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Income Tax Accounting > Chapter 7 part 2 > Flashcards

Chapter 7 part 2 Flashcards

1
Q

EIC must be calculated using

A

EIC Tables

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2
Q

EIC Rules Change ____

A

Yearly

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3
Q

Worksheet A is used to calculate EIC for taxpayers with

A

Wage income Only

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4
Q

Worksheet B is used to calculate EIC for taxpayers with

A

Self employment Income

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5
Q

Schedule EIC is required

A

For taxpayers claiming a Qualifying Child

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6
Q

Child and Dependent Care Credit

A

Allows taxpayers to have a credit for Child and dependent Care expenses

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7
Q

Child and Dependent Care Credit Eligibility

A

is granted to whichever parent has primary physical placement for most of the year

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8
Q

Qualified Care Expenses

A

Must be required for taxpayers to be able to work, Day care and Day camp programs, Babysitter/Nanny, Cannot be another dependendant under 10

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9
Q

to claim credit for qualified care expenses

A

tax payer must include the name, addressm and EIN/SSN of the care party

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10
Q

for taxpayers with an AGI less thanb ___ the allowable care credit is equal to __% of qualifued expenses

A

15,000;35

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11
Q

for taxpayers with an AGI greater thanb ___ the allowable care credit is

A

15,000; rediced

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12
Q

Form ____ line _ shows the applicable car credit percentages

A

2441; 8

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13
Q

Care credit maximums

A

3000 for one dependent, 6000 for 2+

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14
Q

_______ _______ musdt file a joint return to claim the child care tax credit

A

Married taxpayers

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15
Q

for MFJ, the care credit is limited to the ____ of either spouse’s income

A

lesser

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16
Q

full time sudents with little/no income are limited to ___ in care credits

A

250 for 1 dependent, 500 2+/month

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17
Q

Affordable Care Act

A

Obamacare

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18
Q

Health insurance premium tax credits

A

intended to lower the cost of healthcare

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19
Q

Health insurance premium tax credits requirements

A

exchange plan, ineligible for employer spons. Plan, income under limits, not MFS, not a dependent

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20
Q

ACA income eligibility

A

Modified AGI for household+ tax exempt interest & income

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21
Q

Maximum family income for ACA

A

400% FPL

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22
Q

FPL

A

Federal Poverty Line

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23
Q

Taxpayers below the federal poverty line are eligible for Medicaid and thus ___ eligible for the credit

A

are not

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24
Q

The credit is intended to take the form of the ______ of (1) actual health care premiums paid or (2) silver plan premiums less the amount the taxpayer is expected to contribute to health care.

A

Lesser

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25
Q

Under the ACA, the FPL is set in the ____ year during open enrollment

A

previous

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26
Q

calculate the ACA credit

A

household modified AGI, compare to FPL and calculate as a percentage, look up applicable percentage of income for premiums paid,

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27
Q

Ed and Milly are married with two children under the age of 21. Household income is $50,200. Ed and Milly’s household income is at 200 percent of the FPL. For household income of 200 percent of the FPL, the applicable figure is 0.0654; thus the intended or deemed to be paid for health care premiums is or $___.

A

$3,283.08

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28
Q

The amount of the ACA credit is based on comparing the cost of premiums for a designated silver plan in the taxpayer’s state with the deemed premium cost calculated above. For example, if the deemed premium to be paid is $3,283 and the cost of a silver plan for that household is $10,000 then the premium tax credit is ______

A

$6717

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29
Q

For households that did not have coverage for the entire year, the credit is _____ based on the number of months coverage was maintained.

A

prorated

30
Q

ACA credits cannot exceed

A

premiums actually paid

31
Q

ACA Credit can be obtained either ____ as a direct reduction in premiums or ____ the plan year when taxes are filed

A

in advance, after

32
Q

Since the actual premium tax credit is not known until household income can be computed after the end of the tax year, Form ____, provides a reconciliation of the ____ credit and the _____ credit

A

8962; estimated; actual

33
Q

If the actual credit is _____ than the estimated credit, the difference between the two amounts is a ____ credit on the taxpayer’s tax return.

A

greater ;refundable

34
Q

If the estimated credit taken throughout the year is ____ than the actual credit, the difference is treated as additional ___ ___ on the taxpayer’s tax return.

