Adjustments/Deductions Flashcards
educator expenses
adjustment
up to $250/$500
IRA
adjustment ($5500/$11k)
unless:
- RICH ($60-70k or $96-110)
- HAS retirement plan
phaseout: excess/range * max deduction
Roth NOT deductible
Coverdell $2000/child/year
student loan interest expense
adjustment
up to $2500
phaseout range
tuition/fee deduction
adjustment
up to $4000
health savings account
adjustment
up to $3300/$6550 (families)
increased by $1000 for age 55
moving expenses
adjustment
NOT meals, pre-move house hunting, expense of breaking lease, temporary living expenses
50% of S/E FICA
adjustment
non-deductible on Schedule C
S/E health insurance
adjustment (100% deductible)
non-deductible on Schedule C
S/E retirement
adjustment
non-deductible on Schedule C
Keogh plan up to $52k or 25% net earnings (lesser of the two)
interest withdrawal penalty
adjustment
alimony paid
adjustment
child support not deductible
attorney fees (discrimination/whistle-blower cases)
adjustment
domestic production activities
adjustment
9%?
adjustment
deductions above AGI
deduction
deductions below AGI
additional deduction
elderly (65+) and/or blind
standard deduction
$6200 single / $12400 married
higher of $1000 or earned income + $350 for dependent
medical expenses
deduction
qualified expenses (medical/accident insurance)
- reimbursements
- 10% AGI (7.5% elderly)
= deductible amount
non-deductible:
- life insurance
- capital expenditures
real estate taxes (state/local/foreign)
deduction
income taxes (state/local/foreign)
deduction
personal property taxes (state/local/foreign)
deduction
state taxes
deduction
federal taxes
NOT a deduction
including social security
inheritance taxes
NOT a deduction
business/rental property taxes
NOT a deduction
home mortgage interest
deduction allowed on 1st or 2nd home
- up to $1MM ($500k MFS) for buying, constructing, improvement (acq)
FULLY DEDUCTIBLE - up to $100k ($50k MFS) for any purpose (non-acq)
investment interest expense
deduction up to net (taxable) investment income - portfolio income - rents, royalties - net LT and ST capital gains
interest expense to purchase tax-free bonds
NOT a deduction
personal (consumer) interest
NOT a deduction
interest on borrowed funds, credit cards, life insurance loans
interest on federal/state/local tax
NOT a deduction
prepaid interest
deduction when incurred AND paid
educational loan interest
adjustment
up to $2500, excess not allowed
charitable contributions
deduction (unless not itemizing)
up to 50% of AGI (cash)
up to 30% of AGI (FMV of property of LT capital gain)
ST capital gain valued at lower of cost or FMV
services (nondeductible)
carryover 5 years
gifts
NOT a deduction
political contributions
NOT a deduction
casualty/theft losses
deduction
loss - insurance recovery - $100 - amount exceeding 10% AGI = deductible loss
unreimbursed business expense
deduction up to amount exceeding 2% of AGI - overnight business travel - transportation 100% - meals/entertainment 50%
educational expenses
deduction
those not deducted above AGI
miscellaneous expenses
deduction (amount exceeding 2% of AGI)
- uniforms
- business gifts ($25/recipient/year)
- professional journals
- tax prep fee
- debit card convenience
gambling losses
deduction
up to gambling winnings
child/dependent care
tax credit
20% of expenses if AGI of $43k
35% of expenses if AGI $15k or less
decrease by 1% for each $2k of AGI over $15k or less
elderly and/or permanently disabled
tax credit
15% of eligible income
tax credit
reduces income tax liability
American opportunity credit
tax credit
first 4 years, $2500 per person
Lifetime learning credit
tax credit
after first 4 years, $2000 max
qualified tuition program
tax credit for 529 accounts
exempt from federal income taxation
adoption credit
tax credit
IRA credits
tax credit
eligible for taxpayers at least 18 by close of taxyear, not full time student, not a dependent
earned income credit
refundable tax credit
withholding tax
tax credit against taxpayer’s liability
refund if credit exceeds liability
alternative minimum tax (AMT)
ensures minimum payment of tax for those who take large number of deductions
pay greater of regular tax OR tentative min tax
AMT exemption formula
INDIVIDUAL
$52,800
- 25% (AMTI - $117,300)
exemption cannot be less than 0
AMT adjustments
PANICTIMME
[ADJUSTMENTS] (adds/subtracts) Passive activity losses Accelerated depreciation Net operating loss of taxpayer Installment income of dealer Contracts (%age completion vs completed)
[DEDUCTIONS] (adds to regular tax income)
Tax “deductions”
Interest deductions on home equity loans
Medical deductions (excess 10% AGI)
Miscellaneous deductions NOT allowed
Exemptions (personal) and standard deduction
AMT preferences
PPP
always add backs
Private activity bond interest income
Percentage depletion the excess over adjusted basis property
Pre-1987 accelerated depreciation
AMT credit
FACCE
offsets regular tax only not future AMT Foreign tax credit Adoption credit Child tax credit Contributions to retirement plans Earned income credit
AMT credit carryforward period
forever
