1. 1 OR Tri-County Training 2014 Filing Status and Dependency Review Married, Single, and More Exemptions Qualifying Children and Relatives nd More Pub 4012 – Tabs B and C Pub 4491 – Part 2 Pub 17 – Chapters 2 and 3

2. 2 OR Tri-County Training 2014 Five Choices for Filing Status  Single  Married filing jointly (MFJ)  Married filing separately (MFS)  Head of household (HH)  Qualified widow(er) (QW) NTTC Training – TY 2014 Pub 4012 Tab B

3. 3 OR Tri-County Training 2014 Filing Status  Two criteria:  Marital status on last day of tax year  Federal definition – “married” Legal marriage under laws of any state or country Does not include civil unions or registered domestic partners  Type of dependents, if any NTTC Training – TY 2014 Pub 17 Ch 2

4. 4 OR Tri-County Training 2014 Form 1040 NTTC Training – TY 2014

5. 5 OR Tri-County Training 2014 Intake/Interview Sheet NTTC Training – TY 2014 Check Part II entries on Intake Sheet Ask questions – verify

6. 6 OR Tri-County Training 2014 Single  Not married as of December 31 st  Married, but legally separated  No dependent children at home NTTC Training – TY 2014

7. 7 OR Tri-County Training 2014 Married Filing Jointly  Married on last day of year  Common law marriage  If recognized in state where started  Spouse died during current year/not remarried  Generally, most advantageous filing status NTTC Training – TY 2014

8. 8 OR Tri-County Training 2014 Married Filing Separately  Taxpayer chooses to file MFS  Spouse has already filed MFS  Married but separated and not filing MFJ  Not eligible for most tax credits  Rare cases – more advantageous  Generally, no children in home NTTC Training – TY 2014

9. 9 OR Tri-County Training 2014 Head of Household – Unmarried  Provided home for qualified child  Might not be a dependent  Provided home for related dependent  >50% cost of maintaining home for dependent parents living elsewhere NTTC Training – TY 2014

10. 10 OR Tri-County Training 2014 Head of Household – Married  Lived apart all of last 6 months of year  Provided home for:  Child, stepchild, or eligible foster child for over six months  No other relatives qualify, including grandchildren NTTC Training – TY 2014

11. 11 OR Tri-County Training 2014 Qualifying Widow(er)  Spouse died in one of two past years  Has dependent child or stepchild in home all year  Grandchild not eligible  Maintained home for child  >50% of cost  Can file QW for two years only NTTC Training – TY 2014

12. 12 OR Tri-County Training 2014 Turn to the Decision Tree NTTC Training – TY 2014 Back of QC/QR Trifold and Pub 4012 Page B-1

13. 13 OR Tri-County Training 2014 Special Notes  Child is considered to have lived with taxpayer all year if born or died during year (but not stillborn)  Child who is dependent of non-custodial parent under Rules for Divorced or Legally Separated Parents still qualifies custodial parent for HH filing status if all other requirements met NTTC Training – TY 2014

14. 14 OR Tri-County Training 2014 Exemptions  Reduce taxable income  Two Types  Personal exemptions  Dependent exemptions  Qualifying child  Qualifying relative  $3,950 deducted from income for each one Oregon Tri-County Training – 2013

15. 15 OR Tri-County Training 2014 Personal Exemptions ● One for taxpayer and one for spouse when filing jointly ● Taxpayer or spouse is ineligible if another can claim him/her as a dependent Oregon Tri-County Training – 2013

16. 16 OR Tri-County Training 2014 Personal Exemptions  Widow/er can file MFJ and claim two personal exemptions in year of spouse’s death  If not remarried by 12/31  If not divorced or legally separated on date of death  MFS can claim spouse – if no gross income and not dependent of another taxpayer Oregon Tri-County Training – 2013

17. 17 OR Tri-County Training 2014 Dependent Exemption  Person other than taxpayer or spouse who entitles taxpayer to exemption:  Qualifying child OR  Qualifying relative But note: a child doesn’t have to be your child and a relative doesn’t have to be your relative, but can be your child! Oregon Tri-County Training – 2013

18. 18 OR Tri-County Training 2014 Exemptions  Dependency exemption tests  General tests  Taxpayer cannot be dependent of another  Dependent cannot file joint return (except to only get a refund)  U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico Oregon Tri-County Training – 2013

