SEE Examination Outline Part 1 Individuals

  1. List the 3 basic filing statuses and describe them.
    Single- your filing status is single if on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and you do not qualify for another filing status. If you are a widow before the start of the tax year you could file as single but it is better to file as HEAD OF HOUSEHOLD or QUALIFYING WODIOW(ER) to give you a lower tax

    Married Filing Jointly- you can choose this status if both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions.

    *Spouse died during the year- you are considered married for the whole year and can choose married filing jointly

    *Joint Responsibility-both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. Moreover, responsibility of a joint return filed before a decree of divorce may still hold on one individual regardless if the divorce decrees one spouse for sole responsibility.

    *Relief from Joint Responsibility- in some cases a spouse may be relieved of tax liability from a joint return. There are 3 types of relief available: 1. Innocent Spouse Relief 2. Separation of Liability, which applies to joint filers who are divorced, widowed, legally separated, or have not lived together for the entire 12 months on the date this election has been filed. 3. Equitable relief

    • Married filing Separately-this filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return.
    • If you and your spouse don't agree to file a joint return, you may have to use this filing status.
  2. Describe the Head of Household requirements.
    Head of Household- you may be able to file as head of household if you meet all of the following requirements:

    • 1)You are unmarried or considered unmarried on the last day of the year.
    • 2)You paid more than half the cost of keeping up a home for the year.
    • 3)A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). However, your dependent parent does not have to live with you.

    Tax Rate for Head of Household- If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. You will also receive a higher standard deduction than if you file as single or married filing separately. A child may qualify you to file as head of household, even if the child has been kidnapped.
  3. Describe the qualifying widow(er) requirements.
    If your spoiuse died in current tax year, you can use married filing jointly as your filing status for the tax year if you otherwise qualify to use that status. The year of death is the last year for which you can file jointly with your deceased spouse. You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year of death of yoru spouse.

    This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions).

    • Eligibility Rules for Filing Qualifying Widow(er)- You are eligible to file your current year return as a qualifying widow(er) with dependent child if you meet all of the following tests:
    • 1. You were entitled to file a joint return with your spouse died. It does not matter whether you actually filed a joint return.
    • 2. You did not remarry before the end of the current tax year.
    • 3. You have a child, stepchild, adopted child, or foster child for whom you can claim an exemption
    • 4. You paid more than half the cost of keeping up a home that is the main home for you and that child for the entire year, except for temporary absences.
  4. Describe all of the sources of income and the respected schedules they need to be recorded in if need be.
    Wages, Salaries, sick pay and fringe benefits are included in your income.

    Dividend income-
    any income you receive from dividends from the investment of a company. The company should send you a 1099-DIV and you report the dividend income in either Form 1040 or Form 1040A. Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. Report qualified dividends on line 9b of Form 1040 or Form 1040A.

    Interest Income- Generally, you report all of your taxable interest income on Form 1040, line 8a; Form 1040A, line 8a; or Form 1040EZ, line 2. You cannot use Form 1040 EZ if your interest income is more than $1,500. Instead, you must use Form 1040A or Form 1040.

    Rental Income-you generally must include in your gross income all amounts you receive as rent.
  5. What are other sources of income?
    Sales of property-If you sold property such as stocks, bonds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Then you use Form 1099-B to complete Schedule D of Form 1040.

    • Other Income- Bartering is an exchange of property or services. You must include in your income, at the time received, the Fair Market Value of property or services you receive in bartering.
    • If you exchange services with another person and you both have agreed ahead of time as to the value of the services, that value will be accepted as fair market value value unless the value can be shown to be otherwise. Generallly, you report this income on Schedule C, Profit or Loss From Business, or Schedule C-EZ, Net Profit From Business (Form 1040).

    Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amouth in your income. You have no income from the canceled if it is intended as a gift to you. A debt includes any indebtedness for which you are liable or which attaches to property you hold. If a government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt.

    Examples of Other Income- Partnership Income, Accelerated Death Benefits, Itemized Deduction Recovery, State Tax Refund, Royalties, Unemployment Benefits, Alimony, Punitive Damages.
  6. What are the sources of adjustments to gross income?
    Individual Retirement Arrangements (IRAs)-the contributions you make to a qualified Traditional IRAs are deductible.

    Alimony-any alimony you pay is deductible

    Student Loan interests-any student loan interests you pay are deductible.

