Adjustments, Deductions, Credits

Question 1

When are you not allowed an IRA deduction on traditional IRA

Answer 1

Excessive AGI (60-70, 96-116 MFJ)
AND
active participation in another qualified plan

Question 2

Coverdell education savings account

Answer 2

For AGI

2K per beneficiary

Set up to pay for education

Must be under 18 and limit at 30

Question 3

Student loan interest

Answer 3

For AGI

2,500 limit

Question 4

Tuition and fees

Answer 4

For AGI

Max 4,000 - rest is itemized subj to 2%

Question 5

Health savings accounts

Answer 5

Pretax contribution up to 3,300 (6.6 family) as a FOR AGI

Question 6

Moving expenses

Answer 6

FOR AGI

Question 7

Moving expense requirements

Answer 7

Travel, lodging, transport of goods ONLY

NO FOOD (would eat anyways)

Must stay 75% of next 12 months (24 months if SE)

Question 8

Self employment tax

Answer 8

50% For AGI

Question 9

SE health insurance

Answer 9

100% For AGI

Question 10

Keogh Plan

Answer 10

For AGI

Lesser of 52,000 or 25% of net keogh earnings

Question 11

Keogh net earnings computation

Answer 11

Net business income
(1/2 self employment tax)
(Keogh deduction)

= keogh net earnings x 25%

OR self employment income before keogh deduction x 20%

Question 12

Penalty on early withdrawal of savings (interest income)

Answer 12

For AGI

Question 13

Alimony

Answer 13

For AGI for person paying

Question 14

Child support

Answer 14

Non included for person receiving. Not an adjustment for payer.

Question 15

IRA contributions

Answer 15

Adjustment/for AGI

Question 16

Medical Expenses

Answer 16

Itemized Deduction - amount above 10% AGI

Question 17

Qualifying individuals for medical payments

Answer 17

Taxpayer
Spouse
Dependent receiving 1/2 support from taxpayer (excludes gross income or joint return requirement)

Question 18

State, local and foreign taxes. Also, what qualify for these?

Answer 18

Itemized Deduction

State & Local - Real estate, income, personal property, sales

Foreign - Real estate and income

Question 19

Acquisition Indebtedness - definition and classification

Answer 19

Itemized.

Interest on up to 1 million / 500 K (MFJ/Single) may be deducted for buying, constructing, or improving principal or second home.

Question 20

Home Equity indebtedness - definition and classification

Answer 20

Itemized.

Interest on up to 100K (50 if single) can be deducted from debt secured by home.

Question 21

Investment interest expense

Answer 21

Itemized up to NET investment income.

NOT FOR TAX FREE INVESTMENTS

Question 22

Charitable contributions

Answer 22

Itemized deduction.

50% of cash or 30% of FMV of LTCG property.

Question 23

Charitable contribution carryover

Answer 23

5 years

Question 24

Casualty and theft losses (personal)

Answer 24

Itemized. 10% AGI and $100 floor.

Question 25

Unreimbursed business expenses

Answer 25

Miscellaneous Itemized subject to 2% AGI

Question 26

Travel rule for business expenses

Answer 26

All meals and lodging must be for overnight travel

Question 27

Educational expenses (job related)

Answer 27

Miscellaneous Itemized 2%. Must be to maintain/improve skills to keep job.

Question 28

Business Gifts

Answer 28

Miscellaneous Itemized 2%.

$25 limit per gift recipient

Question 29

Uniforms

Answer 29

Miscellaneous Itemized 2%.

Question 30

Expenses of investors - safe deposit box and investment advice

Answer 30

Miscellaneous Itemized 2%.

Question 31

Professional subscriptions

Answer 31

Miscellaneous Itemized 2%.

Question 32

Tax prep fee

Answer 32

Miscellaneous Itemized 2%.

Question 33

Debit card convenience fees to pay income tax

Answer 33

Miscellaneous Itemized 2%.

Question 34

Gambling losses

Answer 34

Miscellaneous itemized - NO 2%

Question 35

Child tax credit

Answer 35

Refundable credit

May claim 1,000 for each qualifying child

Must be under the age of 17

Question 36

Earned income credit

Answer 36

Refundable credit

Question 37

Witholding taxes (W-2)

Answer 37

Refundable credit (what your employer withholds. If its more than you owe, you get it back so technically a credit).

Question 38

Excess social security paid

Answer 38

Refundable credit

Only if two or more employers correctly withheld an amount that was in excess of owed when combined.

Question 39

American opportunity credit

Answer 39

Refundable credit

Question 40

Child and dependent care credit

Answer 40

NOT refundable

Expenses to care for child

Child under 13 or disabled dependent/spouse
1 Child : 3,000
2 or + : 6,000

Question 41

Elderly and permanently disabled credit

Answer 41

NOT refundable

15% of eligible income if 65+ or under 65 and retired because of permanent disability

Question 42

American opportunity credit

Answer 42

NOT refundable

Up to 2,500 per student for first 4 years

Question 43

Retirement savings contribution credit

Answer 43

IRA credits. NOT refundable

Question 44

Foreign Taxes - qualification and calculation

Answer 44

Tax Credit

NOT refundable

Lesser of:

1) Foreign taxes paid
2) (All foreign taxable income / (taxable income x exemptions)) x U.S. Tax

Question 45

General business credit

Answer 45

NOT refundable

Question 46

Adoption credit

Answer 46

NOT refundable

All necessary expenses except medical

Question 47

Lifetime learning credit

Answer 47

NOT refundable

2,000 max per year. Unlimited number of years.