High 5 Income Tax Planning Flashcards
true or false?
alimony received is included in gross income
true
the employer portion of self employment tax is deductible ____ AGI, also known as a(n) ____ deduction
for ; above the line
true or false?
alimony paid is deductible by the payor
true
true or false?
child support is included in gross income of the receiver
false
true or false?
child support is deductible by the payor
false
self employed health insurance is deductible ___ AGI, also know as a(n) ____ deduction
for ; above the line
student loan interest is a(n) ____ deduction
above the line
true or false?
the employee share of self employment tax is deductible
false, the employer share is deductible not the employee share
true or false?
alimony paid is an itemized deduction
false, alimony is an above the line deduction
if AMT is ___ than regular tax, the difference is added to the tax return
higher
true or false?
education credits are refundable
false, they are nonrefundable
true or false?
the foreign tax credit is nonrefundable
true
true or false?
the American opportunity tax credit is fully refundable
false, only 40%
what is more advantageous a tax credit or a deduction?
tax credit
true or false?
the lifetime learning credit is refundable
false, none of it is
what credits would you want to use first: refundable or nonrefundable?
nonrefundable
medical expenses in excess of ___% of your AGI are included in your itemized deductions
10%
what itemized deductions are subject to thresholds?
medical and miscellaneous
what is meant by marginal tax bracket?
the percent that the next dollar of earnings will be taxed at
what is the maximum a person under age 50 can contribute to a 401k and 403b in aggregate?
$18,000
what is the maximum a person under age 50 can contribute to a 401k and 457 in aggregate?
they can contribute the maximum to each plan ($18k)
how do you calculate the phaseout deduction to an IRA contribution when income is too high?
example: single filer earns $67,000 and contributes $5,500 to IRA and is an active particpant
excess over threshold / total threshold
$5,000 / $10,000 = 50%
50% x $5,500 = $2,750
true or false?
you can use HSA funds to pay LTCI premiums
true
true or false?
HSA funds can be used pay for COBRA coverage
true
the child tax credit is reduced $___ for every $____ over threshold
50 ; 1,000
can you use alimony to contribute to an IRA?
yes
what are the 3 types of income?
active income
portfolio income
passive income
