-
what is allowable adjustment for student loan interest
-
what is allowable adjustment for self employment tax
- 50% of payroll taxes (FICA & Medicare)
- 1--% of medical insurance premiums
- 2-6
-
what is deduction from payroll taxes for FICA and Medicare
- FICA - 6.2%
- Medicare - 1.45%
- 2-6
-
when would medical premiums not be allowed as an adjustment
- when another member of the family has coverage through their employer
- 2-6
-
what qualifications must be met for moving expenses to be allowed as adjustment
- work must be at least 50 miles further from old home (each way)
- only direct costs are allowed
- meals, house hunting costs or temp living expenses are not allowed
- must work at least 39 weeks
- 2-6
-
what costs are allowed for business expense
- FAST HOG
- fifty percent of meals and entertainment
- all costs to run business
- similar to small corp.
- taxes paid by business
- hobby losses are not
- one hundred percent of travel
- gifts up to $25 per customer
- 2-6
-
how much is allowed as a deduction for promotional item for business expense
-
what is definition of passive activity
- any business venture in which the taxpayer doesn’t materially participate
- 2-6
-
what are the most common types of passive activates that a person can participate in
- limited partnerships interest
- all rental activity (if not a real state professional)
2-6
-
how are losses recorded for passive activity
- losses only to the extent of passive gains with unused carried forward until activity disposal
- 2-7
-
what entities are allowed to claim a passive activity
- individuals
- partnerships
- estates
- trusts
- closely held C-Corp
- personal service Corp
- 2-7
-
when can tax credits from passive activities offset taxes
- when it arises from passive activities
- 2-7
-
how are losses recorded for someone who materially participates in rental activity
- real estate person - losses treated as ordinary loss
- active participation - $25 K of losses as ordinary loss
-
what is phase out for active participation for real estate
- 50% reduction of excess of taxpayers modified AGI over 100K
- 2-7
-
when is rental income allowed to be excluded from gross income
- dwelling is rented for less than 15 days
- 2-7
-
how is rental income treated for a property that is also used for personal use
- rented more than 14 days or 10% of number of days rented - deductions are limited to gross rental income
- rented is not more than 14 days or 10% - all expenses allocate to the rental portion
- 2-7
-
what qualifications must be met to be considered alimony
- CANNOT
- cash only (not property)
- apart when payments are made
- not child support
- not designated as property settlement
- own return for payer and payee
- terminates on death of recipient
- 2-8
-
would payments for college qualify as alimony
-
what qualifies as earned income for retirement plan
- salaries and wages
- net self-employment
- alimony
- 2-8
-
how much is a person able to contribute to an IRA
-
what is the income cap for Roth IRA
- 122K or 183K if married
- 2-8
-
what conditions cause a traditional IRA to not be deductable
- individual participates in another pension or profit sharing plan AND
- AGI excess 68K or 112 married
- 2-8
-
what happens to IRA contributions if a spouse is a participant in another plan
contributions for no-participating spouse cannot be deducted if joint AGI excess 183K
2-9
-
when would early deduction from a IRA not cause a 10% penalty
- reached age 59.5
- medical expenses exceeding 7.5% AGI
- death or disability of participant
- first time purchase of home (10&
- 2-9
-
what is a Coverdell education savings account
- allows 2000 contribution made to beneficiary who is under the age of 18
- 2-9
-
how are Coverdell education savings monies withdrawn tax free
- pay elementary, middle, high school and college expenses
- 2-9
-
when does unspent money for Coverdell savings get taxed
- at age 30 of beneficiary unless transfer money to another family member of same generation
- 2-9
-
when would jury duty be entered into AGI
- when submitted to employer if employer reimbursed for it
- 2-10
-
what counts as qualified higher education and what is allowable deduction
- courses required by employer, by law, govt. regulation, or improve/maintain skills required in performing job
- $4,000
- 2-10
-
what form is used for health savings account deduction
-
what is the crop method of accounting
- cost of producing crop is deducted in year the crop income is realized
- 2-11
-
what income items go on schedule f
- raised livestock, produce & grains
- livestock and other items bought for resale
- 2-11
-
what expenses are allowed for farmers
- car/truck
- chemicals & pesticides
- depression and 179 depreciation
- feed purchased
- fertilizers
- seeds & plants
- reasonable wages paid to children, meals to feed workers
- 2-11
-
when do depreciation review farm income
11-Feb
-
what is the standard deduction if being claimed on another persons tax return
- greater of 950 or earned income +300 never to exceed regular standard deduction
- 2-11
-
when would a standard deduction be increased from normal
- if over 65 or blind
- $1,450
- 2-11
-
when is a charitable deduction allowed to be deducted on taxes
- if given cash or property and when charity receives the funds
- 2-12
-
what valuation is given to property for charitable contributions
- lower of tax basis or fair market value on date of contribution
- 2-12
-
what valuation is given to property for charitable contributions that is held for at least one year
- fair market value of long-term capital gains recovery
- 2-12
-
how much of a deduction is allowed for charitable contributions
- 50% of AGI or 30% for long-term assets
- 2-12
-
what is carry foward for charitable contribution
-
how much of a deduction is allowed for charitable contributions for corporations
-
