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CFP - TAX > Basic Income Tax (L2) > Flashcards

Basic Income Tax (L2) Flashcards

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CFP® flashcards
1
Q

Basic Tax Formula

A
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2
Q

Cash Basis Taxpayer

A
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3
Q

Accrual Basis Taxpayer

A
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4
Q

Doctrine of Constructive Receipt

A
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5
Q

Filing Status

A
  • Single
    • Married Filing Jointly (MFJ)
    • Married Filing Separately (MFS)
    • Head of Household
    • Qualifying Widow with Qualifying Child
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6
Q

Head of Household

A
  • Unmarried (as of last day of the taxable year)
    ○ Filed separate return
    ○ Paid more than half of the cost of keeping up his home
    ○ Abandoned Spouse (Taxpayers Spouse did not live in the
    home during the last 6 months)
    ○ Taxpayers home is the main home of the taxpayer’s child for
    more than half of the year
    ○ Taxpayer is eligible to claim a credit for that child
  • “Qualifying Person” generally must have lived with the taxpayer for more than half of the year
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7
Q

Qualifying Widow with qualifying child

A
  • ONLY for 2 years following the year of the spouse’s death
  • ALL of the following must apply:
    ○ Widow was eligible for a JOINT return with spouse in the year
    the spouse died
    ○ NOT remarried
    ○ Has a QUALIFIED child/stepchild
    ○ Child lived in taxpayers home ALL year
    ○ Taxpayer paid more than half the cost of keeping up the
    home
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8
Q

Personal and Dependency Exemption

A
  • Repealed with TCJA 2017

$4,400 (2022)

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9
Q

Limited Standard Deduction

A
  • For Claimed Dependents of another taxpayer

○ The GREATER of:
$1,150 (2022) OR $400 plus earned income (CANNOT exceed normal standard deduction)

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10
Q

Qualifying Child

A
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11
Q

Qualifying Relative

A
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12
Q

Sources of Income

A
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13
Q

Exclusion Ratio

A
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14
Q

Modified Adjusted Gross Income (MAGI)

A
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15
Q

Social Security Taxation (Hurdles)

A
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16
Q

Below the Market Loans (IMPUTED INTEREST)

A
17
Q

Exclusions (from Gross Income)

A
  • Gifts and Inheritances (Property, NOT income later generated from the property)
    • Life Insurance Proceeds
    • Scholarships (NOT Room and Board)
    • Gain on Sale of Personal Residence
    • Distributions from Roth IRAs and Roth 401k/403b Plans
    • Compensation for Injuries or Sickness (PHYSICAL)
    • Employer-Sponsored Accident and Health Plans
    • Meals and Lodging
    • Other EE Fringe Benefits
    • Foreign Earned Income
    • Interest on Certain State and Local Government Obligations
    • Discharge for Indebtedness
18
Q

Elements of a Gift

A
19
Q

Viatical Settlement

A
20
Q

Modified Endowment Contract (MEC)

A
21
Q

Scholarships

A
22
Q

Qualified Roth IRA and 401k Distributions

A
23
Q

Other Fringe Benefits

A
24
Q

Foreign Earned Income

A
25
Q

Deductions FOR AGI

A
26
Q

Deductions FROM AGI

A

ITEMIZED DEDUCTIONS and Standard Deduction

27
Q

Medical Expenses

A
  • ITEMIZED DEDUCTION
  • Medical Expenses in EXCESS of 7.5% of AGI)
28
Q

Certain State and Local Taxes

A
  • ITEMIZED DEDUCTION
  • Taxes CAPPED at $10,000
    ○ Property Tax (ONLY US PROPERTY)
    ○ State income tax paid, OR state and local taxes (actual or
    standardized table amount)
29
Q

Contributions to Qualified Charitable Organizations

A
30
Q

Public Charities

A

Red Cross, Salvation Army, ASCPA, etc.

* Churches
* Schools
* Hospitals
*Governmental entities
31
Q

Private Charities

A
  • Veteran organization
  • Fraternal order
  • Certain private foundation that support comes from a small group as opposed to public
32
Q

Deduction Clustering

A
  • Grouping or “clustering” intemzied deductions together in one year
  • 4 categories of itemized deductions that can bunched:
    ○ Early PMT of state income or property taxes
    ○ Early PMT of mortgage interest
    ○ Medical Expenses
    ○ Charitable Donation
33
Q

Charitable Contributions of IRAs

A
  • ITEMZIED DEDUCTION
  • Must be made to a Qualified Charity
  • Owner must be 70.5
  • $100,000 annual limit
    ○ Will be reduced by any IRA contributions made after 70.5
  • Tax Result:
    ○ Contribution is NOT treated as income to IRA owner
    ○ Contribution is NOT treated as a Charitable Contribution
    ○ Contribution can count as the owners RMD
34
Q

Casualty Losses

A
35
Q

Certain Personal Interest Expense (e.g. Mortgage Interest on Personal Residence)

A
  • Investment Interest Expenses is limited to investment interest income. EXCESS investment interest expense may be carried over INDEFINITELY
    ○ Special Election ==> LTCG to be treated as ordinary
    income to offset investment interest income
  • Limited to $750k of mortgage indebtedness (loan)
    ○ Limited to 2 houses (primary and secondary residences)
  • NO home equity interest
36
Q

Qualified Business Income (QBI)

A
37
Q

Tax Credits

A
38
Q

Kiddie Tax

A

CFP - TAX (5 decks)

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