CPA REG 1 Flashcards
What are the criteria for selecting the single filing status?
-unmarried or legally separated from spouse at the end of the tax year
-does not qualify for another filing status
what are the criteria for for selecting the married filing jointly filing status?
At the end of the tax year:
-married and living together as spouses;
-living together in a legally
-married and living apart but not legally separated
what are the criteria for selecting the qualifying surviving spouse status?
-unmarried at the end of the tax year; and
-maintain a household, which for the whole taxable year was the principal abode of the taxpayer’s child or stepchild; and
-the taxpayer’s child or stepchild qualifies as dependent of the taxpayer
what are the criteria for selecting the head of household filing status?
-individual is unmarried, legally separated, or is married and has lived apart from his or her spouse for the last six months of the year
-individual is not a “qualifying surviving spouse.”
-individual is not an NRA
-individual maintained a home that, for more half of the taxable year, is the principal residence of a:
*son or daughter who is a qualifying child or qualifies as the taxpayer’s dependent (qualifying relative);
*a dependent relative who resides with the taxpayer; or
*a dependent parent, regardless of whether he or she lives with the taxpayer
name the requirements for an individual to meet the def for a “qualifying child”
Close relative
age limit (19/24) and younger than taxpayer
residency and filing requirements
eliminate gross income test
support test
name the requirements for an individual to meet the def for a “qualifying relative”
support (over 50%)
under a specific amount of taxable gross income ($4,700 in 2023)
precludes depending on filing a joint return
only citizens (residents of NA)
relative or
taxpayer lives with the individual for the whole year
what are the requirements for a multiple support agreement?
-two or more people together provide more than 50% of support, but no one person contributes more than 50%
-to claim someone as a dependent, a contributor must provide more than 10% of support, and other dependency requirements (suport)
-a multiple support declaration, form 2120, must be filed
when should a cash basis taxpayer report income?
in the year in which income is either actually or constructively received, whether is cash or property
name some nontaxable fringe benefits (exclusions)
-meals and lodging (for the convenience of the employer on employees business)
-employer-paid educational expense
-employer-provided parking and transit passes
-qualified tuition reduction
-qualified employee discount
-employer-paid accident, medical, and health insurance
-dependent care assistance adoption assistance
-life insurance coverage (up to $50,000)
-retirement plan contributions (non-roth)
are life insurance premiums paid by an employer taxable to an employee?
premiums on the first $50,000 face amount) of group term life insurance are not includable in gross income
give some examples of tax-exempt interest
-state and local bonds
-bonds of US possession
-US Series EE bonds if used for higher education and certain ownership and income requirement are met
what are some requirements for alimony to be deductible by the paying former spouse and includable by the recipient?
-divorce or separation agreement must have been executed on or before Dec 31, 2018
-payments must be legally required pursuant to a written decree
-payments must be in cash or its equivalent
-payments cannot extend beyond death of payee
-payments cannot be made to members of the same household
-no joint return filed
state and tax treatment of property settlements in a divorce
for a property settlement in a divorce, the transferring spouse gets no deduction for payments made (or property transferred), and the payments are not includable in gross income of the spouse receiving the payment or property. This is still true even if the divorce was finalized on or before Dec 31, 2018
when are funds in a deductible traditional IRA taxable?
-funds are not deductible until withdrawn
-distributions are 100% deducible
-distributions of earnings from traditional IRA are always taxable
-distribution of principal (contributions) are taxable if the taxpayer took a deduction for the contribution when made
when are funds in a nondeductible traditional IRA taxable?
-funds are not deductible until withdrawn
-only distributions of earnings are taxable. Distribution of principal (contributions) are nontaxable
-distributions are allocated between principal (contributions) and earnings pro rata based on relative amounts in the IRA account
what are the requirements for a qualified Roth IRA distribution ?
-distribution is made at least 5 years after the first day of the year in which first contribution was made; and
-taxpayer is one of the following:
age 59 (1/2) or older;
disabled;
first-time homebuyer using the distribution to help purchase a home (max $10,000); or
beneficiary of roth ira and distribution is made after owners death
when are funds in a roth IRA taxable?
-funds are never taxable until they are withdrawn
-distributions of principal (contributions) are never taxable
-distributions of earnings are only taxable if it is a non-qualified roth distribution (qualified are 100% nontaxable)
-distributions of roth iras are considered to come first from principal (contributions), then earnings
