Chapter 6 Flashcards
business expense deductions are reported on Schedule ___
C
rental or royalty income is deductible ____ AGI
for
self-employment tax is deducted _____ AGI
for
business expenses must be _____ and _____ to be deducted
ordinary and necessary
taxpayers traveling to receive necessary medical care can deduct costs of:
transportation and lodging
school loans are deductible _____ AGI, with a limit of $_____
for AGI, limit of $2,500 annually
the deduction of investment interest is limited to a taxpayers net:
investment income
formula for medical expenses deducted with AGI floor
(medical expenses) - (7.5% * AGI)
MFJ homeowners can deduct interest on up to _____ of acquisition of indebtedness after 2017
$750,000
2 types of interest expense deductible as itemized deductions:
- interest on indebtedness secured by a qualified home
- investment interest
3 broad categories of For AGI deductions
- directly related to business expense
- indirectly related to business expense
- miscellaneous items
3 types of For AGI business income
- trade or business
- production of income
- personal use
business expenses are generally deductible ____ AGI
for
which investment expense is For AGI and which is From AGI?
for: rent/royalty
from: interest expense
income/loss from flow-through entities and rent/royalty expenses are reported on Schedule ____
E
two types directly related to business activities
rent/royalty and flow-through entities
four types indirectly related to business activities
- moving expenses
- health-insurance for self-employed
- self-employment tax deduction
- deductions for IRA
when/where is it deductible?
moving expenses
FOR AGI, not deductible except if active military changing station
when/where is it deductible?
deductions for IRA
FOR AGI, depends on income/whether employee or self-employed
when/where is it deductible?
health insurance for self-employed
FOR AGI, can deduct premiums for taxpayer and dependents
when/where is it deductible?
self-employment tax deduction
FOR AGI, half of self-employment taxes paid
four categories of misc For AGI deductions
- alimony (pre 2019)
- education expenses (K-12) up to $300
- interest on qualified education loan up to $2,500
- attorney fees for IRS whistleblowers
2 categories of FROM AGI deductions
- larger of standard or itemized
- 20% of QBI
itemized deductions are reported on schedule ____
A
7 categories of itemized deductions
- medical/dental expenses
- taxes
- interest on qualified residence
- investment interest expense
- charity contributions
- casualty/theft
- other itemized (gambling, life annuity)
SALT deductions are limited to ______ per year
$10,000
2 categories of SALT deductions
- SALT and foreign income taxes (can choose to deduct sales tax instead)
- SALT property tax
mortgage interest deduction cap
$750,000 for both residences
mortgage interest is limited to:
principal use plus one other residence
____ AGI deductions generally carry forward 5 years
From
investment interest expense is deductible limited to ______
the amount of investment income
are political contributions deductible?
no
when are monetary charity contributions are deductible?
in year paid, including travel costs (14 cents per mile)
how are property charity contributions deductible?
fair market value of the capital gains property on the date of donation
taxpayer can only deduct the ______ if he received goods from charity he contributed to
excess
must have a _______ _________ of charity contribution
written record (name of charity, date, how much given)
cash donations to charity are limited to ____ of AGI
60%
property donations to charity are limited to ______ of AGI
50%
casualty losses are subject to a _____ floor per casualty
$100
casualty losses are limited to _____ of AGI per year
10%
3 factors for standard deduction amount
- filing status
- age of taxpayer (over 65)
- legally blind
timing strategy: bunching itemized deductions
shifting when deductions are paid to try to maximize itemized deduction
standard deduction for an individual claimed as a dependent
larger of:
1. $1,250 or
2. $400 plus earned income up to a total of regular standard deduction
which two specified services or trades are allowed to be claimed as QBI?
architecture and engineering
when does the QBI exclusion of services rule not apply?
when the taxpayer is lower income
