5. Other Gross Income Items Part 1-3

Question 1

State or Local tax refund rules. Interest on the tax refund is…taxable or non taxable?

Answer 1

taxable

Question 2

State/Local tax refunds. If itemized in prior year then is it taxable or non taxable?

Answer 2

taxable

Question 3

State and local tax refunds. If itemized, is it taxable?

Answer 3

No

Question 4

For alimony. What is the rule for taxable alimony payments?

Answer 4

If the divorce was 2018 and prior. Payments are taxable and ex will need to report as income.

Question 5

What are the 3 categories of payments resulting from a divorce?

Answer 5

1. alimony
2. child support
3. property settlement

Question 6

Is unemployment income taxable?

Answer 6

Yes

Question 7

Social Security Income. When is it taxable?

Answer 7

When the SS income is 50% of the ss income is over 25K, then 50% of SS is taxable. over 34K then 85% of SS income is taxed. If married then between 32-44K, then 50% taxable. Over 44K is 85% taxable

Question 8

MAGI

Answer 8

Modified Adjusted Gross Income

Question 9

Year of Death Income =

Answer 9

• final tax filing for the deceased
• income earned after date of death is reported on the Federal Estate Return.

Question 10

For gambling winnings and losses…

Answer 10

Where anything won is subject to tax and losses are deductible in a schedule A.

Question 11

Damage awards are determined when the award was for damages “in…”

Answer 11

In lieu of. if damages were awarded for compensation of lost profit then it is considered income.

Question 12

Is cancellation of debt taxable?

Answer 12

Yes except for:
1. when debt is discharged through bankruptcy
2. taxpayer is bankrupt
3. student loan forgiven by lender (not included on borrower’s taxable income 2021-2025)

Question 13

If you have a unsecured recourse loan and you only pay $30K of the total $80K, how much is your taxable income?

Answer 13

$50,000

Question 14

Partially taxable items: Scholarships and Fellowships. What part is non taxable?

Answer 14

for degree seeking students- only tuition, fees, books, and supplies…not room or board

for non degree seeking = fully taxable

*no services are exchanged for the grant and no consideration of past, present or future services of the grantee should be made.

Question 15

Non taxable if a COLI. COLI stands for……

Answer 15

Company owned life insurance. Only taxable if there are interest received beyond the premiums paid.

Question 16

Are personal injury or illness taxable?

Answer 16

No

Question 17

Is foreign income earned taxable?

Answer 17

Up to 120K in 2023 can be excluded. There are some requirements to qualify

Question 18

What are some of the requirements to qualify for foreign income exclusion of up to 120K/year?

Answer 18

1. Must be a foreign resident for over a year
2. must be present in that foreign country for 330 days out of the 365 days