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REG CPA Practice Questions: The Tax-Payer Filing Statuses
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May 3, 2024
In this video, we walk through 5 REG CPA exam practice questions going over the different tax-payer filing statuses. Important Links Link to the free study training webinar mentioned in the video: https://www.superfastcpa.com/strategic-study See the full post for this video: https://www.superfastcpa.com/reg-cpa-practice-questions-explained-the-tax-payer-filing-statuses/ See the other REG walkthrough videos here: https://www.superfastcpa.com/free-reg-cpa-practice-question-walkthroughs/ 00:00 Intro 00:52 Question 1: Married Filing Jointly 02:19 Question 2: Married Filing Separately 03:44 Question 3: Head of Household 05:45 Question 4: Qualifying Widow(er) 07:51 Question 5: Single 09:22 Pillar Topics
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Welcome to another reg walkthrough video. I'm Logan, and in today's video, we're going to be
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recalling taxpayer filing statuses, or basically what the different filing statuses are available
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to different taxpayers. And we're going to be doing that, the Superfast CPA way, which is
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diving straight into questions. If you don't know much about our strategies, and if you want to learn
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more, make sure you go to superfastcpa.com and check out our free one-hour webinar training
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where we go over the six key ingredients to passing the CPA exam. Again, it's only one hour long
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it's free and it will save you a ton of time with your studying. The link to that will be in the
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description. Also, if you like the idea of using questions as your main learning material
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be sure to check out our Superfast CPA app where we not only have succinct review notes and
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audio notes, but we also have five question mini quizzes that you can access on your phone
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easily throughout the day to continually be studying on the go. With that said, let's dive straight
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into the questions. Okay, here's the first question. Jacob and Olivia, who got married on December 15th
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year one are preparing their taxes for the same year. They are evaluating what status to choose for
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year. Which of the following is their filing status for the year? So would they be single
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married filing separately, married filing jointly, or surviving spouse? You probably would know
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they're not going to be surviving spouse, but would they still count as single since it was at the
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end of the year? Would they be married but filing separately because again it was at the end of the year
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or should they probably pick married filing jointly? Let's go ahead and read the answer to see how this works
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so they would choose married filing jointly. To be eligible for married filing jointly, status on a tax return
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a couple must be legally married by the end of the tax year, which is December 31st
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They must both agree to file together and sign a single return that includes all of their combined income
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deductions, and credits. This status is available to U.S. citizens, residents, or nationals
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and non-resident aliens may opt to be treated as residents to file it jointly
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So there's a possibility that you can do that, but typically for U.S. citizens. filing jointly can offer benefits like a higher standard deduction and lower tax brackets
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but it also means both spouses are equally responsible for the tax liability and any penalties
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or interest incurred. So this is one of the most basic filing statuses, married filing jointly
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If you're married before the end of the year and you're still together and you're not
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separated or anything like that, then you would pick married filing jointly. Let's go ahead and go to the next question to learn about another filing status
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Okay, here's question two. Jacob and Emma, so different Jacob, are legally separated as of the end of the tax year
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but their divorce has not been finalized. They have been living apart for the last six months of the year and have no dependent children
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They both have taxable income. Given their circumstances and the desire to file their taxes in a way that reflects their current legal situation
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which filing status is most appropriate for them So they are still married they not divorced but they living apart and they are legally separated So what does that mean for their filing status Let go ahead and look at the answer So they would be married filing separately If Jacob and Demma are
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legally separated and living apart, they may choose married filing separately as their filing status
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This status is appropriate for married couples who are living apart and want to keep their tax
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liabilities separate. Furthermore, if they live in a state that recognizes their legal separation
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and they are responsible for their own finances, they may be considered unmarried for tax purposes
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but this does not allow them to file a single unless specific IRS criteria are met. By the way
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married filing separately, one of if not the most unfavorable filing status. But essentially
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it's for people who are still married, they're not legally divorced, but they don't live together
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anymore. There are some situations where you can file separately, even if you're still together and not
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divorced, not legally separated, but those situations are few, so most of the time, if you can, you want to do
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married filing jointly. With that said, let's go ahead and go to the next question. Okay, here's
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question three. Ava has been living apart from her spouse since June of the previous year
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and they are in the process of obtaining a divorce. She has a daughter who lives with her
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and for whom she provides more than half of the support. Ava earns full-time salary and has no significant investment income. She has not signed any form of joint tax
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return with her estranged spouse for the current tax year. Considering her circumstances, which filing
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status could Ava potentially qualify for that would provide her with a lower tax rate and a higher
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standard deduction than her current filing status. So basically, what filing status can she take
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with a spouse who hasn't been with her for multiple months, but she's still taking care of her child
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Let's go ahead and go into the answer to learn about this filing status. So this would be a situation
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where head of household would be the best filing status, and let's learn why
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Ava may qualify for head of household status because she has lived apart from her spouse
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for the last six months of the year. Her daughter lives with her more than half of the year
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and she provides more than half of the keeping up a house for her dependent daughter
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This status provides a lower tax rate and a higher standard deduction than filing as single
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or married filing separately. The head of household filing status offers taxpayers
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higher standard deductions and lower tax rates compared to filing as single
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To qualify, a taxpayer must be unmarried or considered unmarried at the year's end
