of get you acquainted with the Internal Revenue
site.
And it is IRS.gov is the site.
And you can find out all type of information.
You can type in just a question you have in the search bar and you can come up with, you
know, a list of articles and things to look at.
You can also get tax forms.
Let's say that you want to do your taxes and you don't have software, you didn't get forms
in the mail, you go here and do it.
So let's go to determine who must file.
So if you type that in, you'll come up with a list of articles.
Do you need to file a tax return?
A list of articles and a list of information, you know, is it an exempt organization.
So you can go through those, but I want to introduce you to a publication that the IRS
produces that I really like and that in my classes that I teach on campus that I go to
the IRS and I pick up a publication 17 for all of my students.
They're free.
There's no charge.
Or as I'm doing now, you can access it on the Internet and it's a PDF file.
Now, I wouldn't try to print it off because it's 300 pages, so you don't want to do that.
But you can go and find the necessary information you want.
Here's the table of contents.
And I am going to cover or look at the chart that has to do with who must file.
And it is going to be on Page 5.
They -- they give you a summary of the new items this year regarding to taxes.
So it covers a lot of information.
And so I really like this publication, so I suggest strongly that you use it.
I'm going to go ahead and blow this chart up so we can see it and use it here.
Now, they have a chart in the book, but they have it asterisked as to at the time of the
publishing that this particular chart wasn't available.
But I believe it's the same chart, they just probably hadn't had a chance to verify it
yet.
But let's look.
They say it's based, once again, off your filing status.
So if I'm single and I am under 65 and I had gross income of at least $8,950, then I need
to file a tax return.
If it was less than that, I do not.
If I am single and I'm 65 or older and I had income of at least $10,300, then I would need
to file a tax return.
So you can use this chart, once again, based on filing status, which we'll cover here shortly,
married filing jointly, married filing separately, head of household and qualifying widower with
a child and they always of course have some items at the bottom for you to consider.
But that helps you be able to tell do I need to file a tax return?
Do I need to file a tax return or not?
And then if you look on Page 1-8 of your book, there's another chart which is also in the
-- on the publication website.
Here is what if I'm at -- claimed as a dependent on someone else's tax return?
Do I still need to -- you know, I'm a teenager or a young child that works, my parents claim
me; do I have to file a return?
And once again, you can look here and go through the steps and determine by answering the questions
on this chart whether I need to file a return.
And it doesn't mean that you can't, it's just that you're not required to, because a lot
of people who don't meet those income limitations aren't required to file a return, but they
want to file a return in order to get their refund back, because probably the way it works
is that, and this is not always the case, if you are under those income guidelines,
you're probably not going to owe any tax.
So that's why they say you're not required to file a tax return.
So if they withheld taxes from your paycheck, you're going to want to file that return in
order to get your amount withheld back, in order to get a refund, so you want to make
sure you do that.
And then, also, on Page 1-8, which we won't go to, they have a Chart C that is for other
situations in which you must file.
So definitely go to IRS.gov, use this website, type in publication 17.
It is a excellent website in which to search things.
If you have a question that you can't find right away in the book, go to their Table
of Contents and find the information that you need.
So it's an excellent website, okay?
Next we want to look at filing status, like what is my filing status.
I've spoke of single.
I've spoke of married filing jointly.
I've spoke of single.
And so the question is, is how can I file?
Can I file single if I'm still married but maybe I'm separated from my husband?
Can I file married filing separately if, you know, we are married but we just don't want
to file a joint return?
So I want to go into detail, and in your packets that you got in the mail from me, you should
have received these notes that we're going to be writing on today.
I sent out the note along with the PowerPoint, if I'm using PowerPoints.
So just make sure that you use those handouts and follow along and take the notes.
Starting on Page 1-9, starting on Page 1-9, we look at -- I want to blow that up a little
bit so you guys can see what I'm writing on here.
We want to start with single.
As I mentioned, the filing status is how do you file your return, what is my status?
Am I married filing jointly?
Am I single?
So that's your status.
That's the first thing you have to do is determine your status.
The first one we want to look at is for single people.
This is when you are unmarried.
