 Hello, and welcome to this session in which we would look at the filing requirement of taxpayers. This topic is covered both on the CPA exam and in your accounting courses. If you're studying for your CPA exam, I do not replace your Becker, Roger, Glyme, Wiley, or any other course you are taking. I can be a supplement. I can add knowledge. I can add understanding to whether the other courses are teaching you. Think of it as a supplement or a vitamin to your course. That's how I would like you to look at it. So it will be a useful addition where you can add, in my opinion, 10 to 15 points to your CPA exam. Please visit my website. If not for anything is to check out how well your university on average doing on the CPA exam. Also, I do have plenty of accounting finance tax courses. Please connect with me on LinkedIn if you haven't done so and check out what other users say about my lectures on LinkedIn. Also, like my lectures, please like them, share them. If they benefit you, it means they might benefit other connect with me on Instagram and Facebook. So here's the table that you need to know. Now there's a lot of numbers on this table. Are you expected to memorize it? No. What should you do then? So I'm going to try to explain this table for you step by step. And once you understand the concept, then you'll be able to answer CPA questions as well as exam questions. For one thing, this is for year 2020. So if you're listening to this recording in year 2022, those numbers will change, but the concept should not change at least until 2025. Well, at least until then, until we find out if Biden, if he's going to become a president, if he's going to change the laws, what's going to happen, so on and so forth. So I just want to make sure we keep that in mind. So if you are single, do you have to file? Well, the rule is you don't have to file if you're, if you don't make more than your standard deduction. That's the general rule, 12,400. Why? Because if you make less than your standard deduction, basically the standard deduction will wipe out your income. Therefore, you don't have to worry as long as your income is less than 1200, as that makes sense. Why it's 1200? It's not that 1200 matters is remember it's your standard deduction. So that standard deduction could change. If you are single 65 or older, well, guess what? If you're single 65 or older, you're going to get your standard deduction plus an additional deduction of 1650. Therefore, it's 14,050. Just know it's the standard deduction plus an additional deduction for your age. If you are married filing jointly, well, again, if you're married filing jointly up to your standard deduction, you should be good, which is 24,800. If you are married and one spouse is 65 or older, you're going to get an additional 1300. This will make your threshold 26,100. If you are married and both spouse are 65 or older, now you add 2600 to the standard deduction and your threshold for filing becomes 27,400. Well, this is an easy one. What happened if you're married filing separately? As long as you have any income, you have to file even $5. Okay, gross income of $5, you have to file. How about that? Okay. So this is easy to remember. Head of a household, the standard deduction is 18,650 in 2020, and that's your threshold. As long as your head of a household and your income is less than that, your gross income is less than that, then you should be good. You don't have to file if you don't want to. Now, when I say if you don't have to file, but you should file if your employer would help any money from you because you want to get that money back because up to 18,650, you're basically not responsible for any taxes. Therefore, if you work somewhere and you earn some money and the employer took money away, deducted money, then you want that money back. Or if you qualify for the earned income tax credit, you want to get that as well. We'll talk about that later on. Head of a household and you're 65 or older. Again, you'll have an additional deduction of 1650, which increase your threshold. Surviving spouse with a dependent child, very similar to merit filing jointly. Notice 24,800. Well, it's the standard deduction. Again, don't worry about the numbers themselves. Just think of it this way. If I'm less than my standard deduction, I am not required to file. Should I file? Yeah, why not file, especially if you can get a refund. Okay, so don't worry about the numbers. Again, surviving spouse with a dependent child, with a dependent child 65 or older, you'll have an additional standard deduction. Now, as far as the CPA exam is concerned, just you want to know, kind of have make sure you know the big picture, make sure you know the big picture. And I'm pretty sure, let's not, let's not say pretty sure I'm confident that if they ask you for numbers, they'll provide you those numbers within the problem. Like in other words, they will let you know what's the additional, what's the standard deduction, what's the additional deduction for 65 or older, then, you know, you'll have to answer that question. But generally speaking, just know the overall idea, if you are self employed, well, if you are self employed, your net self employment, if it's more than 400 or more. So if you're net, remember the net, not the gross, then you have to file. Also, you have to file if you are subject to the kitty tax, and you will see a separate recording about the kitty tax. If you are getting the earned income tax credit, you should file to get that. What about if you are a dependent? Well, what's a dependent? It's when you are a claim on someone else's return and you have a gross income more than the standard deduction of a dependent. Now, what is the standard deduction of a dependent? Well, let's think about a dependent that's single and that dependent is not 65 years or older and they're not blind to their single and they're not over 65, not blind. Well, if you're, when do you have, when do you have to file? Okay, you must file if any of the following situation apply, if you're unearned income, if that dependent dependent has unearned income. Now, what is unearned income? Maybe you know what's unearned income. Maybe not its interest income dividend. And you have to know unearned and unearned and earned income and capital gain. If you have any of those and the income from this from these unearned income sources more than 1100, then you have to file. Then you have to file. If your earned income was no more than 12200. Notice here it's earned, earned, earned means you work for it. What's earned income? Wages, think of it wages. If it's more than 12200, then you have to file or your gross income and here what we mean by gross income unearned plus earned. So you have both. So what's your standard deduction then? The standard deduction is the greater of 1100 or your earned income up to 11800 plus 350. You compare so you're so so you compare those two. OK, you must file if any of the following apply if your gross income was larger than either this number or earned income plus earned income up to 11500 plus 350 which will make it 12200. Now, if you are over 65 online, you're going to have additional deduction. You could look at the numbers here. The key to remember is the key point is what do you need to know about filing requirement, make sure the overall idea, especially for the CPA exam. Well, if I don't have income more than my standard deduction, I should be good to go. I don't have to file. Basically, this is what you have to remember. OK, remember this. This is the this is the big idea and it all revolves around the standard deduction. Plus, you might have additional deduction if you are 65 or older. OK, so that's the idea. Remember, self-employed net employment income, 400 or more subject to the kitty tax and the dependent. How much you need to know? Just make sure you know the gist of it, the overall idea as well. Now, as always, I'm going to remind you at the end of the this recording to like it. Once again, if you are studying for the CPA exam, I'm going to invite you to visit my website, farhatlectures.com. Basically, here's what I'm here's what I'm offering you. You are risking $30 to do what to check out a supplemental tool that's going to help you substantially pass your CPA exam. Are you willing to pay $30 to check it out? So what's your maximum loss? $30. What's the gain passing the CPA exam? Are you willing to take that chance? Good luck, study hard and most importantly, stay safe.