A

greater ; tax due

35
Q

as long as the household income remains below ___percent of the FPL, the repayment amount of the credit is _____

A

400 ;limited

36
Q

ACA Repayment limits

A

<200% FPL 300/600
200-300% 800/1600
300-400% 1325-2650

37
Q

Form ____ reports the taxpayer’s actual premiums paid,

A

1095-A

38
Q

education tax credits

A

to reduce the cost of education

39
Q

AOTC

A

American Opportunity Tax Credit

40
Q

American Opportunity Tax Credit

A

Previously referred to as the Hope credit, a tax credit available for the first 4 years of postsecondary education expenses for students who meet specific requirements.

41
Q

AOTC is for students in their ____ ____ years of postsecondary Education

A

first 4

42
Q

AOTC can be claimed for expenses related to

A

associates/bachelor degreed

43
Q

Students must be enrolled at least

A

half time for one period during the tax year

44
Q

Students need form ____ provided by the school to qualify for AOTC

A

1098T

45
Q

Students cannot have any ____ convictions to qualify for AOTC

A

drug

46
Q

Students claiming aotc cannot file

A

as someone elses dependent or married filing separate

47
Q

Qualifying expenses for the AOTC ___ be paid on behalf of the taxpayer, his or her spouse, or dependents.

A

can

48
Q

AOTC requires due diligence form ____ and carries the same penalties as EIC for falsification and erros

A

8867; EIC

49
Q

Lifetime learning credit is meant

A

to encourage taxpayers to take courses at eligible institutions to acquire or improve job skills

50
Q

The lifetime learning credit may be used in ___ tax year the American Opportunity tax credit is not used for expenses paid for education.

A

any

51
Q

Unlike the American Opportunity tax credit, the lifetime learning credit may be claimed for an ___ tax years.

A

unlimited number of

52
Q

for Lifetime learning credit, taxpayers can elect a nonrefundable tax credit of __ percent of qualified expenses of up to $_____

A

20%,10000

53
Q

The lifetime learning credit is available for qualified expenses paid for the education of whom?

A

the taxpayer, his or her spouse, and dependents.

54
Q

Lifetime learning credit is less restrictive than AOTC because

A

you do not need to be degree seeking, you can take as little as one course, it is not subject to drug convictions, and it can be used every year.

55
Q

Lifetime Learning Credit Phaseouts

A

MFJ 116-136000, S/HOH/QW 58-68000

56
Q

Taxpayers cannot take both the ____ and ____ education credits in the same tax year.

A

AOTC; LLC

57
Q

Foreign Exclusion Tax credit

A

Certain taxpayers working and living outside the U.S. are eligible to exclude a certain portion of their foreign income from taxable income under the foreign income exclusion.

58
Q

to Qualify for FETC taxpayers must live and work outside the __, and must have a real ___ _____ outside the US

A

US; tax home (not a house)

59
Q

Foreign Income Exclusion is claimed on form ____

A

2555

60
Q

you can’t claim ____ with FIC

A

EITC

61
Q

Employees and self-employed taxpayers that qualify for the foreign income exclusion are also eligible for a ____ ____ _ ____

A

housing exclusion or deduction

62
Q

The foreign housing exclusion is an additional exclusion designed to represent the

A

incremental cost of housing in a foreign country above a base amount

63
Q

Foreign tax credit

A

The purpose of this credit is to eliminate double taxation on income earned in a foreign country.

64
Q

U.S. ______ taxpayers and U.S. ____ may claim a foreign tax credit on income earned and subject to tax in a foreign country or U.S. possession.

A

individual ;corporations

65
Q

As an alternative to the credit, a ____ may be taken for the foreign taxes paid.

A

deduction

66
Q

An individual will typically incur foreign taxes if they have worked outside the US as either an ___ or as ___-____ OR as a result of ____ _____ through an investment portfolio such as___ ___

A

employee; self employed; foreign investments; mutual funds

67
Q

foreign tax credit is typically claimed on Form

A

1116

68
Q

A simplified foreign tax credit that does not require the completion of Form 1116 is available if you meet all of the following requiremen

A

forign income iss passive(dividends/interest), all foreign income taxes reporter on payee statement (1099/K1), creditable taxes < 300(600 MFJ)

69
Q

If the Form 1116 is not used, the foreign tax credit is entered directly on Schedule _of Form 1040, Line 1

A

3

70
Q

IRS Publication 54

A

all about Foreign income exclusions/credits

71
Q

adoption credit

A

a nonrefundable income tax credit for qualified adoption expenses

72
Q

Form ___ is used to calculate and report the adoption credit

A

8839

Income Tax Accounting (7 decks)

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