And you're unmarried or legally separated as of December the 31st.
So as I said, I want to mention the fact that if I get divorced or legally separated on
December 31st, I'm considered single for the whole year even though I was actually married
for the entire year.
But it's your status as of the last day of the year, it qualifies you to file that for
the entire year.
Okay?
And so basically if you're unmarried or legally separated as of 12/31 you can file single,
or if you don't qualify for any other status, so if you do not qualify for any other filing
status.
So that's the other reason.
As we go through the other ones, you may say, no, that doesn't fit me, that doesn't fit
me, that doesn't fit me.
So given those, then I'm going to have to file single.
So if you can't fit in any of the other filing statuses, then you will be considered single.
You will be considered single.
The next one we want to look at is married filing jointly, and that's if you are married
on or by 12/31.
Once again, if I get married on December 31st, I'm considered married for the same -- for
the entire year.
Same sex couples do not -- cannot file jointly.
So it doesn't apply to same sex couples.
So you can't file for the IRS purposes, you cannot.
Okay.
And then, also, if your suppose dies during the year, you can still file a joint return.
So if your spouse dies, you just indicate on there the date of the death and then you
can still in that year of death file a joint return.
So that is married filing jointly.
So married as of the end of the year, same sex couples don't apply, and then if the spouse
dies during the year, you can still file married filing jointly.
Okay.
If you're married, you can have an option of filing married filing separately, if you
choose to.
And that's when each spouse files a separate return.
So instead of combining our income, we're going to file a separate return.
And we're going to file married filing separately, which tends to be the highest income tax,
the highest tax bracket, it tends to be the highest tax bracket.
One thing about that, that when you file a married filing separate return, either you
both have to take the standard deduction or you both have to itemize.
So despite, you know, what's more advantageous for the other, you both have to do the exact
same thing.
So you either both have to take the standard deduction or you both itemize.
One can't itemize and one can't take the standard deduction, okay.
And then for -- you need to follow state law for those who are in community property states,
which Kansas or Missouri is not a community property state.
So if you're in a community property state, you want to make sure you check out the state
law for how to -- how it works for married filing separately.
And what happens is that, depending on your state and state law, is that even though we're
filing a separate return, in a community property state, just to give you a little history,
it means that all our property is considered joint property.
And so, therefore, if I'm filing a separate return, everything that we do as a couple
is joint.
So in certain community property states, property that is joint, then half of it has to go on
one spouse's return, half has to go on the other spouse's return.
In community property states, in all community property states, wages, if me and my husband
lives in a community property state, half of his wages go on my return, half of my wages
go on his return.
In Missouri and Kansas, which is not a community property state, if we file a separate return,
I'm only going to put my income on my return, he's only going to put his income on his return.
And then we choose what we're going to put on our returns, meaning am I going to carry
the kids, is he going to carry the property, and then we make those decisions.
It's different in community property states.
I'm going to have to put half of his income on my return and vice versa.
So make sure in those community property states you look and follow those rules.
So married filing separately, like I said, tends to be the highest income tax bracket.
Okay?
Let's go to head of household.
Let's look at our head of household rules, okay.
Head of household is a common filing status, and it has some good benefits, it has low
rates.
So that's one that often people are trying to qualify, has lower rates than single.
So it's a better option than single or married filing separately.
So it's advantageous to take head of household.
Single's going to have a little higher rate and married filing separately is, okay.
And so you can file head of household if you are considered unmarried or you are considered
an abandoned spouse as of 12/31.
So we're going to look at what that means.
So if you're considered unmarried, okay, or considered an abandoned spouse, then you can
file head of household.
There's an "and" to that.
So once I determine, okay, I'm unmarried or I meet the abandoned spouse rules, what else
must I do?
I must have paid more than 50% of the cost of keeping a home.
And this home has to be the principal residence of a dependent.
So not only do you have to be unmarried or considered abandoned spouse, this particular
home that you have to pay more than half of the upkeep for has to be the principal residence
of a dependent.
It has to be principal residence of a dependent.
And there are some exceptions.
