Above The Line Deducctions Flashcards
What is the maximum educator expense deduction for classroom supplies per individual?
$300 per individual
Maximum deduction is $600 for two educators filing Married Filing Jointly (MFJ)
Who can deduct business expenses for government officials working on a fee basis?
Performing artists and members of the military reserve forces (reservists) who traveled more than 100 miles
Applicable to those performing reserve services
What type of contributions are made with after-tax money in a Health Savings Account (HSA)?
HSA contributions
These contributions can be deducted from taxable income
What expenses can active-duty members of the U.S. Armed Forces deduct?
Moving expenses
Applicable for those who relocate for military service
What portion of the self-employment tax can be deducted?
Employer portion (i.e., ½ SE Tax)
This deduction is available for self-employed individuals
What type of retirement account contributions can self-employed individuals deduct?
Retirement account contributions
Includes those made by small business owners
What health insurance costs can self-employed workers deduct?
Health insurance premiums, including dental and long-term care insurance
Applicable to self-employed individuals
What is a common penalty related to early withdrawals from savings accounts?
Early withdrawal penalties
Commonly associated with certificates of deposit (CDs)
What type of payments can be deducted if they were part of agreements effective before 2019?
Alimony payments
Deductions for alimony payments were ended in 2018
What type of contributions are subject to phaseouts based on filing status?
Traditional IRA Contributions
Phaseouts also depend on active participant status
What is the maximum amount of student loan interest that can be deducted?
$2,500 of interest paid on student loans
This deduction is available for qualifying borrowers
Rising Prices - FIFO Profit
Higher
Reflects increased inventory costs.
Rising Prices - FIFO Tax Liability
Higher
Due to higher reported profits.
Rising Prices - FIFO Inventory Value
Realistic
Represents current market conditions.
Rising Prices - LIFO Profit
Lower
Due to older, cheaper inventory costs.
Rising Prices - LIFO Tax Liability
Lower
Results from lower reported profits.
Rising Prices - LIFO Inventory Value
Understated
Does not reflect current market value.
FIFO
Falling Prices -
Profit
Lower
Due to older, higher inventory costs.
Falling Prices - FIFO Tax Liability
Lower
Results from lower reported profits.
Falling Prices - FIFO Inventory Value
Realistic
Reflects current market conditions.
Falling Prices - LIFO Profit
Higher
Due to newer, cheaper inventory costs.
Falling Prices - LIFO Tax Liability
Higher
Results from higher reported profits.
Falling Prices - LIFO Inventory Value
Overstated
Does not reflect current market value.
What is the useful life of Autos?
5 Years
What is the useful life of Computers?
5 Years
What is the useful life of Heavy Machines?
7 Years
What is the useful life of Office Furniture?
7 Years
What is the useful life of Residential Real Estate?
27.5 Years
What is the useful life of Non-Residential (Commercial) Real Estate?
39 Years
Fill in the blank: The useful life of Heavy Machines is ______
7 Years
True or False: The useful life of Autos and Computers is the same.
True
List the useful life for the following assets: Autos, Computers, Heavy Machines.
- Autos: 5 Years
- Computers: 5 Years
- Heavy Machines: 7 Years
What is property that is not listed as a capital asset?
Accounts receivable;
Art, copyrights, compositions;
Inventory held for sale;
Depreciable property (1231 assets)
What is section 1231 property?
Property that is used in a trade or business, and
Property held for the production income.
Broken down into 1245 and 1250 property.
What is section 1245 property?
Section 1245 property is ‘personalty’ used in a trade or business for the production of income
- furniture, computers, decorative light fixtures, etc.
What is the estimated tax payments if AGI is less than 150k?
- 90% of tax liability for current year
- 100% of tax liability shown on prior year
What is the estimated tax payments if AGI is over 150k (75k if MFS)?
- 110% of the prior years tax liability
- 90% of the current years tax liability