what qualifies as an other miscellaneous expense
- gambling losses to extent to winnings
- estate taxes on income in respect to descendent
- 2-12
-
what qualifies as a miscellaneous expense
- BIT
- business expense as employee
- investment costs
- tax preparation/legal advice related to taxable income
- 2-12
-
what form is used for business expenses of an employee
- form 2106 in schedule A
- 2-12
-
what qualifies as a business expense
- A JAB CLUB
- AICPA and union dues
- job travel
- appraisal fees for charitable donations or casualty loss
- business mileage
- CPE/job education
- laptop
- uniforms
- business use of home
- 2-12
-
what is included as investment expense
- safety deposit box
- investment advisory fees
- newsletters
- and IRA custodial fees
- 2-13
-
what qualifies as medical expense for deductable expense
review HW problems for items
-
who can qualify for medical expense deduction
- taxpayer
- spouse
- dependents
- anyone who provides taxpayer over 50% of support
- 2-13
-
what interest is deductable
- investment interest
- mortgage loan interest
- 2-13
-
how much of mortgage loan interest is allowed of deduction
- acquisition indebtedness to 1,000,000
- home equity loans 100,000
- 2-13
-
how much is allowed for deduction of interest
- extent of reported net investment income on tax return
- carried forward indefinitely
- 2-14
-
what is definition of acquisition indebtedness
- loans used to acquire or construct the home as well as loans that replace previous acquisition indebtedness
- 2-14
-
what qualifies as taxes paid for deduction
- personal property and real estate taxes
- state and local sales tax
- state, local, or foreign taxes
- 2-14
-
what does not qualify for taxes for deduction
- fees
- fines
- federal
- FICA
- gas
- excise
- 2-15
-
what is phase-out for itemized deductions
- misc - 2%
- theft & casualty - 10%
- medical - 7%
- 2-15
-
how is loss measured for theft & casualty
- drop in fair market caused by event but is limited to the tax basis of asset
- 2-15
-
what is calculation for theft and casualty losses
- loss
- -insurance reimbursement
- -$100 per event
- -10% AGI
- 2-15
-
when can a child claim an exemption
- when dependent child is not claimed as personal exemption
- 2-15
-
what is requirement for dependent
- C-IRS Jack you
- Citizen
- income
- relationship or unrelated household member
- support
- no Joint return
- 2-16
-
What are citizen requirements for dependence
- US citizen
- resident of Mexico or Canada
- 2-15
-
what is not considered relative for dependence
-
what are different credits allowed for individual tax return
- FACE FED
- foreign tax credit
- adoption credits
- child tax credit
- education credits
- first-time homebuyer tax credit
- earned income credit
- dependent and child care credit
- 2-19
-
what is the amount of child tax credit
- 1,000 for children under 17
- 2-17
-
what is the dependent care credit based on
- smallest of
- actual dependent care expenses
- earned income
- 3,000 for one dependent or 6,000 for multiple dependents
- 2-17
-
what income is used for calculation of dependent care credit
- earned income is based on lower-paid spouse
- unless spouse in school and income based on the spouse who is gainfully employed
- 2-17
-
what is the amount allowed for the adoption credit
- first 13,360 of costs and carry forward for 5 years
- 2-18
-
what are two different types of education credits
- American opportunity tax credit
- lifetime learning credit
- 2-18
-
what is the amount of the tax credit for the American opportunities tax credit
- applies to first four years of post secondary school
- 100% of first 2,000
- 25% of next 2,000
- per student
- 2-18
-
what is the amount of the tax credit for lifetime learning credit
- applies to all other years of education
- 20% of first 10,000
- per family
- 2-19
-
what are limitations for lifetime learning and American opportunities credit
- applies to only tuition and fees
- credit is not available to taxpayers over a certain AGI
- credit cannot be claimed on the tax return of the dependent
- cannot claim both credits at the same time
- 2-18
-
what is the maximum investment income a person can have to still qualify for earned income credit
-
what amount is allowed for the first-time homebuyer tax credit
- lesser of 8,000 or 10% purchase price
- 2-19
-
what form are estimated tax payments made
-
when are estimated tax payments due for individual taxpayers
- months 4,6,9
- and Jan 15
- 2-19
-
when would an individual be subject to underpayment tax penalty
- balance due on the tax return is greater than 1,000 by April 15
- 2-19
-
how can an individual avoid the underpayment penalty for employment tax
- withholding & estimated taxes excess 100% of prior year or 100% if taxable income is over 150,000 in PY
- 90% of current year tax liability is paid
- 2-19
-
what is the penalty for underpayment for estimated tax payments
- filing - 5% per month limited to 25%
- payment - .5% per month
- 2-19
-
what is an accuracy related penalty
- penalty of 20% if underpayment of employment taxes is attributable to negligence or disregard of rules
- 2-20
-
what is the calculation for alternative minimum tax for individuals
- AMT
- regular taxable income
- +- adjustments and preferences
- =AMTI before exemption
- - exemption
- =AMTI
- X tax rate
- =tentative minimum tax
- - regular tax
- =amt
- 2-21
-
what are different adjustments for AMT
- SIMPLE PIE
- standard deduction
- interest on home equity loans
- medical expenses under 10%AGI
- personal and dependent exemptions
- local and state income taxes, all property taxes and sales tax
- employee business expense, tax prep and investment expense subject to 2%
- 2-22
-
what are preferences for AMT
- PIE
- private activity bond interest
- incentive stock options
- excess depreciation on personal property
- 2-22
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