• 1040
• 1040A
• 1040EZ

• File extension form is 4868
• Could get up to a 6 month extension
• Interest will accrue until you pay
• You could face penalties; late payment penalty or a late filing penalty 

Tax Formula

Income broadly conceived

-Exclusions

=Gross income 

-Deductions For AGI

=AGI

- > of Total Itemized deductions or Standard Deduction

- Personal and Dependency Exemption

=Taxable Income

• Cash Method- includes in gross income when actually or constructively received
• expenses are deductible only when they are actually paid with cash or other property 
• Accural Method- include an item in gross income when the amount is earned and the amount is reasonably determinable 
• deductions of expenses is determined by applying the all events test and the economic performance test

Determination of Tax Filing Status

• Single Taxpayers
• Married Individuals
• Surviving Spouse
• Head of Household
• Abandoned Spouse

• Martial status is determined as of the last day of the tax year, except when a spouse dies

Married Individuals

• It is generally advantageous for married individuals to file a joint return, because the combined amount of tax is lower.

• Applies for two years following the death of one spouse, if the surviving spouse maintains a household for a dependent child

• Must pay more than half the cost of maintaining a household as his or her home
• Must be the principal home of a dependent, except for temporary absences (school, hospital stay)
• Dependent must live in the taxpayer's household for over half of the year
• Dependent must be either a qualifying child or a qualifying relative who meets the relationship test

• Allow a married taxpayer to file as not married, and thus, either single or HOH, if all conditions are met:
• Taxpayer does not file jointly
• Paid more than 1/2 the cost of maintaining the home
• Spouse did not live in the home during the last six months of tax year
• Principal residence of the taxpayer's son, daughter, etc. for more than half the year, and the child can be claimed as a dependent

• Tax return is required for every individual who has gross income that equals or exceeds the sum of the exemption amount plus the standard deduction

Investment/Expected Return  X   Annuity Payment   

= Exclusion Amount

1/2 S.S. Rec'd

+MAGI

= Balance 

- Base Amount

= Excess

• If you have an excess, you include in Gross Income, the lesser of:
• 1/2 the S.S. Benefits Rec'd 
• 1/2 the Excess

• Dependency exemption is available for either a qualifying child or a qualifying relative and must meet:
• Relationship Test- child, brother, sister or descendant of child (grandchild, nephew)
• Adobe Test- must live with for more than half of the year
• Age Test- must be under 19 or under 24 and a full time student. Does not apply to a child who is disabled during any part of the year
• Support Test- provide more than 1/2 of the support 

• Relationship Test- more expansive than qualifying child, includes
• Parents or Grandparents
• Uncles and Aunts
• Certain in-laws
• Gross income test- must be less than the exemption amount
• Support Test- over 1/2 of the support of the qualifying relative

Exclusions 

• The government chose to exclude certain types of income from the tax basis
• Life insurance paid upon death
• Gifts
• Child Support
• Workers Comp
• Scholarship Grants
• Welfare
• Veterans benefits
• Unemployment

• Form of pay for the performance of services
• Health insurance
• 401k 
• Retirement plan
• Paid Vacation days
• Paid sick days
• Continuing education

• The meals and/or lodging are furnished by the employer on the employer's business premises for the convenience of the employer
• In the case of lodging, the employee is required to accept the lodging as a condition of employment.

Qualified employee discounts with regard to products and services

• The employee is allowed to purchase the employer's merchandise at a price that is not less than the employer's cost. 
• Allowed for current, retired and disabled employees
• No exclusion for highly compensated employees

Services: 

• The employee is allowed a discount (maximum of 20%) on services the employer offers to customers.

• The service will be nontaxable if all of the following conditions are satisfied:
• The employee receives services, as opposed to property.
• The employer does not incur substantial additional cost, including forgone revenue, in providing the services to the employee.
• The services are offered to customers in the ordinary course of the business in which the employee works.

• Life insurance proceeds paid to the beneficiary because of the death of the insured are exempt from income tax. 
• Under the accelerated death benefits provisions, exclusion treatment is available for insured taxpayers who are either terminally ill or chronically ill. 
• Terminally ill- doctors reasonably expect to cause death within 24 months

• Rules intended to provide exclusion treatment for education related benefits that cant qualify as gifts or compensation
• Tuition and Related expense
• Fees
• Books
• Supplies
• Room and Board are NOT excludible and treated as earned income

Prizes

• The fair market value of prizes and awards must be included in gross income

Personal Medical Expense

Dependent daughter's medical expense

For AGI

Real estate taxes on rental property

Real estate taxes on daughters personal residence

Interest on daughters personal residence mortgage

Charitable contributions

Depreciation on rental property

• Expenses paid or incurred to determine the feasibility of entering a new business or expanding an existing business. Depends on a number of variables
• Current business if any 
• Nature of the business
• Extent of the investigation
• Whether the acquisition actually takes place
• if the business is the same or similar, all expenses are deductible.
• if the business is different, the tax result depends if the business is acquired. 
• If you do not acquire the business, all expenses are nondeductible.
• If you do acquire the business, deduct up to 5,000 and amortize the rest over 180 months.