Dual status alien - ANS-An alien who is both a nonresident and resident alien during the
same tax year. The most common dual-status tax years are the years of arrival and
departure.
Resident Alien - ANS-If either the green card test or the substantial presence test is
met. Even if the taxpayer does not meet either of these tests, (s)he may be able to
choose to be treated as a U.S. resident for part of the year.
Green Card Test - ANS-A taxpayer is a resident for tax purposes if (s)he was a lawful
permanent resident (immigrant) of the United States at any time during the year
Substantial presence Test - ANS-A taxpayer is considered a U.S. resident if she/he was
physically present in the US for at least (1) 31 days during 2018 and 183 days during
2018, 2017, and 2016, counting all days of physical presence in 2018 but only 1/3 of
days in 2017, and 1/6 of days in 2016
Provisional Income threshholds for exclusion of SS Benefits from Income - ANS-MFJ --
32,000 to 44,000
All Others-- 25,000 to 34,000
MFSLT -- 0
What is excluded from gross income in the case of insurance proceeds? -
ANS-Disability pay (excluded)
Accident insurance proceeds. sub for lost income (excluded)
Damages for emotional distress (included if no physical injury)
Punitive damages (included)
Gross income does not include benefits specified that might be received in the form of
disability pay, health or accident insurance proceeds (even if benefits are a substitute
for lost income), workers' compensation awards, or other damages for personal physical
injury or physical sickness. Also excluded are damages received for emotional distress
if an injury has its origin in a physical injury or physical sickness (regardless of whether
the damages are received by a lawsuit or an agreement). Punitive damages received
are included in gross income even if in connection with a physical injury or sickness
Is unemployment compensation included in gross income? - ANS-Yes
Is disability pay included in gross income? - ANS-No
, Are punitive damages included in gross income? - ANS-Yes (unless you received a
physical injury in connection with the punitive damages)
Are benefits from a health and accident plan included in gross income if paid by
employer? - ANS-No (if you received a physical injury in connection with the benefits)
is compensation for lost wages included in gross income? - ANS-No, as long as the
income was given because of physical injury or illness
is compensation due to punitive damages included in gross income? - ANS-No, as long
as the income was given because of physical injury or illness
In December 2018, Jim and Tina, a married couple with $50,000 in gross income,
cashed qualified Series EE U.S. Savings Bonds, which they had purchased in January
2015. The proceeds were used to help pay for their son's 2018 college tuition. They
received gross proceeds of $3,500, representing principal of $3,000 and interest of
$500. The qualified higher educational expenses they paid during 2018 totaled $2,100.
Their modified adjusted gross income for 2018 was $80,000. How much of the $500
interest can Jim and Tina exclude from income for 2018? - ANS-$300. Interest is
excluded as long as the gross amount received (principal and interest) do not exceed
qualified educational expenses. If they do exceed that amount, the amount excluded is
limited to the percentage. 2100/3500 = .6 *500 = 300. The exclusion is reduced when
AGI exceeds a threshold of $79,550 (single) or $119,300 (MFJ). completely phased out
at $94,550 and $149,300
What factors determine tax home? - ANS-1. The taxpayer performs his or her business
in the area surrounding his/her main home and uses that for lodging while in the area.
2. The taxpayer has living expenses at his or her main home that are duplicated
because business requires him/her to be away from the main home.
3. The taxpayer has not abandoned the area in which both his/her traditional place of
lodging and man home; family members live at his/her main home. She often uses this
main home for lodging.
Under what circumstance is a day NOT considered a day of personal use of a dwelling
unit for determining if it is used as a home? - ANS-If the taxpayer rents the home at fair
rental value to any person (including relatives), such use by that person is not
considered personal use of the home
When are meals deductible? - ANS-50% of meals are deductible if eaten while away
from home on business or with a client or business associate.
same tax year. The most common dual-status tax years are the years of arrival and
departure.
Resident Alien - ANS-If either the green card test or the substantial presence test is
met. Even if the taxpayer does not meet either of these tests, (s)he may be able to
choose to be treated as a U.S. resident for part of the year.
Green Card Test - ANS-A taxpayer is a resident for tax purposes if (s)he was a lawful
permanent resident (immigrant) of the United States at any time during the year
Substantial presence Test - ANS-A taxpayer is considered a U.S. resident if she/he was
physically present in the US for at least (1) 31 days during 2018 and 183 days during
2018, 2017, and 2016, counting all days of physical presence in 2018 but only 1/3 of
days in 2017, and 1/6 of days in 2016
Provisional Income threshholds for exclusion of SS Benefits from Income - ANS-MFJ --
32,000 to 44,000
All Others-- 25,000 to 34,000
MFSLT -- 0
What is excluded from gross income in the case of insurance proceeds? -
ANS-Disability pay (excluded)
Accident insurance proceeds. sub for lost income (excluded)
Damages for emotional distress (included if no physical injury)
Punitive damages (included)
Gross income does not include benefits specified that might be received in the form of
disability pay, health or accident insurance proceeds (even if benefits are a substitute
for lost income), workers' compensation awards, or other damages for personal physical
injury or physical sickness. Also excluded are damages received for emotional distress
if an injury has its origin in a physical injury or physical sickness (regardless of whether
the damages are received by a lawsuit or an agreement). Punitive damages received
are included in gross income even if in connection with a physical injury or sickness
Is unemployment compensation included in gross income? - ANS-Yes
Is disability pay included in gross income? - ANS-No
, Are punitive damages included in gross income? - ANS-Yes (unless you received a
physical injury in connection with the punitive damages)
Are benefits from a health and accident plan included in gross income if paid by
employer? - ANS-No (if you received a physical injury in connection with the benefits)
is compensation for lost wages included in gross income? - ANS-No, as long as the
income was given because of physical injury or illness
is compensation due to punitive damages included in gross income? - ANS-No, as long
as the income was given because of physical injury or illness
In December 2018, Jim and Tina, a married couple with $50,000 in gross income,
cashed qualified Series EE U.S. Savings Bonds, which they had purchased in January
2015. The proceeds were used to help pay for their son's 2018 college tuition. They
received gross proceeds of $3,500, representing principal of $3,000 and interest of
$500. The qualified higher educational expenses they paid during 2018 totaled $2,100.
Their modified adjusted gross income for 2018 was $80,000. How much of the $500
interest can Jim and Tina exclude from income for 2018? - ANS-$300. Interest is
excluded as long as the gross amount received (principal and interest) do not exceed
qualified educational expenses. If they do exceed that amount, the amount excluded is
limited to the percentage. 2100/3500 = .6 *500 = 300. The exclusion is reduced when
AGI exceeds a threshold of $79,550 (single) or $119,300 (MFJ). completely phased out
at $94,550 and $149,300
What factors determine tax home? - ANS-1. The taxpayer performs his or her business
in the area surrounding his/her main home and uses that for lodging while in the area.
2. The taxpayer has living expenses at his or her main home that are duplicated
because business requires him/her to be away from the main home.
3. The taxpayer has not abandoned the area in which both his/her traditional place of
lodging and man home; family members live at his/her main home. She often uses this
main home for lodging.
Under what circumstance is a day NOT considered a day of personal use of a dwelling
unit for determining if it is used as a home? - ANS-If the taxpayer rents the home at fair
rental value to any person (including relatives), such use by that person is not
considered personal use of the home
When are meals deductible? - ANS-50% of meals are deductible if eaten while away
from home on business or with a client or business associate.