The one exception that I want to mention and write down here is that in the case when the
taxpayer parent is the dependent, okay, when the taxpayer parent is a dependent, that parent
does not have to live with the taxpayer.
Okay.
So if the dependent you're claiming, the dependent we're talking about is your parent, that parent
does not have to live with you.
That parent does not have to live with you.
So head of household, unmarried, abandoned spouse, and then you have to pay more than
50% of the cost of keeping up the home, okay.
It's in the publication 17, but these rules that have to do with this abandoned spouse
is also in your textbook on Page 1-10.
On 1-10.
And what they're saying, if you look on Page 1-10, is that your spouse -- how do I want
to say this -- your spouse cannot live with you.
So let's say I'm married and for the last six months of the year my spouse did not live
with me.
So if the spouse did not live with me in the last six months of the year, then that's considered
abandoned, and then, therefore, I can file head of household.
So what they're doing is, they're trying to make sure you're not penalized in situations
where you are separated or you are still married but you don't -- you no longer live together
and you both have your own homes and you're taking care of dependents and things like
that.
So they don't limit you to married filing separately, which is the highest tax bracket.
They give you some options.
So they say for the abandoned spouse rules, if your spouse did not live with you within
the last six months, then you would meet that abandoned rule.
So and you would be able to qualify for the head of household status, which is a favorable
status.
Okay.
And then the last one's top of Page 1-11 that we want to look at is that the surviving spouse.
We want to look at the surviving spouse as the last one.
And also they call it either the qualifying widower as well, okay.
The tax that you're going to pay under the surviving spouse rule is the same as married
filing jointly.
So it's going to be married filing jointly.
And this applies in the two years following the death of a spouse.
So the way it works is if you remember in the year of death, so if your spouse dies
in 2009, when you file your 2009 tax return, you would file married filing jointly with
that spouse and with that spouse's name listed on your tax return and showing the date of
death.
So in 2009, the year of death, you're going to go ahead and file married filing jointly.
In 2010 and in 2011, you're going to file as a qualifying widower.
So in those two subsequent years after the date of death, you're going to file as the
qualifying widower.
But there's one more qualification that allows you to use this.
You have to pay more than half -- you must pay more than or over half of the cost to
maintain a household for a dependent child.
And this can be a child, a stepchild, an adopted child, or a foster child.
But in order for you to qualify for that status, you have to have a dependent in which you're
providing over half of the cost of a household for them to live.
So it's not just that you are a widower.
You have to have a dependent in which you're providing half the -- over half the household
expenses.
And so what that does is that allows you for those -- those last two years, those subsequent
two years, to still get that standard deduction of married filing jointly, to still get the
favorable tax treatment for married filing jointly if you're claiming someone as a dependent.
If you do not have a dependent in the year of death, you file a joint return, and then
in the years after that you would file single or whatever if -- I guess single would be
the only one not unless you qualify for some reason for head of household.
But I'm thinking if you qualify for head of household, then you should be able to take
the qualifying widower, which is more advantageous than head of household, the standard deduction
is bigger.
Okay.
And so on Page 1-11, they talk about briefly about the tax computations.
And I want you to -- if you would turn, everyone should have textbooks by now.
If you would turn to the back of your book, I just want to kind of talk about our point
to the tax schedules versus the tax table.
When I went over on the front page your tax formula and we got down to taxable income,
I said, okay, you figure your taxable income using the tax table or the tax rate schedule,
and so I want to just briefly look at that.
That is in Appendix A in the back of your book.
Appendix A in the back of the book.
Okay.
And I'll show you here on the overhead, and Appendix A in the back of the book, we first
have a tax rate schedule.
This is a tax rate schedule.
And, for instance, this one that I'm showing you is for married filing jointly or your
qualifying widower.
So it's going to be based on that.
And the way it works is that if you have income not over 16,050, then your taxable income
is going to be taxed at 10%.
If your income is between 16,050 but not over 65,100, then your tax is 1,605 plus 15% of
that excess that's over 16,050.
But remember not over the 65,100.
And then so these are your tax tables, you know.
