Federal Taxation For Individuals

Question 1

Casualty Loss

Answer 1

Lesser of FMV or adjusted basis.
Less:
Loss in excess $100 plus 10% of AGI.
Equal:
Deductible loss

Deductible in federally declared disaster areas only.

Question 2

Rental of residence

Answer 2

Less than 15 days is not reported

Question 3

Charitable contributions - LTCG property

Answer 3

30% of AGI limitation

Investment assets, personal use assets, & business use assets (Basis is FMV)

Question 4

Charitable contributions - Ordinary income property

Answer 4

50% AGI limitation

Inventory, ST assets, & investment/personal use assets that have depreciated in value. (Basis is cost)

Question 5

Capital Gains

Answer 5

Short term: taxed as ordinary income at regular tax rate

Long term: taxed at 0, 15, or 20%

Question 6

Itemized Deductions

Answer 6

Medical expenses: amount exceeding 7.5% of AGI
Charitable contributions: Cash = 60%, Property = 50%

Question 7

Pass-through Reporting

Answer 7

If a partnership sold a property, the individual will report the sale on Sch D

If an entity received dividend income, the individual will report share on 1040.

If an entity received interest income, the individual will report share on 1040.

If an entity made charitable contributions, the individual will report share on Sch A

Question 8

Qualifying Child

Answer 8

Under 19, or
Under 24 if full time student for 5 months, or
Any age disabled

Question 9

Qualifying Relative

Answer 9

Must live with taxpayer all year, income must be less than exemption amount ($5050) and provide more than half support.

Question 10

Net Investment Income Tax (NIIT)

Answer 10

3.8% on lesser of net investment income or excess of modified AGI.(250k MFJ, 200k others)

Question 11

QBI Deduction

Answer 11

20% of QBI

Limitations:
Single & all other = $191,950-$241,950
MFJ = $383,900-$483,900.
If income is above limits then lesser of 50% of W2 or 20% QBI

Except SSTB - law, health, consulting.

Overall Limitation:
Lesser of combined QBI deduction or 20% of taxpayer’s taxable income in excess of net capital gains

Question 12

Student Loan Interest Expense

Answer 12

Limited to $2,500

AGI limitations:
Unmarried = $75k-$90k
MFJ = $155k-$185k

Question 13

Educator expenses

Answer 13

K-12th grade can deduct up to $300 of qualified expenses

Question 14

HSA

Answer 14

Pretax contributions up to $3,850, ($7,750 families).

Non-qualified distributions are included in gross income and subject to additional 20% tax

Question 15

Kiddie Tax

Answer 15

Net unearned income of a dependent child minus $2600 taxed at parent’s marginal rate

Question 16

Individual Tax Liability Safe Harbor

Answer 16

Lesser of 90% of current year or 100% of prior years (110% if prior AGI is more than $150k)

Question 17

Interest on Municipal Bonds

Answer 17

U.S. Treasury & Corporate Bonds are taxable.

Bonds issued by state or local governments is excluded from gross income

Question 18

Refundable Tax Credits

Answer 18

Child tax credit
Earned income tax credit
American opportunity tax credit (40%) 2500max - 100% of first 2k, 25% of next 2k.
Lifetime learning credit-2k max-20% of 10k.
Child and dependent care credit (20-35%)
Credit for elderly or disabled (15%)
Adoption credit-up to 15,950
Retirement savings contribution credit-10,20,50%
General business credit-first 25k-remainder can only be 75% eliminated.
Energy efficient credit-10% of qualified improvements. Lifetime limit $500
Clean energy vehicles-7500 new, 4000 used.
Alternative fuel refueling property credit-30% max 1k

Premium tax credit for health insurance. 100-400% of poverty