Review of Filing Requirements Shows IRS Enrolled Agents How to Help Entire Family

February 23, 2012 by  Filed under: Taxes 

Reaching a high level of expertise in the tax industry as an enrolled agent prepares you to render solutions for many tax situations. Often the matter entails identifying the optimal tax filing arrangement for a family. The knowledge derived from studying all those sample enrolled agent exam questions is especially useful with modern family arrangements.

A variety of tax filing considerations are required for households with several generations. Single grandparents can claim Head of Household filing status due to grandchildren in their homes – even when parents of the children are also present. Alternatively, a better result may occur if a parent claims her child as a dependent although a grandparent is also present and must file a tax return.

Children from various marriages in the same residence present other factors to consider. Several considerations covered during enrolled agent training impact whether a child is eligible as a dependency exemption. Additional complications arise when the youngest person in a household is required to file a tax return, regardless of dependent status. All of the scenarios are addressed in EA study materials in order to evaluate every potential case.

Tax filing requirements are based upon a person’s age, amount of income and even the type of income. An individual may need to file a return despite someone else claiming him for a dependency exemption. Investment income can trigger a filing requirement even when a dependent child has no earnings from working. Also, only $400 of self-employment income necessitates filing a tax return and payment of self-employment tax even when no regular income tax liability arises.

Conditions where filing of tax returns is advisable but not required are particularly important for IRS enrolled agents to notice. The most important cases to consider for filing tax returns are those where refundable tax credits are applicable. Some examples are people who can file returns in order to qualify for the Earned Income Tax Credit, the American Opportunity Credit, the Additional Child Tax Credit, and the Adoption Credit.

Consequently, alert enrolled agents find ways to help an entire family maximize legally entitled tax advantages. For instance, a parent can claim the Earned Income Tax Credit using a qualifying child who someone else claims as a dependent. Stepchildren and younger siblings are included in these determinations.

Enrolled agents should remember a very important factor when preparing a tax return solely to obtain a refund or refundable credit. These tax filers do not lose status as qualifying persons for beneficial tax treatment by other taxpayers. For example, a married individual filing a joint tax return with a spouse just to obtain a refund is still a possible dependent of a parent.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Fast Forward Academy is a leading publisher of education for enrolled agent and tax professionals. Access to free questions for the enrolled agent exam questions is available on their website.

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