CYCLE!!!!
Dual status alien - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER 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 -
ANSWER 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? -
ANSWER Disability pay (excluded)
Accident insurance proceeds. sub for lost income (excluded)
Damages for emotional distress (included if no physical injury)
Punitive damages (included)
1
, 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? - ANSWER Yes
Is disability pay included in gross income? - ANSWER No
Are punitive damages included in gross income? - ANSWER 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? -
ANSWER No (if you received a physical injury in connection with the benefits)
is compensation for lost wages included in gross income? - ANSWER No, as long as the
income was given because of physical injury or illness
is compensation due to punitive damages included in gross income? - ANSWER 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? - ANSWER $300. Interest is excluded as long as the
gross amount received (principal and interest) do not exceed qualified educational expenses.
2
Dual status alien - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER 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 -
ANSWER 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? -
ANSWER Disability pay (excluded)
Accident insurance proceeds. sub for lost income (excluded)
Damages for emotional distress (included if no physical injury)
Punitive damages (included)
1
, 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? - ANSWER Yes
Is disability pay included in gross income? - ANSWER No
Are punitive damages included in gross income? - ANSWER 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? -
ANSWER No (if you received a physical injury in connection with the benefits)
is compensation for lost wages included in gross income? - ANSWER No, as long as the
income was given because of physical injury or illness
is compensation due to punitive damages included in gross income? - ANSWER 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? - ANSWER $300. Interest is excluded as long as the
gross amount received (principal and interest) do not exceed qualified educational expenses.
2
