Chapter 5 - Deductions from AGI, Credits, AMT, and Limitations

Question 1

Adjustments to Gross Income

Answer 1

1. Educator expenses
2. Certain business expenses of reservists, performing artists, etc.
3. Health savings account deduction
4. Moving expenses
5. Deductible part of self-employment tax
6. Self-employed SEP, SIMPLE, and qualified plans
7. Self-employed health insurance deduction
8. Penalty on early withdrawal of savings
9. Alimony paid
10. IRA deduction
11. Student loan interest deduction
12. Tuition and fees deduction
13. Domestic production activities deduction
14. Jury duty repayments

Question 2

Itemized deductions

Answer 2

1. Medical and dental expenses
2. Taxes paid
3. Interest paid
4. Gifts to charity
5. Casualty and theft losses
6. Job expenses and certain misc. deductions
7. Unreimbursed employee expenses
8. Tax preparation fees
9. Other expenses (e.g., investment fees, safe deposit box. etc.)
10. Other misc. deductions

Question 3

Standard Deduction

Answer 3

MFJ - $12,600 65 or blind $1250
Qaualifying Widower $12,600 65 or blind $1250
Head of Household $9,250 65 or blind $1550
Single $6,300 65 or blind $1550
MFS $6,300 65 or blind $1250

Question 4

___________ is applied only if the tentative minimum tax exceeds the taxpayer’s regular tax liability.

Answer 4

Alternative Minimum Tax (AMT)

Question 5

AMT Formula

Answer 5

Taxable Income
+ Tax preferences
+ Personal exemptions
+ Standard deduction if taxpayer does not itemize
+/- Certain other adjustment
= AMTI (Alternative minimum taxable income)

• Exemption amount phaseout of $.25 per $1
  in excess of
  MFJ 83,400 158,900
  Single 53,600 119,200
  MFS 41,700 79,450
  = AMTB (Alternative minimum taxable base)

x Rate
AMT base (MFJ)
First 185,400 (92,700 MFS) 26%
Excess 28%
= Tentative minimum tax
- Regular income tax
= Alternative minimum tax (AMT)