You could be in the 10% bracket, the 15% bracket, the 25% bracket, the 28% bracket, the 33%
bracket, and the 35% bracket.
And kind of the way it works is that your first 16,000 is taxed at 10%, the next amount
of income between 16 and 65 is going to be taxed at 15%, and so forth and so on.
So that's kind of to show you how those tax rate schedules work.
And then on the other side of that page, they begin to show you -- or they give you the
tax table.
The tax table is a little bit more simpler, you don't have to do any calculations.
You just say, okay, if my income is at least 0 but less than 5, then obviously on this
I would have no tax.
So let me turn to a page that there's some tax here so you can get an idea, okay.
Let's look at this one.
This one is 71,000.
71,000 here.
If my income is between 71,000 but it's less than 71,050, then if I'm single, my tax is
going to be 14,100.
If I'm married filing jointly, it's going to be $10,444.
If I'm married filing separately, it's going to be 14,259.
If I'm head of household, it's going to be 12,819.
So kind of want to show you that advantage that I talked about.
Notice in this tax range, head of household -- well, actually married filing separately,
I'm sorry, is the lowest tax.
It's only 10,444.
And then we have head of household.
And then we have single.
And then the highest is married filing separately.
There's a $4,000 difference, a little less than that, though, in tax between married
filing jointly and married filing separately, jointly being the lowest, separately being
the highest.
So just keep that in mind.
So you would use the tax table if you have income less than 100,000.
If your income is over 100,000, then you want to use the tax rate schedules.
So that just gives you a little idea of how you compute your tax.
So once you get down to taxable income, then you either use the tax rate schedule or you
use the tax table based on your income.
Okay.
So we've talked about your filing status.
We talked about your filing status.
So now we want to look at your personal and dependency exemption.
So there's go there and look at that.
Let's blow that up a little bit for you.
And let's look at your personal and dependency exemptions.
Okay.
You have two exemptions in which you can take.
You can either take a personal exemption, and this is going to be for the taxpayer,
you, and your spouse.
You still get -- now, keep in mind, you're still gonna get 3500 apiece, but those are
considered personal exemptions.
And then we have dependency exemptions, and that's for children, maybe people who stay
with you, there's a lot of different people that fit under the dependency exemptions.
And so you get 3500 per personal exemption, that's you and your spouse.
And then you get, for each dependency exemption, you get 3500 for each dependency exemption.
So let's look at your personal exemption first, and as I said already, but we'll write it
down since I have it here, you get 3500 each for that.
So taxpayer and spouse, they get a deduction of 3500 for your dependency exemption.
Now, be aware that for high income taxpayers, if your income is within a certain range,
you may not get that full 3500.
You may not get all your dependency exemptions if you have high income.
That's going to also work when we cover itemized deductions; if your income is within a certain
amount, you may not get all your itemized deductions.
So just remember that, that you could not end up getting all your deductions.
And if you look on Page 1-12, that high income, it begins to phase out at 2%.
It's a calculation that we won't spend time with right now, but if it -- beginning at
income of 159,950, and for someone that is single, and it begins at 239,950 for married.
Okay.
So if you have income in those high brackets, then just know, and we will show that or deal
with that calculation a little later, that you may not get all this 3500 for every dependent.
There's a calculation that you have to go through and it's going to limit some of that,
okay.
So let's look at the dependency exemptions.
There is two ways in which you can claim somebody as your dependent.
They can be a qualifying child and meet those tests, or they can be a qualifying relative,
they can meet those tests.
And we will look at both of those today.
So it could be either one.
They could be a qualifying child or they can be a qualifying relative.
Okay.
So let's start at -- and look at the qualifications for qualifying child.
What are the tests?
What must I meet in order to claim somebody as my qualifying child?
And this is on Page 1-13 of your textbook.
They start with the relationship test.
This person has to be a child, a stepchild, an adopted child, a brother or a sister, and
then maybe it's a half-brother or a half-sister, okay, or maybe it's a stepbrother or a stepsister.
And then they go and say any descendents of any of these.
So that means this can be a grandchild.
This can be a nephew, a niece, and I won't write all those down, but they are on Page
1-13.
