🎯Filing requirements and status T/F

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Yinghong Jin 11 December 2023

Question 6: The question statement didn’t mention ” provided he meets other requirements too” like in the answer. If this legally separated individual doesn’t have a qualifying person who lives with him for more than half the year, then he may not use the HOH status. Therefore, I would choose “False” instead of “True”.

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1. Maroun, CPA 30 January 2024
  
  Hello Yinghong,
  
  Let’s take a closer look at the statement: ‘A legally separated individual, who has lived apart from his spouse for the last 6 months of the tax year may use the head of household filing status.’ It’s crucial in this context to focus solely on the information that’s actually provided.
  
  The word ‘may’ here is key. It implies a possibility or permission given the condition that’s mentioned – being legally separated and living apart from a spouse for the last 6 months of the tax year. However, it does not confirm with certainty that the individual will qualify for the head of household (HOH) status. It simply opens up that possibility under the given condition.
  
  Now, here’s the important part: We should not add to or assume facts that aren’t stated. Just because the statement opens up a possibility, it doesn’t mean we should assume there are other, unstated conditions or criteria that need to be met. On the CPA exam, assumptions can lead to incorrect conclusions. We must base our understanding and decisions only on the facts as they are presented.
  
  In other words, the statement “A legally separated individual, who has lived apart from his spouse for the last 6 months of the tax year may use the head of household filing status” means that the individual is potentially eligible for the HOH status and is not ruled out under these circumstances. However, this eligibility is not automatic or absolute and may depend on additional, unspecified criteria.
  
  Hope this makes sense!
  
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Thomas 8 January 2024

I am getting a little confused at the qualifying relative rules. A non-relative member of a household may be considered a qualifying relative provided the taxpayer’s relationship with that person does not violate local law. So if the individual lives with the taxpayer for the whole year, then the individual still doesn’t qualify under the qualifying relative rule?

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1. Mansour Farhat 9 January 2024
  
  A non-relative can be considered a “qualifying relative” for tax purposes under certain conditions. One of these conditions is that the person must live with the taxpayer all year as a member of the household. However, another important criterion is that the relationship between the taxpayer and the individual must not violate local law.
  
  If a non-relative lives with the taxpayer for the entire year and the relationship does not violate local law, the individual may potentially qualify as a qualifying relative, assuming other criteria are also met. These other criteria typically include support and income tests, among others.
  
  I hope this helps.
  
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Karan Chadda 30 January 2024

For such questions, is it not mandatory to provide all information in the question itself . I marked this as false considering the fact pattern of the information provided in question

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1. Deleted User 2 February 2024
  
  Hello Karan,
  
  Which questions are you referring to ?
  
  Farhat Lectures support Team
  
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Eunice M 6 July 2024

Question 6 also threw me off. I was more focused on the legal separation and the last 6 months. I answered True because no dependent was mentioned.

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1. Maroun, CPA 8 July 2024
  
  Hello Euny,
  
  In the context of the statement “A legally separated individual, who has lived apart from his spouse for the last 6 months of the tax year, may use the head of household filing status,” the word “may” implies possibility or potential eligibility. It means that the individual is allowed or permitted to use the head of household filing status, provided that they also meet all other necessary conditions.
  
  The word “may” does not guarantee or assert that the individual automatically qualifies for the status; rather, it indicates that qualifying is possible.
  
  If the word “must” was used instead of “may”, the answer would be false.
  If the legally separated individual has lived apart from his spouse for the last 5 months of the tax year for example, the answer would be false because he may not use the head of household in this case.
  
  Think about the opposite statement: “A legally separated individual, who has lived apart from his spouse for the last 6 months of the tax year may NOT use the head of household filing status.” Would it be true or false? It would be false because a legally separated individual, who has lived apart from his spouse for the last 6 months of the tax year may use the head of household filing status, provided he meets other requirements too.
  
  I hope this helps!
  
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Hongxing Tan 29 November 2024

This income limitation is out of date for 2024?

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1. Maroun, CPA 30 November 2024
  
  Hello Hongxing,
  
  The gross income limitation for a qualifying relative has increased to $5,050 for the 2024 tax year. I will review the questions and update them if necessary.
  Thank you for bringing this to our attention!
  
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Akin 13 May 2025

Can individuals select fiscal year? I thought everyone is defaulted to Jan 1 – Dec 31

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1. Maroun, CPA 15 May 2025
  
  Hi Akin,
  
  Most individuals do default to the calendar year, but the tax code does allow an individual to adopt a fiscal year if two conditions are met:
  – Books and records are kept on that same fiscal basis, and
  – IRS permission is obtained (or the fiscal year is adopted on the very first return), usually by filing Form 1128.
  
  Thus, if Yara consistently maintains her records for an April 1–March 31 year and the IRS signs off, she may use that fiscal year. Her Form 1040 would then be due on July 15, the 15th day of the fourth month after March 31.
  
  Hope that clears it up!
  
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Taraka Phanindra Alluri 3 August 2025

Can we select our tax year as individual or is it standard from Jan to Dec

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1. Maroun, CPA 6 August 2025
  
  Hello Taraka,
  
  For most individual taxpayers, the “standard” tax year is the calendar year (January 1–December 31). That is the default the IRS assigns, and you do not have to file any special paperwork to use it.
  
  Can an individual choose a different (fiscal) year?
  Yes, but only in limited circumstances. An individual may adopt a fiscal year that ends in any month other than December if (1) they keep books and records that are consistently maintained on that fiscal-year basis, and (2) they either start out filing on that fiscal year or obtain IRS consent (generally by filing Form 1128) before changing from a calendar year.
  
  If you do not keep formal books (which is the case for most employees and simple sole proprietors), you are required to stick with the calendar year.
  
  Thus, while the law does allow individuals to adopt a non-calendar tax year, in practice, almost all individual filers use January 1–December 31.
  
  I hope this helps!
  
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Kalgi 8 May 2026

Can individual taxpayers select their own fiscal year? My understanding was that all individuals follow calendar year and only the corporations have different year-ends. I got the answer right since I was thinking the deadline was April 15.

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1. Maroun, CPA 11 May 2026
  
  Hello Kalgi,
  
  Your general understanding is correct: individual taxpayers generally must use a calendar year. However, an individual can use a fiscal year in limited situations if the individual maintains books and records on that basis.
  
  Thus, for exam purposes, the normal rule is individual = calendar year. However, this question is assuming that Yara is on a fiscal year of April 1 to March 31. Following the fact pattern, the filing deadline would be the 15th day of the fourth month after year-end, which would be July 15, not June 15.
  
  Hope this helps!
  
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Ishita Parikh 29 June 2026

Can you check the explanation for question 1, true/false. It says “Individual taxpayers are required to file their income tax returns on or before the 15th day of the fourth month of their fiscal year. Yara selected a fiscal year of Apr 1 – Mar 31. Therefore, she has until the 15th of July to submit her income tax return.” I think it should be April 15 and not July. If it is July, can you please explain why?

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1. Maroun, CPA 1 July 2026
  
  Hello Ishita,
  
  The answer is still July 15, but the explanation should be worded more clearly.
  
  For an individual using a fiscal year, the tax return is due on the 15th day of the fourth month after the close of the fiscal year.
  
  Yara’s fiscal year ends on March 31.
  
  Count four months after March 31:
  April = 1st month
  May = 2nd month
  June = 3rd month
  July = 4th month
  
  Therefore, the return is due on July 15, not April 15.
  
  April 15 applies to a regular calendar-year taxpayer because the year ends on December 31, and April is the fourth month after December.
  
  Hope this makes sense!
  
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