Essay on Aca Task 302.2.3-01-08

1674 Words Sep 30th, 2014 7 Pages
1. The most advantageous filing status for spouse A and spouse B to use is married filing jointly. 1. Spouse A and B may only choose from the married filing jointly or married filing separately statuses. Under married filing separately the spouses would start accruing taxes against their income sooner. For example under married filing separately a spouse would only be able to earn $8,925.00 of taxable income before they would be progressed to the next tier of the income tax bracket. Under married filing jointly the spouses could earn $17,850.00 of taxable income before they would be progressed to the next tax bracket. These figures were based on the IRS income tax guidelines for the year 2013. (Phillips Erb). They will qualify for 2 …show more content…
First guideline to meet is the relationship test. (i.e. parents, grandparents, aunt, uncle, some in law's, also non relatives can qualify as long as their living with the filer does not violate state law, and they also are not a spouse at any point during the filing year in question.) Once it is determined that an individual meets the qualifying relative guidelines then it must be determined if they meet the income guidelines. They must not have gross income more than the personal exemption amount for the calendar year. As long as the two previous guidelines are met then it is determined whether the filer provided more than ½ the support for the relative for the calendar year in question. 2. Taxable earnings are: Spouse A's income from the partnership and the part time soccer referee job is included. Spouse B's earned income from the job as a controller counts as taxable income. The quarterly dividend from company E also falls under the income heading on the 1040 form. The capital loss is also included under income. The interest from the municipal bond is considered tax exempt for federal standards. 3. Capital Gain – is the gain from the sale or exchange of a capital asset while capital loss is the loss from the sale or exchange of a capital asset. Spouse B's day trading resulted in a capital loss of $5000.00, of this only $3000 is able to offset the couples other income. The other 2000 is able…

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