So that's the first test.
So do they meet the relationship test, are they related to you?
The next is the domicile test.
Are they in the same residence as you for more than half the year?
So are they in the same residence for more than half a year?
And they -- they're okay with temporary absences for college, for vacations, for illnesses
and things like that.
So do they meet the relationship test and do they meet the domicile test?
Next we want to look at the age test.
We want to look at the age test.
Do they meet the age test, okay?
Are they under 19?
Or if they're not under 19, are they a full-time student?
Student and under 24, okay.
So either they're under 19, which probably means they're still in high school, or either
they are under 24 and they're a full-time student.
If they meet that test, then they meet the age test.
Next is the joint return test, okay.
If you're claiming somebody, that individual cannot file a joint return with a spouse.
So they cannot file a joint return with a spouse.
Okay.
Now, there's an "unless" to that.
Unless that they're filing that return only to get a refund.
So unless they are not required to, you know, we're going to look at our required, who's
required to file chart, and they are filing it simply to get a refund.
So they're not required to file the return, okay.
And but they're going to file it in order to get a refund.
So basically you can't be claimed as a dependent on someone else's tax return and then you
file a joint return with them as, you know, with your spouse, unless the -- you're not
required and you're just doing it to get a refund.
Okay, next is our citizenship.
You have to be a U.S. citizen.
I mean your dependent has to be a U.S. citizen or a resident, okay, of the U.S. or also a
resident of Canada or Mexico.
Okay.
So make sure that those tests are met.
So we -- next we want to look at the self-support test.
The self-support test is our last test, and then that's basically did they provide more
than half of the support for themselves, okay.
So if a child or a dependent -- doesn't have to be a child per se -- but if the child provides
more than half of their own support.
And if they -- basically they're saying if the child provided half of their own support,
then you didn't provide half of their support and, therefore, you cannot claim, okay.
So basically if they're providing half of their support, then you did not, and you cannot
claim them.
You cannot claim them.
Okay.
And so we have these six tests that you must meet in order to claim somebody as a qualifying
child, in order for you to claim somebody as a qualifying child.
At the bottom of Page 113 in your textbook, they deal with what happens if more than one
person, what happens if there's more than one person that can claim somebody?
What happens if maybe me and the father are not -- no longer married and we both meet
all these tests?
Who actually gets to claim them?
Okay.
So the tie breaker, instead of really writing some notes on that, let's just look.
There's a tie -- if you have more than one person that qualifies to claim somebody as
a dependent, at the bottom of Page 113, they tell you if one of the person that the tie
is with is a parent and the other one is not, then the parent is the one who is able to
claim them.
So if there's a tie between two people and one of them is a parent and one of them is
not, then the parent is going to get to claim them.
If both of the people in the tie are the parents, okay, but we're filing separate returns, then
the parent that the child resides with the longest is going to get to take the child
or take the dependency.
Now, if the answer to that is that, oh, it was 50/50, it was even, so we can't say who
had the child the longest, then if that's the case, it's both parents can determine
who had the child the longest, then the tie break is going to go to the parent with the
highest AGI, with the highest adjusted gross income.
And then, finally, if neither one of the people in the tie break are parents, so maybe it's
two aunts or whatever the case may be, then the individual with the highest adjusted gross
income would meet the tie and would -- would be able to claim the child, so.
Also, they speak of divorces.
A lot of time divorce decrees specify who can claim the children and in what year.
Sometimes it may be, you know, one spouse claims them in all even years and another
spouse may claim them in all odd years.
So a lot of time divorce decrees state who claims the exemptions and it's pretty specific
about that.
Okay.
Next we want to go ahead, well, what if my child or whoever I feel that I've taken care
of and I should be able to claim them as a dependent that meet any of these qualifying
child rules?
Well, then the next thing you want to do is look at the qualifying relative rules, and
they begin on Page 14.
So let's go ahead and write a few notes on that.
They begin on Page 1-14.
Okay.
Qualifying relative.
Basically, this is one who's not a qualifying child.
So that means they didn't meet the qualifying child test.
Okay.