19. 19 OR Tri-County Training 2014 Tests to be a Qualifying Child  Relationship test  Age-Student-Disability test  Residency test  Support test  Entitlement test Pub 4012 – page C-3 Oregon Tri-County Training – 2013

20. 20 OR Tri-County Training 2014 Tests to be a Qualifying Relative  Not a qualifying child of another  Qualifying relative (next slide) or member of household all year  Gross income under $3,950  Taxpayer provided over 50% support  exception for multiple support Oregon Tri-County Training – 2013

21. 21 OR Tri-County Training 2014 Qualifying Relative (cont)  Son, daughter, stepchild, foster child or descendant of any  Sibling or immediate descendant of sibling  Parent, grandparent, aunt or uncle  Step parent or step sibling  In-laws (parent, child, sibling) Oregon Tri-County Training – 2013

22. 22 OR Tri-County Training 2014 Qualifying Child Tri-Fold ● Replaces a dozen Pub 4012 charts B-1, B-2, B-3, C-3, C-5, C-6, C-7, C-8, G-3, G-8, G-9 and I-4 Oregon Tri-County Training – 2013

23. 23 OR Tri-County Training 2014 Follow the arrows  If the answer to the question in Box 1 is “yes,” follow the yes arrow to Box 3. Oregon Tri-County Training – 2013

24. 24 OR Tri-County Training 2014 Follow the arrows  If the answer to the question in Box 3 is “yes,” follow the yes arrow to Box 5  And ask the question in Box 5 Oregon Tri-County Training – 2013

25. 25 OR Tri-County Training 2014 Blue boxes When you get to a blue box, STOP ● The blue box lists ALL the benefits for which this child qualifies the taxpayer ● Read the whole box. Important information is included in parentheses and footnotes after most benefits Oregon Tri-County Training – 2013

26. 26 OR Tri-County Training 2014 Start with Qualifying Child Chart  Always start with the Qualifying Child Chart (Chart 1) – you will be directed to Qualifying Relative Chart (Chart 2) if appropriate  Easy to mistake child of a non-custodial parent as a qualifying relative – always start with the Qualifying Child Chart Oregon Tri-County Training – 2013

27. 27 OR Tri-County Training 2014 QC of More Than One Taxpayer Who can claim the child if two taxpayers have the same qualifying child? 1. If only one is a parent – the parent 2. If both are parents, the one with whom the child lived the greater number of nights 3. If both parents claim the child, the parent with higher Adjusted Gross Income (AGI) NTTC Training – TY 2014 Pub 4012 pg C-4 Pub 17 pg 234

28. 28 OR Tri-County Training 2014 QC of More Than One (cont) 4. If a parent could claim the child but doesn’t, the household (and family) member with the highest AGI 5. If neither are parents, the person with the highest AGI NTTC Training – TY 2014

29. 29 OR Tri-County Training 2014 Uniform Definition of a QC In general, only one person can treat the child as a QC for all the following benefits (provided the person is eligible for each): Dependency exemption Head of household filing status Earned Income Credit Child Tax Credit Child/Dependent Care Credit Exclusion for Dependent Care Benefits NTTC Training – TY 2014

30. 30 OR Tri-County Training 2014 Child of Separated Parents  Limited situation  Parents are divorced or legally separated or lived apart the entire last half of the year  Child was in custody of one or both parents more than ½ the year  At least ½ child’s support was provided by one or both parents (or step-parents) NTTC Training – TY 2014

31. 31 OR Tri-County Training 2014 Child of Separated Parents ● Agreement Pre-2009 divorce decree Form 8332 or similar ● Allows non-custodial parent to claim some benefits based on the child, while custodial parent retains other benefits ● Without an agreement, custodial parent claims the child NTTC Training – TY 2014

32. 32 OR Tri-County Training 2014 Child of Separated Parents  Non-custodial parent can claim:  Dependency exemption  Child tax credit  Education credits  Medical expenses that he or she paid NTTC Training – TY 2014

33. 33 OR Tri-County Training 2014 Child of Separated Parents  Custodial parent can claim:  Head of household filing status  Dependent care credit  Earned income credit  Medical expenses that he or she paid NTTC Training – TY 2014

34. 34 OR Tri-County Training 2014 Note… Dependents cannot claim exemptions for dependents i.e., taxpayers who can be claimed as a dependent on someone else’s return cannot claim any exemptions for themselves or their own dependents Pub 4012 – page C-1 Oregon Tri-County Training – 2013 34