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having paid for more than half the household expenses for the year, and having a qualifying person like a child or certain other relatives live with them for more than half of the year
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So essentially, for a head of household, you have to either be unmarried or at least have been apart from your spouse for six months
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but you're still providing for yourself and your family and you have dependents who depend on you
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For dependent parents they don necessarily need to live with the taxpayer as long as the taxpayer maintains their primary residence This status is designed to benefit single parents and caregivers by recognizing the financial
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burden of maintaining a household and supporting dependents. Okay, so far, we've learned about married filing jointly, married filing separately, and head
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of household. Let's go ahead and go to the next question. Okay, here's question four
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Liam's spouse passed away in year one, and he has remained unmarried
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In year three, he still has a dependent child living at home who he supports fully
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Liam has been working full-time and has no other dependents. Considering the tax benefits and his current family situation
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which filing status could Liam qualify for in year three that allows him to retain the benefits of a married filing jointly status
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So in this situation, can he still qualify for married filing jointly? Is he single? Is he head of household
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Or is he a qualifying widower? This is year three, so it's been a couple years
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So how does that work? Let's go ahead and dive into the answer to see how this works
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Okay, so he would be considered a qualifying widower with dependent child
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So let's learn about that. Liam make file as a qualifying widower with dependent child if he has a child who qualifies
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as his dependent. He has not remarried and it is within two years of his spouse's death
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The qualifying widow or a widower with dependent child status allows a surviving spouse to
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use the married filing jointly tax rates for two years following their spouse's death
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provided they haven't remarried and they have a dependent child. This child must live with the taxpayer all year, excluding temporary absences
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and the taxpayer must provide more than half of the cost of maintaining the home
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This status requires that the taxpayer could have filed jointly with the deceased spouse in the year of death
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offering benefits like a higher standard deduction and lower tax rates, easing financial pressures during this period
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After two years, the taxpayer may qualify for head of household if they meet the specific criteria that we went over before
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qualifying widower, basically, in the year of death of the spouse, as long as you were still
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married filing jointly type thing, you can use married filing jointly in the year of death
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and then for the next two years, then you would use qualifying widower with a child dependent
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and that gives you the same or very similar benefits of married filing jointly for those two years
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as long as you haven't remarried and you still have a dependent child. And then after that, they may qualify for the head of household, but for those first two years
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after the death, it's qualifying widower. So let's go ahead and go to the last question
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Okay, here's question five. Samantha, who has never been married, provided financial support to her
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elderly aunt, who moved into Samantha's apartment in February due to health issues
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Samantha paid for 40% of her aunt's living expenses and medical care. Her aunt received
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Social Security benefits that covered 60 of her own support Samantha is also a full employee and she rents her apartment Given these circumstances which filing status is most appropriate for Samantha Okay so at this point
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we've learned a lot about the other statuses. I bet you could figure out what status Samantha has
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even though this question has a little bit of complexity to it. So go ahead and pause the video
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think about it, and when you're ready, come back and we will look at the answer for this last question
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Okay, so Samantha would file as single. Samantha should file a single because she has never been married
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and does not meet the specific requirements for any other status. Despite supporting her aunt, the aunt does not qualify as a dependent
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because she did not rely on Samantha for more than half of her support, which is a key criterion for filing as head of household
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So even though Samantha did provide a lot for her aunt and her aunt lives with her
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she didn't provide more than half of her support, so she doesn't qualify as a qualifying relative dependent
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and so Samantha still has to file as single. With that said, in another video
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we are going to look at dependent status and how that's figured out
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but specifically for this video, we were just talking about the filing statuses
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And with that said, let's finish the video by doing one more part of the Superfast CPA strategy
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which is something called pillar topics. Now, pillar topics is as you're going through questions and after you've gone through the questions
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to learn the material, you will have noticed multiple topics that were obviously important
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and that you needed to learn based off of your review course. These are the things that you saw multiple times throughout the questions, and you know that you need to know this for the CPA exam
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So let's go ahead and look at the pillar topics for this video. Okay, and here are the pillar topics, basically just the different filing statuses listed out
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Married filing jointly, you have to be legally married as of the last day of the year and not legally separated
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That's the gist of it. Married filing separately must be legally separated but not divorced as of the last day of the year
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Head of household, unmarried, or qualifying as unmarried, such as being separate
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for more than six months, pay more than half of living expenses, and also pay for more than half
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of the living expenses of a dependent. And then finally, qualifying widower can be taken the two years
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after the death of a spouse, and it's basically the same as married filing jointly, but you can't
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have remarried and must still have a dependent child or children. And obviously there's also
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single, but that's what's left over. That's what's used if you're not any of these filing statuses
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And with that said, that's the end of the video. Make sure you go to superfastcpa.com and check out our free one-hour training webinar
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Again, it's free. It's going to help you a lot, so make sure you check it out. Also, be sure to check out our Superfast CPA app where we have five-question mini-quises
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so you can continually be practicing questions all throughout your day so you're ready for the exam when it comes
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If you liked this video, make sure to like it and leave a comment. I hope this was helpful. I'll see you in the next video
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