The relationship, the first test they look at is the relationship or the member of the
household test, the relationship or the member of the household test.
Relationship basically is on Page 1-14, and what they mention is that when we talk about
relationship, they say it's broad, but it includes our parents, any grandparents, children,
grandchildren, siblings, aunts and uncles by blood, nephews and nieces-in-laws and adopted
children.
Foster children may also qualify under certain circumstances.
And then they say if the potential dependent is more distant relative, if you go to the
IRS.gov site, you should be able to get some details.
But one thing I want to point out that they specifically mention is that cousins are not
considered relatives.
So you want to be aware of that.
Cousins are not considered relatives.
So I know they are not part of the relatives list, okay.
But keep in mind, this is an "or" test.
So let's say, okay, I feel like I've taken care of my cousin, okay, but they don't meet
the relationship test, but they may meet the member of the household test.
The member of the household test says that they have to be a member of your household
for the entire year.
Not six months.
Not the last nine months.
The entire year, the full 12 months.
So if my cousin happens to live with me and I meet the other test, then I can claim my
cousin as a qualifying relative.
So it doesn't mean I could never claim my cousin.
It just means they would have to meet the member of the household test.
On the other hand, my grandmother, who would meet the relationship test, wouldn't have
to live with me because they meet the relationship part of this.
And as long as they met the other test, then they would not have to live with me.
Okay.
So keep that in mind.
That's how that works, is the relationship or the member of the household test.
Next is the gross income test, is the gross income test.
If they make more than $3,500, they do not meet that test and that's basically the exemption
amount.
So if you got someone who made $3,600, they would not meet the gross income test.
If they make $3,200, they meet it.
If they make $3,500, they will not meet it because it tells us equal to or above.
So if they make 3500 or above, they are not going to meet that test.
Okay?
Next is the support test.
Once again, providing over half of the support.
If they're providing over half of the support, you didn't provide over half of the support.
So you have to be the one providing whatever of their support, okay.
The joint return test is the same as above, that they cannot file a joint return, not
unless they're not required to file a return and they're just doing it to get a refund,
and the citizenship test is the same as above.
The big difference with this test is that someone who didn't meet the relative test
under qualifying child may meet it under this, as long as these other rules apply.
And then, also, if you have a child who is 19 or over but not a full-time student, they
could qualify this way if they haven't had more than $3,500 worth of income.
So keep that in mind.
So either your dependent is going to meet the qualifying relative test or the qualifying
child test in order for you to claim them on your tax return.
So that pretty much wraps up what I want to cover in Chapter 1.
Let's just briefly review what we've covered.
We looked at our tax table again and we went over what was the standard deduction for single,
married filing jointly, married filing separately, head of household, and surviving spouse.
And then we looked at there's an additional standard deduction for people who are blind
and over 65.
And then we also looked at what -- what are the qualifications for those filing status.
We looked at the tax table and the tax rate schedules and then also gave you an opportunity
to see the difference between those filing statuses and the taxes.
And we noticed that when we were looking at $71,000, that married filing jointly was the
lowest and married filing separately was the highest.
So keep that in mind.
And then we looked at personal exemptions and dependency exemptions.
Personal exemptions are for you and your spouse.
You each get 3500.
Dependency exemption is for someone who meets the requirements for a qualifying child or
a qualifying dependent, and we went through those rules and what it takes to meet that,
and then if they meet that you can claim them on your tax return and you can get a deduction
of $3,500.
If you are considered high income based on the IRS standards and the figures that I gave
you, there's a possibility that a portion of that item -- I'm sorry, not itemized, but
your deductions for your dependents could be phased out.
So just keep in mind high income taxpayers, okay.
So the next thing, what we want to pick up on when we meet next time is we're going to
begin to look at Chapter 2.
So make sure that you now go through and do all your multiple choice questions for Chapter
1, get those to me via mail, via e-mail.
You can drop them off at my office.
And then you want to begin to read Chapter 2, and that's what we're going to cover.
We're going to begin to look at gross income and what's included in gross income.
So that's what we'll do.
And send me any e-mails if you have any questions or concerns.
Thank you.