Individuals
Individual taxation framework
Start with filing status, because it drives brackets, the standard deduction, and many credits. Know the five statuses and their tests, especially head of household: the taxpayer must be unmarried or considered unmarried, maintain a home for a qualifying person for more than half the year, and the qualifying person must generally live there. Dependency has two tracks: qualifying child (relationship, age, residency, support, joint-return rules) and qualifying relative (gross income, support, relationship, not a qualifying child of anyone). Tie-breaker rules matter when multiple taxpayers could claim the same child.
Gross income is broad; exclusions include gifts, inheritances, life insurance proceeds, municipal bond interest, qualified scholarships, and certain employer-provided benefits. Above-the-line adjustments reduce AGI: retirement contributions, HSA, student loan interest, and self-employed health insurance or retirement plans. Below-the-line deductions include medical expenses above the AGI floor, state and local taxes subject to the cap, acquisition mortgage interest, charitable gifts, and casualty losses in federally declared disasters. Then apply credits, QBI, and capital gain rates.
Traps: divorce decree language does not override the residency test for head of household; the kiddie tax; hobby losses; cancellation-of-debt income; basis carryover for gifts versus step-up at death; nondeductible IRA contributions; and the $3,000 capital loss limit with carryforward.
Worked example: A single filer has $50,000 wages and $10,000 long-term capital gain. The gain stacks on top of ordinary income; only the portion falling above the 0% threshold is taxed at 15%, not the entire gain. Rule of thumb: run dependency tests in order-if someone is a qualifying child of any taxpayer, they cannot be a qualifying relative.