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HS321 > Chapter 4 - Exclusions From Gross Income > Flashcards

Chapter 4 - Exclusions From Gross Income Flashcards

1
Q

The value of a gift is ___________ from gross income.

A

excluded

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2
Q

A gift cannot be payment for…

A

services rendered.

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3
Q

If you start earning income from property that is gifted to you, then you will be…

A

taxed on the income from that property.

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4
Q

Inherited property is…

A

excluded from your gross income.

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5
Q

Any income earned on inherited property, including the sale of the inherited property is taxed to…

A

the person that received the inheritance.

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6
Q

“Interest income” from state and municipal bonds are ____________ from gross income.

If you sale the bond and get more than what you paid for the bond, then the gain is __________ as _________________.

A

excluded

Taxed as capital gains

This is to encourage people to invest in these type of bonds.

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7
Q

“Interest Income” earned from qualified private activity bonds and non-governmental purpose bonds are subject to…

A

alternative minimum tax.

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8
Q

Interest income from US treasury bills, notes, and bonds is ___________ in gross income.

A

included

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9
Q

Treasury bills are taxed at when it reaches…

A

maturity.

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10
Q

Treasury bills are often taxed exempt for…

A

state and local tax purposes.

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11
Q

Interest on a Series EE savings bonds is __________ from your gross income if it’s use to pay…

A

excluded

qualified education expenses.

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12
Q

Interest on a Series EE savings bonds is phased out based on…

A

AGI level.

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13
Q

Up to ____% of social security benefits may be taxable.

A

85%

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14
Q

How you are taxed on your social security benefits depends on your…

A

“provisional income”.

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15
Q

What is the calculation for your provisional income?

A

AGI +
half of SS Benefits +
tax exempt interest income =
“PROVISIONAL INCOME”

Which tells you how much of your SS is taxable.

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16
Q

The taxation of your SS Benefits is based on your range of provisional income. What are the ranges for singles and married people?

A

Single: $25K - $34K
Married: $32K - $44K

$0 taxes below, 50% in between, 85% over the threshold

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17
Q

_____________ plans are the only employer offered benefits that are given on a discriminatory basis.

A

Disability

18
Q

Noncontributory disability plan is when the ______________ pays the entire cost of the premium and a contributory disability plan the ______________ pays the entire cost of the premiums.

A

employer

employee

19
Q

Noncontributory disability premiums are tax-deductible for…

A

the employer.

20
Q

Benefits received from premiums paid by an employer for a “nondiscriminatory disability plan” is ____________ to the employee.

A

taxed

21
Q

Benefits received from a “contributory disability plan” are __________ to the employee.

A

tax-free

22
Q

In a “partially contributory disability plan”, a portion of the benefit is taxable based on…

A

the amount each party contributes.

23
Q

Do you pay taxes on Worker’s Compensation benefits?

A

You “NEVER” pay taxes on Worker’s Compensation benefits.

Fuck that!!!

24
Q

If you are involved in a lawsuit, and you receive a settlement award because of injuries or sickness, do you pay taxes on this money?

A

No. But you do you pay taxes on libel/slander, wage losses, and “punitive” damages.

25
Q

Health benefit plans (e.g. HMO, PPO) are tax-deductible when…

A

the employer pays the premium.

26
Q

Health benefit plans (e.g. HMO, PPO) ________ taxed to State Farm employees.

A

are not

27
Q

Amounts received for medical care from an employer sponsored medical plan (e.g. HMO, PPO) are ___________ from the employees gross income.

A

excluded

As long as it’s for medical reimbursement 😷or loosing a limb. 🙀

28
Q

Amounts received for employer sponsored long-term care are ___________ for employees.

A

tax free

29
Q

An uninsured plan for employers to reimburse employees, tax-free, for their medical expenses directly from an account.

A

self-funded medical reimbursement plans

30
Q

Some medical insurance plans allow discrimination testing to qualify for the medical plan, however “self-funded medical reimbursement plans” you…

A

can not discriminate.

31
Q

A “self-funded medical reimbursement plan” is considered discriminatory if it provides greater benefits to…

A

highly compensated employees.

32
Q

A “self-funded medical reimbursement plan” is considered discriminatory if it provides benefits based on…

A

a percentage of compensation.

33
Q

________ procedures are not included in a “self-funded medical reimbursement plan” when considering the nondiscrimination rule.

A

Diagnostics

34
Q

If a “self-funded medical reimbursement plan” turns out to be discriminatory, then the excess benefits given to highly compensated employees are…

A

taxed.

35
Q

If a “self-funded medical reimbursement plan” turns out to be discriminatory, and only the employees are given the benefits, then…

A

all benefits will be taxed.

36
Q

The cost of dependent care services provided by an employer are _________ from the gross income of the employee.

A

excluded from the gross income of the employee.

37
Q

If State Farm paid the cost for “dependent care services” provided by my 19 year old daughter, would that money be excluded from my gross income?

A

Yes

38
Q

For “dependent care services” provided by State Farm, what is the maximum amount that will be excluded from your gross income if you were single or if you were married?

A

$5,000 for single or married filing joint

$2,500 for married filing separate

39
Q

John’s federal marginal tax rate is 35%. He is considering investing in a tax-free bond issued in his state of residence which yields 4%. What is the taxable equivalent yield of this bond?

A

.04 / ( 1 - .35 ) = 6.15%

40
Q

If the employer provides disability insurance coverage, the disability benefit proceeds are…

A

taxable to the employee when received.

HS321 (14 decks)

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