Use 2025 tax law through December 31, 2025, including the One Big Beautiful Bill Act (OBBBA). The testing window runs July 1, 2026 through February 28, 2027.
A prior-year return is a useful guide for comparison, accuracy, and carryovers into the current year. Comparing it with this year's documents shows what changed and what paperwork is missing. Compare income sources, withholding, dependents, and filing status. A change is not an error by itself, but ask about it before you copy any entry forward.
The prior-year adjusted gross income (AGI) is also used, when required, to authenticate electronic filing. It never becomes this year's AGI.
Line labels can change between years, so for accuracy match the prior Form 1040 to the 2025 Form 1040:
Prior years' returns are evidence of basis (the taxpayer's investment in property, used to figure gain or loss) and carryovers. They are not conclusive proof, and they are not the only source. Ask the taxpayer for acquisition records, amendments, and supporting worksheets, and keep them in the file.
Common mistakes
- Importing a Schedule D carryover without reconciling its supporting worksheet and getting the missing brokerage records.
- Using the 2025 IP PIN on a return submitted in 2026, which needs the 2026 PIN.
- Treating 185 weighted presence days as decisive before checking excluded days and exceptions.
Bottom line
- Prior returns require reconciliation with current evidence.
- Citizens and resident aliens generally report worldwide income.
- Substantial presence requires 31 current days and 183 weighted days, subject to exclusions and exceptions.
- Net self-employment earnings of at least $400 trigger filing.
Exam shortcut
Mark citizenship, counted days, marital dates, and household relationships before touching income arithmetic. When a question says “below the threshold,” search immediately for self-employment, dependent rules, and special taxes. Translate “parent lives elsewhere” into two checks: dependent eligibility and who paid the home's costs. Label each number as proceeds, income, adjustment, deduction, credit, or payment before choosing its return field.
The full lesson (about 5,577 words, 37 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
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