Individual Income Tax  

Case Facts: 

Client, Kyrian Robertson, 29 years old, is a software Engineer and a taxpayer  in the United States with no dependents and is not married, want to file federal  income tax returns for 2022. Kyrian has earned a total income of $45,000 in  2022, has to contribute $2,000 for his retirement plan in his traditional IRA  (Individual Retirement Account), and has a pending student loan interest of  $1,000 for 2022. Client wants to determine the correct tax forms to file as an  individual taxpayer in the US. 

Queries / Requirements from the Clients: 

Query 1: Appropriate tax form Kyrian needs to file at the IRS?

My Opinion / Reply:  

Form 1040 US Individual Income Tax Return – This form is used by most taxpayers  to report their Income, Deductions and Credits. There are several variations of Form  1040 depending on taxpayers filing status i.e. Single, Married Filing Jointly,  Married Filing Separately, Head of Household, Income Level and other factors. For  example taxpayers with more complex tax situations may need to file Form 1040 along with Schedule A to itemize their deductions OR Form 1040 along with  Schedule C to report self employment income.

Query 2: Tax Form that should have been used if the Client was 65 and not 29  years?  

My Opinion / Reply:  

Form 1040 – SR – US tax Returns for Senior – This form is meant for people who  are 65 years and above in US. It is very similar to the standard Form 1040 but  designated to make tax filing process easier for seniors.

Query 3: Given Clients scenario what would be his appropriate filing status?

My Opinion / Reply: 

Form 1040 – X – Amended US Individual Income Tax Return – This form is used to  correct errors or make changes to previously filed tax returns like correcting filing  status, reporting additional income, claiming deductions / credits or changing number  of exemptions that have been claimed. This form is filed only after filing original tax  return.  

Query 5: Filing due date for Form 1040 and penalties for late filing?

My Opinion / Reply:  

Filing Due date (Non Extended Due Date): April 15th every year;  6-month extension (Extended Due Date) by filing Form 4868: October 15^th.  Penalties – This is summarized as under: 

Late filing: 5% p.m. of net tax liability  

 Late payment: 0.5% p.m. of net tax liability ; 5% p.m. max limit   Max penalty: 25% 

Query 6: Brief overview of five filing statuses?  

My Opinion / Reply: 

 Single: Unmarried OR Married but legally separated  

 Married filing jointly (MFJ) i.e. Married as of year end, OR spouse dies  during the year and surviving spouse does not remarry OR, Living apart  Married filing separately (MFS) i.e.

Each spouse filing separately  Head of Household (HOH):

•  Rule 1: Unmarried/Married but separated > 6 months 
• Rule 2:Dependent lives at taxpayer’s home for half year and taxpayer  provides > 50% of cost of household. Dependent can be child, parent or  relative. 

 Qualifying Surviving Spouse (QSS):

• Rule 1: Up to 2 years after death of spouse, not remarried
• Rule 2: Dependent Child (Own child, Stepchild, Adopted child) lives at  taxpayer’s home for whole year and taxpayer provides > 50% of cost of  household 

Query 7: What would be the filing status for the Client, if his marital status  changes from Single to Married as at December 31, 2022? 

My Opinion / Reply: 

His options would be one of the two stated as under:  

 Married filing jointly (MFJ) i.e. Married as of year end, OR spouse dies  during the year and surviving spouse does not remarry OR, Living apart  Married filing separately (MFS) i.e. Each spouse filing separately 

Query 8: Client had paid taxes 27 months ago but did not file a return and  now he wants to claim a refund of Federal Income Tax that was paid at that  time. Client seeks to know how and when claim for refund can be filed?  

My Opinion / Reply:  

According to Publication # 556 of September, 2013, Form 843 can be used  by Taxpayers to claim a refund (or abatement) of certain overpaid (or over assessed) taxes, interest, penalties, and additions to tax. 

Section 6511(a) of IRC cites as following: 

• The latest date, by law, you can claim a credit or federal income tax refund for  a specific tax year is generally the later of these 2 dates: 
  • 3 years from the date you filed your federal income tax return, OR
  • 2 years from the date you paid the tax.

This time period is called the Refund Statute Expiration Date (RSED).  Here Client did not file the return and paid taxes 27 months ago, the time limit  to file for refunds for him is 2 years from the date of tax payment. Therefore  Client can’t file for a refund.  As per IRC Section 6511(b)(1), no credit or refund shall be allowed or made  after the expiration of the period of limitation prescribed in Section 6511(a) for  the filing of a claim for refund, unless a claim is filed within such period. 

However, deadlines for claiming a refund can be extended if:

•  Agreement with the IRS in writing to extend the time limit to assess  tax: The time limit is specified in your agreement, plus 6 months, to  claim a credit or refund. There may be additional limits on the amount of  credit or refund you can claim based on any limitations on the IRS’s  ability to assess tax, as shown in the written terms of your signed  agreement,  
• Are affected by a Presidentially declared disaster: You may have up to  1 more year to claim a credit or refund,  
• Serving in a designated combat zone or contingency operation: You  may have additional time to file a claim for a credit or refund, but you  must meet certain requirements to qualify,  
• File because of a bad debt deduction or a worthless security loss: You have 7 years from the return due date from that year to file the  claim.