Married Taxpayers Filing Status

As mentioned in a previous post, you will often find the determination of the filing status for married taxpayers to be straightforward.  However, there are some wrinkles that the exam might require you to know.

Whether a marriage is recognized is determined by state law in the state the marriage began.  If valid in the state where the marriage began, the marriage continues to be recognized for federal tax purposes even if the couple moves to another state,  Of course, the most common example of this is common-law marriages. 

Pursuant to the Defense of Marriage Act, for federal tax purposes, marriage is the legal union between a man and a woman.  Same sex couples whose union is recognized under state law, cannot file as married on the federal return.

Same as with recognition of the beginning of a marriage, state law is also determinative when considering when a marriage ends. For federal tax purposes, taxpayers for whom a decree of divorce, or a decree of separate maintenance has been issued, are no longer considered married.

An annulment requires the filing of amended returns to change filing status to an unmarried filing status from a married filing status.  In other words, as if a marriage never existed.  When amending returns for the filing status of married taxpayers, couples can change from married filing separate to married filing joint, but cannot change from married filing joint to married filing separate (unless done so before due date)

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IRS Seeks Input from Tax Preparers

In Notice 2011-48, the IRS announces that it will seek input from the tax preparers and others regarding the 1040 series competency exam that is scheduled to be released later this year.  This is a great opportunity for the those of us in the preparer community to influence the examination content and process.  Among the things that IRS is interested in receiving input are:

• The areas of tax law that should be covered by the examination;
• The approximate percentage of the examination that should be dedicated to each area of tax law identified above;
• The format of the examination (e.g., multiple choice, short-answer questions, written tax computations problems, or a combination thereof);
• The general difficulty and approximate length of the examination;
• The detail of examination result information reported to the applicant (e.g., pass/fail, numeric scores);
• The appropriate time-of-year/month to annually update the examination to reflect the most current law;
• The frequency that the examination should be administered (e.g., annually, semiannually, quarterly, monthly, weekly, or daily);
• The period of time that applicants, other than those individuals who obtain a preparer tax identification number prior to the examination being offered, should be required to wait before retaking the examination if the applicant does not pass;
• The administration of the examination in languages other than English and the other languages that should be considered;
• The elements of the special enrollment examination (content or test administration) for either enrolled agents or enrolled retirement plan agents that the competency examination should attempt to utilize or should not attempt to reproduce; and
• Any additional information that the IRS should consider when developing the content of, and the procedures for administering, the competency examination.

The IRS provides contact information that input can be submitted to.

This blog is published concurrently at our website: www.taxpreparerlearningsystems.com

IRS Has Published Final Regulations

In TD 9527, the IRS issued final regulations, effective on August 2, 2011, that make the designation Registered Tax Return Preparer (RTRP) official.  As you may have seen in other communications, to become a  RTRP, preparers must meet the following requirements:

1. Possess a current or otherwise valid PTIN.
2. Pass a minimum competency exam.
3. Pass suitability and tax compliance checks.
4. And to continue to hold the RTRP designation as time passes, meet continuing education requirements
1. Fifteen hours per year
2. Of which, three hours are federal tax update, and
3. Of which, two hours are tax ethics.

The IRS has also issued Notice 2011-45 that makes it clear that no one can hold themselves out as a "Registered Tax Return Preparer" at this time.  To call yourself an RTRP, you must first meet the above requirements.  Since the exam is not yet available, no one has yet met the requirements.

We expect the exam to be available in the near future, sometime this fall.