    Contributions to a Health Savings Account

    Moving Expenses

    Part of your SE Tax

    Self-Employed Health Insurance

    Payments to Self-Employed SEP, SIMPLE, and qualified plans

    Penalty on the early withdrawals of savings

    Contributions to an Archer MSA

    Reforestation expenses or amortization

    Expenses from the rental of personal property

    Certain required payments of supplemental unemployment benefits

    Foreign housing costs

    Jury duty pay given to your employer

    Attorney fees and certain costs for actions involving certain unlawful discrimination claims or awards to whistleblowers

    Domestic production activities deduction
  7. What is the Standard Deduction and how much is it for different filing statuses, handicaps and ages?
    Your standard deduction is zero and you should itemize any deductions you have if:

    1) You are married and filing a separate return, and your spouse itemizes deductions,

    2)You are filing a tax return for a short tax year because of a change in your annual accounting period, or

    3)You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident and resident alien during teh year.

    Higher Standard Deduction for Age (65 or Older)-If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. You are considered 65 on the day before your 65th birthday.

    Higher Standard Deduction for Blindness- If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction. You qualify for this benefit if you are totally or partially blind. If you are partly blind, you must get a certified statement from an eye doctor or registered optometrist that:

    • 1. you cannot see better than 20/200 in the better eye with glasses or contact lenses, or
    • 2. your field of vision is not more than 20 degrees.

    • Standard Deduction for Dependents-The standard deduction for an individual for whom an exemption can be claimed on another person's tax return is generally limited to the greater of:
    • 1. $900, or
    • 2.The individual's earned income for the year plus $300 (but not more than the regular standard deduction amount, generally $5,450).
    • However, if the individual is 65 or older or blind, the standard deduction may be higher.
  8. Who should itemize deductions?
    You should itemize deductions if your total deductions are more than the standard deduction amount. Also, you should itemize if you do not qualify for the standard deduction. You should first figure your itemized deductions and compare that amount to your standard deduction to make sure you are using the method that gives you the greater benefit. You may benefit from itemizing your deduction on Schedule A (Form 1040) if you:

    1) Do not qualify for the standard deduction, or the amount you can claim is limited.

    2) Had large uninsured medical and dental expenses during the year.

    3) Paid interests and taxes on your home

    4)Had large unreimbursed employee business expenses or other miscalleneous deductions,

    5)Had large uninsured casualty or theft losses

    6) Made large contributions to qualified charities, or

    7)Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.
  9. Which medical and dental expenses can you include?
    • Medical care means amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness.
    • Medical care expense include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical care expenses also include limited amounts paid for any qualified long-term care insurance contract.

    Medical expenses for a decedent that are paid from his or her estate are treated as paid at the time medical services were provided if they are paid within the 1-year period beginning with the day after the date of death. Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. This includes expenses for the decedent's spouse and dependents as well as for the decedent. You can deduct only the amont of your medical and dental expenses that is more than 7.5% of your adjusted gross income.
  10. Whose medical expenses can you include?
    You can include medical expenses you pay for yourself and for the individuals like your spouse and your dependents. You can include medical expenses you paid for your spouse. To claim these expenses, you must have been married either at the time your spouse received the medical service or at the time you paid the medical expenses.

    • You can include medical expenses you paid for your dependent. To claim these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. A person generally qualifies as your dependent for purposes of the medical expense deduction if:
    • 1. That person lived with you for the entire year as a member of your household or is related to you,
    • 2.That person was a U.S. citizen or resident, or a resident of Canada or Mexico, for some part of the calendar year in which your tax year began, and
    • 3. You provided over half of that person's total support for the calendar year.
  11. What Medical Expenses are Deductible?
    This is the list for medical expenses that are deductible:





    Artificial Limb

    Annual Physical Examination

    Artificial Teeth

    Autoette (wheelchair)


    Birth Control Pills

    Body Scan

    Braille Books and Magazines

    Breast Pumps and Supplies

    Breast Reconstruction Surgery

    Diagnostic Devices

    Disabled Dependent Care Expenses

    Drug Addiction

    Drugs (medicines)

    Eye Exams


    Eye Surgery

    Fertility Enhancement

    Guide Dog or Other Service Animal

    Health Institute

    Health Maintenance Organization (HMO)

    Hearing Aids

    Home Care

    Home Improvements

    Hospital Services

    Insurance Premiums

    Intellectually and Developmentally Disabled, Special Home for

    Laboratory Fees

    Lead-Based Paint Removal

    Learning Disability

    Legal Fees

    Lifetime Care


    Long-Term Care


    Medical Conferences


    Nursing Home

    Nursing Services



    Organ Donors



    Pregnancy Test Kit

    Psychiatric Care


Card Set
SEE Examination Outline Part 1 Individuals
Describes individual tax concepts