Part 1 - Individuals - Preliminary Work And Taxpayer Data

Every tax return includes information about the taxpayer, including biographical data, filing status and sources of deductions. This section of the exam covers the initial work and information gathering required for preparing individual tax returns. Topics include:

  • Use of prior years' returns for comparison, accuracy and carryovers for current year's return
  • Taxpayer data – date of birth, marital status and any dependents
  • Taxpayer citizenship and/or residency status, and Special requirements for nonresident aliens (Form 1040NR)
  • Taxpayer filing status – married filing jointly, married filling single, head or household, and widow
  • Sources of taxable and non-taxable income – business, dividends, interest, wages, rental, etc.
  • Sources of gross income adjustments – alimony, health insurance, health savings accounts, moving expenses, retirement plans, self employment tax, etc
  • Sources of credits – child care, education, energy, retirement, etc
  • Sources of deductions – itemized, standard
  • Sources of tax payments and refundable credits (earned income tax credit, estimated payments, withholding, etc.)
  • Previous IRS correspondence with taxpayer
  • Additional required returns filed and taxes paid – estimated, gifts, information returns
  • Special filing requirements – foreign income, disaster areas
  • Foreign report and asset reporting
  • Exemptions, including dependents
  • Dates for tax returns and extensions
  • Minor children's unearned income (Kiddy Tax)
Income And Assets
Related Articles
  1. Professionals

    Holding Out for Capital Gains Could Be a Mistake

    Holding stocks for the sole purpose of avoiding short-term capital gains taxes may be a mistake, especially if all the signs say get out.
  2. Professionals

    Advisors: Warn Clients About These Audit Triggers

    There are several factors that may increase the risk of an audit, especially with high-net-worth clients.
  3. Professionals

    3 States Where Taxes Can Hammer Retirees

    Knowing which states ding retirees with the highest tax implications should be part of your retirement research.
  4. Professionals

    Best Ways to Avoid RMD Tax Hits on IRAs

    If you want to avoid hefty tax penalties, read this cheat sheet on IRA required minimum distributions.
  5. Retirement

    Top Tips for Minimizing Taxes on Social Security

    Social Security benefits are taxable under certain circumstances. Here are some ways retirees can lessen the tax burden.
  6. Professionals

    How to Help Retirees Manage Taxes on Distributions

    There are many variables when it comes to helping retirees manage taxes on distributions. Here's what advisors need to consider.
  7. Taxes

    Employers: Don't Forget IRS Form 941

    Your obligations as an employer include various employment taxes. Use this form to report them.
  8. Entrepreneurship

    What's the Purpose of IRS Form 1065?

    Business partners need the information on this form to complete their own tax returns. Here are the details.
  9. Taxes

    What's IRS Form 2848 Used For?

    It's a power of attorney tax form and here's what it can, and cannot, do.
  10. Taxes

    20 Medical Expenses You Didn't Know You Could Deduct

    To lower your tax bill, be sure not to miss out on these commonly overlooked medical tax deductions.
RELATED TERMS
  1. Structured Transaction

    A series of transactions that could have been treated as a single ...
  2. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
  3. Working Tax Credit (WTC)

    A tax credit offered to low-income individuals working in the ...
  4. Proof of Charitable Contributions

    Substantiation required by the Internal Revenue Service for a ...
  5. Quid Pro Quo Contribution

    A charitable donation for which the donor receives something ...
  6. Readvanceable Mortgage

    A mortgage feature that allows the borrower to re-borrow the ...
RELATED FAQS
  1. What are the best free online calculators for calculating my taxable income?

    Free online calculators for determining your taxable income are located at Bankrate.com, TaxACT.com and Moneychimp.com. Determining ... Read Full Answer >>
  2. In what instances does overhead qualify for certain tax allowances?

    Businesses are just as keen as anyone else to keep their tax burdens low by any means possible. Overhead expenses often qualify ... Read Full Answer >>
  3. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>
  4. How are write-offs recorded on my tax return?

    The way your write-offs are recorded on your tax return varies depending on whether you are filing a personal or business ... Read Full Answer >>
  5. How is the deductible I paid for my insurance claim treated for tax purposes?

    The deductible you pay on your health insurance policy may be tax-deductible if you meet certain conditions. However, whether ... Read Full Answer >>
  6. What is the difference between comprehensive income and gross income?

    Comprehensive income and gross income are similar, but comprehensive income is a specific term used on a company's financial ... Read Full Answer >>
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!